Editor’s note: As part of our special editorial partnership, CRN is publishing this recent article from Channelnomics in the US.
Like an aging Olympian whose running stride had seen better days, Apple limped across the second quarter finish line with one per cent overall growth.
While beating Wall Street estimates and its own forecast, Apple’s growth has been stunted by rapidly falling tablet demand. Returning to growth, the company says, may include getting more aggressive in sales to businesses, and that would require a channel.
The iPhone smartphone remains the dominant product in the Apple portfolio, having sold 31.2 million units in the second quarter when analyst had forecast sales of 26.1 million. However, Apple only sold 14.6 million iPad tablets, down 14 per cent from the previous year. Apple and analysts believe sales and revenue will pick up in the Autumn when back-to-school season kicks in and the holidays approach.
Expected new models of both the iPhone and iPad are expected to stimulate sales. And rumored large-screen versions of the iPad could also help drive new demand.
Hurting Apple is a variety of market factors, including stiff competition in all markets by cheaper smartphones with more features, foreign currency exchange fluctuations, and a general market saturation of mobile products putting pressure on pricing.
Apple and observers believe new products, such as a larger iPad, different iPhone models at different price points, and the anticipated smartwatch will help lift sales and revenue.
Few expect any of these products to be runaway hits like the iPhone, iPad and iPod were; growth will have to come from somewhere, and CEO Tim Cook is already intimating that expanded channels could be the answer.
On the earnings call yesterday, Cook said there are a number of “levers” that can push on to stimulate growth, including increasing sales to business through expanded channels and expansion in emerging markets. In both cases, Apple will need channel partners who have relationships with end user customers for designing, selling and supporting Apple products.
In other words, Apple could soon be having a the same moment Dell had in 2006 when it decided to abandon its direct sales-only model and build a broad channel program. Apple does already have a partner program, but it’s dominated by application developers.
While Apple does work with many solution providers, it’s generally apathetic toward the channel. The same do not disturb message has been on the Apple partner application page for more than two years.
It reads: “Thank you for your interest in the Apple Channel Programs. Apple is not currently accepting reseller or service provider applications. Please check the Apple Channel Programs page periodically for new information.”
VARs get around the Apple blockade by not selling products but integrating and supporting them with other business solutions. They tell Channelnomics that it’s easier and more profitable to provide services to Apple customers than trying to deal with Apple itself.
To date, Apple has been able to dictate terms to its partners because it was the belle of the ball.
Now that the shine has come off Apple and it may need to embrace the channel, it may find a less receptive reseller community.
The point is the tide is turning rapidly for Apple and it will need to make some serious decisions about how it wants to play in a market it never wanted to play in.
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