Apple increases distribution bandwidth
It also bucked a current trend among PC makers: The move to widen the channel pipe runs counter to the rest of the PC industry, which has come to rely increasingly on direct sales.
Officials on both sides of the deal cited expanding sales of Apple (aapl) products as the reason for Apple to bring Clearwater, Fla.-based Tech Data back into the Mac fold after cutting it loose three years ago. Cupertino, Calif.-based Apple said this growth is in marked contrast to most PC manufacturers, which have seen sales slide over the past year.
"It's a much bigger pie we're offering today than two years ago," said Jeff Hansen, Apple senior director of U.S. channel sales and distribution. "We wanted to keep good velocity going through the tubes, and adding another distributor was the best way to do it."
By 1998, Apple had pulled out of its previous distribution partnership with Tech Data, relying on Ingram Micro Inc. and Pinacor Inc. "At the time," Hansen said, "given where our sales were, we figured that was all we needed." That period saw Apple lose significant market share in the personal computer market and rack up consecutive quarterly losses.
However, the past two years have seen a dramatic rebound for Apple, with many of its models, especially the iMac, ranking either at the top or in the top five of category sales.
Apple (aapl) Hansen downplayed the idea that the deal with Tech Data would automatically expand Apple's retail presence significantly. "We're confident Tech Data has the ability to expand us into new outlets," he said, but "right now we're just trying to get simple distribution off the ground."
Hansen said that working with Tech Data will require some retraining of the distributor's staff -- "our product line is totally different than it was two years ago" -- as well as integration of both companies' databases.
Hansen also addressed concerns about periodic Mac supply problems that have affected the company's most popular hardware lines in recent years.
"We've made remarkable improvements in matching supply and demand," he said. "I think we're as good as anyone else, though of course there will always be the occasional problem."
Referring to Taiwan's October 1999 earthquake, which disrupted production of notebook LCDs and Apple's consumer portable iBook, Hansen said, "We've done a lot to make sure a problem at one source doesn't leave us behind the eight ball."
Kelly Johnson, business unit director for Ingram Micro's Mac division, agreed that Apple's sales can easily support a third wholesale distributor: "With their increased volume, Apple certainly wants to grow the market."
Johnson said she doesn't see the bottom falling out any time soon, either. "Everybody always anticipates the next new thing from Apple," she said, "and we have high hopes for Apple to continue to expand its market share."
To fulfill its role in the deal, Tech Data will create a division specifically for working with Apple dealers in areas such as marketing, sales and technical support.