Apple Biting the VAR Hands That Fed It

Maybe I have followed Apple too closely over the years to be objective about its channel philosophy, but our "Bad Apple" cover story does offer an interesting spin on one of high tech's highest fliers. If you judge companies based on market-share value and stock-price increases, then Apple must be considered wildly successful. Much of its current popularity is based on its breakthrough iPod device, which has revived the company's fortunes and is credited with driving sales of Macintosh notebooks and desktops. Helping matters is the current Windows virus plague, which is pushing some users to Apple's platform. (Even a colleague of mine, who has long been one of Apple's most vocal critics, broke down and finally purchased one of those hot G5 computers.)

So everyone is feeling all warm and fuzzy about Apple. Except us, that is. Our skepticism comes from Apple's channel philosophy. At a time when the entire IT community has embraced partners like never before, Apple is going in the opposite direction. Its aggressive expansion plans for its retail stores have had a devastating impact on many longtime, loyal Apple resellers. Yes, some of these resellers did rely on consumers and a retail business, but they also helped keep Apple afloat during some very dark days.

These resellers say they've been given little consideration or guidance in the way of channel management by Apple. You can blame some of that on the executives responsible for Apple's channel strategy. The top guy was a former Adobe executive, while his primary tactician hailed from Intelligent Electronics, which, ironically, was once a major Apple reseller. But let's be frank. When it comes to Apple's channel strategy or product direction, there is one man calling the shots: Steve Jobs. You can respect him for his technical vision and marketing genius, but why would someone with so much smarts be confounded by how to leverage channel partners? At some point, Apple will find it difficult to sustain current growth rates without a sound channel strategy. Every company--perhaps with the exception of Dell--has found that out, and Apple is no Dell.

Is It me, or is Symantec's acquisition of Veritas grabbing less attention than it deserves? Despite the intrigue that developed during HP's purchase of Compaq, this combination is likely to have a greater impact on the solution-provider community. I reached that conclusion after listening to the perspectives of the four channel managers from both operations: Allyson Seelinger and Randy Cochran of Symantec, and Michael Sotnick and Julie Parrish of Veritas. Their collective point of view is this deal brings together two growing and vibrant organizations in a high-margin sector. It is a pretty good argument for getting on the Symantec-Veritas bandwagon if you haven't already.

What this deal lacks in headline-grabbing appeal is made up by the sheer opportunity surrounding the combination of security and storage-management software. When this deal is complete, Symantec will have one of the largest partner networks of any major software company in the market; it will certainly be the most channel-centric. Seelinger and Sotnick said their respective partners received news of the deal warmly, and there appears to be little overlap in their channel-representing opportunities for both sides.

Both teams have to be careful about what they say publicly until the deal clears certain regulatory approval, but they claim their main focus will be to communicate the benefits to partners. As Sotnick noted, they will be judged by the "consistency of their message and the quality of the message."

Some people are calling it the end of an era, others the beginning of a new one, while still others speak of it as a major breakthrough in how American industry can leverage low-cost Chinese production capabilities. What I am referring to, of course, is the $1.25 billion sale of IBM's $10 billion Personal Computing Division to China's Lenovo Group, whose primary shareholder is the Chinese government.

The new Lenovo PC organization should make several moves quickly. They include naming a channel chief immediately; communicating with the leading channel executives so they clearly understand the strategy; and not letting Dell or HP portray the merger as the dumping of a business unit no longer strategic to the company. For more details about these and some other suggestions, go to varbusiness.com.

Let me know what you think about Apple, Symantec and Veritas, and IBM and Lenovo at rdemarzo@cmp.com.