Apple Goes On Enterprise Offensive With New VAR Rebate Incentives

Apple has launched a new rebate program for VARs aimed at driving the consumer technology giant's iPad and Mac products deeper into the enterprise market.

As part of its corporate sales offensive, the Cupertino, Calif.-based company is moving 2 percent of the iPad price and 1 percent of the Mac price to a back-end rebate incentive tied to new sales volume targets.

The rebate incentive, which took effect in July, takes a page out of Cisco Systems' popular VIP incentive program playbook, launched by the networking giant 12 years ago to increase the profitability of partners investing more in driving sales growth in key technologies.

[Related: iOS 9 Productivity Features Put Apple On Track To Boost iPad Sales]

A spokesman for Apple declined to comment on the new program.

The sales chief for a top national Apple partner, who did not want to be identified, praised the changes, predicted 10 percent to 15 percent revenue growth in his company's Mac and iPad segments due to Apple's new rebate incentives.

"Apple is starting to view its product line as less of a commodity and as more of a solution sale," said the executive. "This is a key step for the channel. … It puts a lot more meat into their reseller program."

While he declined to give sales targets tied to the rebate incentives, he noted that the numbers are "not easy but reachable."

"Nothing is a slam dunk, but if partners apply and execute a plan they will have a fair shot of increasing their growth numbers," he said. "It is very fair."

While the rebates mean iPad and Mac prices will bump up, it is not a significant increase, he added.

Apple has been moving aggressively to push its products to enterprise customers, particularly the iPad, which has seen declining sales for the past six quarters due to a slow tablet market.

The company also aimed to extend its corporate drive through its partnership with IBM, which on Wednesday announced new cloud-based Mac integration standard services for enterprise systems.

In June, the smartphone company also announced new enterprise-targeted features of its iOS9 operating system, which is slated to ship next month.

Partners, for their part, said they have the consulting, services and systems integration muscle to move drive enterprise market share for Apple products, but they need more channel support from Apple to get it done.

Another partner, who did not want to be identified, said that the program would provide a boost to Apple VARs who are investing more in driving enterprise solutions sales and negatively impact VARs that were simply reselling commodity Apple products.

"This new program will help us deliver an overall better experience with our customers … in return for it we'll be more successful in staying focused on Apple solutions," said the partner. "But, it will be bad for dealers that are not performing at Apple's expectation level or those who are not focused on Apple as their main platform."

An executive for a regional Apple partner, who did not want to be identified, said the new rebates are a "kick to the shin" of smaller partners. He said the rebate changes are going to hammer the quarterly sales commissions for his sales reps.

According to the partner, his Apple sale rep commissions -- which are based on gross profit -- will drop by 33 percent per iPad transaction and 16 percent per Mac transaction.

"This will hurt our salespeople unless we figure out a way to change their compensation model or measure these rebates on a per-transaction basis," said the partner. "These Apple sales guys live and breathe Apple. But Apple doesn't care. They have no channel love. It's not a partnership. It's an unhappy marriage."

PUBLISHED AUG. 7, 2015