Apple's Latest Chance To Build A Strong Channel Won't Last Forever


Will Apple open the door?: opportunity knocks


As evidenced by its earnings report last week, Apple continues to deliver innovative products that consumers are willing to pay a premium for because they are well-designed and simple to use. But can the company perform to a similar level in the commercial market?

ROBERT FALETRA
Can be reached at (781) 839-1202 or via e-mail at rfaletra@cmp.com.

That&'s an easy one to answer. No.

This isn&'t because Apple is incapable of delivering products that can compete. It&'s because the commercial market&'s needs aren&'t well-met by Apple&'s current strategy. Before you dismiss that statement as a contradiction, let me explain my thinking.

In the consumer world, products are traditionally positioned, sold and used for a sole purpose. The commercial world, on the other hand, requires that technologies fit together in a much more complicated and interdependent environment.

Moreover, commercial applications require a much different sales approach that is more dependent on support than it is on being cool. Being cool isn&'t enough. Apple needs a robust value-added channel to regain traction in commercial accounts.

Apple has some very good solution providers, but unfortunately they are successful in spite of, rather than because of, the vendor. Steve Jobs and company don&'t seem to want to deal with the nuances of the solution provider market. It&'s why the company lost the education market, and it&'s why it has a negligible share of the commercial market. But there are thousands of solution providers that are commercially focused and would consider adding the Apple brand if the company put forth a meaningful channel strategy.

With the release of the Intel-based Macs and a future where the Apple product environment is not only stable and innovative but price-competitive, it&'s easy to imagine the company making significant market-share gains. But those gains can only come if Apple becomes more inviting to the channel.

As managed services become a meaningful way to deliver solutions, Apple&'s products have the potential to be more easily integrated into the mix. But managed services could also displace Apple in the few vertical markets where it has built significant share.

The buzz surrounding Apple is largely the result of the iPod&'s success. Yes, Apple has done some very innovative things with the Macintosh, but the solution world stretches beyond having a PC with integrated productivity software.

 
‘Apple has some very good solution providers, but unfortunately they are successful in spite of, rather than because of, the vendor. Steve Jobs and company don&'t seem to want to deal with the nuances of the solution provider market.&'

Apple&'s reluctance to work with a larger set of solution providers has ensured that its sales to businesses remain miniscule. Without that channel, the application developers that reside inside of solution provider organizations or act as independent programmers are not writing the software Apple needs.

So, Apple has good products that will become more price-competitive. It has buzz in the market. And it faces a channel that is willing to take a more serious look at its offerings and ultimately sell them. It has a real opportunity right now to change the market dynamic, but that opportunity won&'t last forever.

In the end, Apple must decide whether it wants to be a consumer
electronics company or a more diversified player with strong positions in both the commercial and consumer worlds.

The truly great companies in American history have always leveraged their original position to move into new markets. Consider General Electric, which began in consumer appliances and then built a huge commercial business, or Microsoft, which started in desktop operating systems and later became dominant in productivity software and networking. Both recognized and acted on a new opportunity as it arose, leading ultimately to long-term success.

Apple&'s chance to leverage its position and grow stronger and more diversified through a value-added channel initiative is now. The only question is, will it take that chance?

Make something happen. I can be reached at (781) 839-1202 or via e-mail at rfaletra@cmp.com.