Apple Store Success Rankles Some Resellers

In contrast, Apple has "thousands" of resellers, according to its Web site. These range from retail giants such as CompUSA and Best Buy (BBY Quote) to mom-and-pop shops and independent businesses in small towns.

Apple doesn't break out the retail value of its reseller sales or the wholesale value of its shipments to resellers. But in the first nine months of this year, just 17% of its overall sales came from its own retail stores, implying that a large portion of its business came from its reseller network.

Retail stores' share of Apple's overall sales has been climbing rapidly, generating 14% of the company's overall sales in its last fiscal year and just 10% in fiscal 2003.

Some resellers charge that those gains are coming out of their cash registers.

Mac Made Easy, an Apple reseller in Honolulu, has lost half its sales since Apple opened a retail store in the city about 18 months ago, says owner Betty Markowski. Although Apple promised not to go after her customers, that's precisely what the company has done, Markowski says.

She says the company has lured away some customers by stocking its own store shelves with in-demand products that she's been unable to get. Others have been lured away by discounted prices or free services that she can't offer.

As a result, Markowski has cut Mac Made Easy's staff from 20 to 8, and she worries that her business, which she has run for 13 years, won't survive.

"They're killing us," she says. "They have no loyalty to their resellers. That's really too bad because the resellers have stuck with them for so long."

Other resellers say the impact of Apple's stores hasn't been all negative. Although Apple's store in Grand Rapids, Mich., has only been open a couple of months, CompuCraft, a reseller there, has already seen a drop in the number of walk-in customers, says Brian Swets, the company's technical service manager.