Reseller Moving Out Of Apple Store’s Shadow

April 14, 2012

One of Apple’s most high-profile authorized resellers is moving from its epic location, directly across the alley from the Boylston Street (Boston) Apple store, and refocusing its operation only on business and professional customers. Tech Superpowers founder Michael Oh explains, “We’ve determined that we can compete with Apple, but we’ve just stopped wanting to.” Oh says that on May 1st the company will move five blocks away and give up the walk-in consumers they’ve handled since the company was founded in 1992. Oh says the relocation and change in business focus simply reflects a change in the Apple market itself, and is not the result of a knock-out punch by the Apple store.

Tech Superpower’s (TSP) offices have been located on Newbury Street, considered the city’s highest-profile retail street, much like Fifth Avenue in New York City. Officially TSP is an Apple Specialist, considered Apple’s top tier of resellers and service providers. The company has a ground floor space for walk-in repair and service customers, and also a “digi-lounge” and Internet café. An upper floor houses the repair and service operation and offices.

TSP opened a full retail store at the Patriot Place mall last July, about 40 minutes south of Boston in a region where Apple has no stores. That store will continue to operate.

When construction began on the Boylston Street store in 2004, TSP was so close to the site that its wide-angle Webcam could barely capture the entire scene. The proximity immediately created speculation among the Apple community about whether TSP would ever survive. However, in an interview with IFO from the company’s London office, Oh said TSP’s core business had always been the business customer and professional services, with a secondary focus on consumers. So the arrival of the Apple store was never considered a potential company-killer, Oh said.

Since the Apple store grand opening, the Apple eco-system has changed dramatically, Oh said. The number of Apple devices has increased, mostly portables, while serviceability has been going down. “The reason that we’ve moving is because the numbers tell a story, which is not that Apple is the big mean company that’s come in to take away our business. Rather, the technology and the overall Apple ecosystem has changed radically over the last five years.”

He explained that with the much larger base of Apple users, there are now two significant sets of users that resellers can serve: business and high-end consumers, and ordinary consumers. It’s that first set of users that TSP will begin to serve exclusively.

Business users, “really couldn’t be bothered by all the glitz and glam of the Apple store,” Oh said. “They don’t want to sit in line. They don’t want to wait at the mall or one of these big stores with everyone else. They want a higher level of service.”

He said that Apple has addressed some business customers with its Joint Venture service. But, he added, “Apple is still a consumer-oriented business when it comes to the Apple stores. Our opportunity within this marketplace is to become more of a provider for businesses and VIPs. And that’s really where we’re taking our business.”

And, Oh explained, “Once you make that decision, you don’t need to be on Newbury Street,” which is an expensive place to locate. So on May 1st TSP will move to 29 Stanhope Street in Boston, a 10-minute walk from their current location.

Oh hopes the move won’t affect the positive relationship TSP has built with the Apple store. “We’ve developed an extremely good relationship with the guys at Boylston Street,” Oh said. “They’ve been very good about referring us business.” TSP frequently receives referrals for data transfer and recovery, and repairs on older Macs that the Apple store won’t handle.

The TSP retail store at Patriot Place represents a very different strategy, Oh said, filling in a “blank spot” for Apple store in the Boston area. He says the store has experienced growth since it opened in July 2011, and he looks forward to analyzing one-year financial results later this year.

Advice For Resellers

For other Apple resellers, Oh says they should either pick a region that has no nearby Apple stores, or focus on different customers. With so many Apple product users in both consumer and business areas, there’s room for resellers. “The Apple stores can’t really excel in both areas,” he said.

For a reseller facing the arrival of an Apple store, “Run for higher ground,” Oh said. He added that in the long-term, “I think now the time is right for a reseller to look at that opportunity and say, we’re going to focus on professional services, we’re going to focus on high-worth individuals, and on businesses, and that’s where the money can be made.”

As for the Apple stores, they have become expert at improving sales with innovative technology. But now there millions of products in the hands of users around the world. “I think the challenge is, all those products are sitting in the hands of users looking for support,” Oh said. “The Genius Bars are absolutely busting at the seams.”

That crowd of Genius Bar visitors has fundamentally changed the Apple store experience, he said, and has created a new group of people who can afford to pay for improved service, and who go to resellers for that service. “That number is growing,” Oh said. “We’re getting more and more calls from consumers who are willing to spend money to have the exact same services done in their own home. That to me says the Genius Bars have reached a point of saturation.”

Oh sees challenges ahead for Apple as their customer base increases. “Apple’s support model really is very consumer-facing, and unfortunately, is one that’s always going to have struggles with scale.” He also see challenges in staffing Apple’s retail stores. “I think the other part of it is going to be retaining staff as the number of people they deal with goes up. You’ve already been seeing people saying, ‘Well , this really isn’t the job I signed up for, anymore,’ and walking away from it.”

Oh acknowledges some current Apple store employee dissatisfaction and the movement to improve working condiions. “It’s no longer this utopian place to work, and it hasn’t been for awhile.”

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