The New Apple Store Next Door

May 19, 2008

When Apple began construction two years ago on its new three-level, glass-walled Boylston Street Apple Store just 50 feet away from the Boston-based Apple reseller Tech Superpowers, company president Michael Oh says he first learned about it from an article in the Boston Globe, not from anyone at Apple. And to add insult to injury, the Boston Globe reported recently that, according to Apple executive Ron Johnson, the company had been watching the space since 2000 with the intention of opening a store there. However, nobody had told Oh.

There’s no question that the facility, which opened last week and is now the largest Apple store in the United States, poses a real threat to Oh’s $3.5-million-a-year business. “Our tactic has always been to take all comers that need service and sales: consumers, prosumers, small to medium sized business, and large business,” he said. “That Apple store, obviously, will basically take away any of the consumer business, and it will certainly infringe on the prosumer business: people that are photographers or video editors, freelancers, people that work on their own or maybe in a team of two people, that kind of stuff.”

And so, in the couple of years since Oh learned of the coming Apple store on Boylston, he’s shifted his company’s focus into the areas that an Apple store isn’t likely to cover. “We’re doing more data recovery services, and we’re doing more rentals of laptops for people that have their computers in for repair,” he said. “Those are two great examples of services that we’ve specifically developed over the last couple of years when we knew the Apple store was coming in, because we knew the Apple store could refer us that business.”

In that way, Oh suggested, the new store could actually be a good thing for him. “Regardless of what happens in terms of the store taking our consumer business, there’s going to be a real increase in business for some of those types of services, as well as the more traditional things like onsite services which Apple stores don’t touch at all,” he said.

And the same is true of business users. Pointing to a recent Business Week cover story about Apple’s growing presence in the corporate world, Oh said that creates a perfect opening for resellers like Tech Superpowers. “They’ve just never made an effort in the business and enterprise markets… which, for independent resellers like us, gives us an opportunity."

The point, Oh said, is that even if Apple were to step in and start targeting business customers directly, there would still be room for a company like his. “They would play to the bigger enterprise companies… but for us, the bulk of our business still comes from 10-, 20- or 50-person companies. No matter how big Apple gets as a direct seller to business, they’re simply not going to have enough coverage of all of those little businesses to take away that part of the pie.”

Apple didn’t respond to requests for comment. However, Oh believes nothing he’s saying is intended as an indictment of the company. “We’re happy with the margins that we get, we’re happy with the support that we get, and in some cases, they’re very communicative with us about what’s going on,” he said. “It’s just the Apples stores which function, it seems, almost like a separate company.”

Oh added the manager of the new Apple store did stop in and visit Tech Superpowers about a week ago to discuss how the two stores could help each other with referrals for service and for out-of-stock items. But the fact that there was no communication from the company itself throughout the two-year construction process was frustrating. “It really would have helped to have a little bit of cooperation from a partner and a vendor who’s so important to our business… organizationally, there’s just a big line between the retail division and the channel side,” he said.

As a result, Oh finds himself thrilled with one part of Apple’s business – and simply shut out by the other part. “The channel side of their business is better than it has ever been in terms of programs, in terms of support, and all those things,” he said. “But then you have the ‘other’ Apple, and I’m frustrated with them, simply because we have no information, and they’re spending x millions of dollars putting a store in right next to us without any official acknowledgement that they’re doing it… I’ve had conversations with people on the channel side, and they couldn’t confirm anything about the store’s presence or when it was coming in or any of that stuff because that’s basically a completely separate business."

Looking forward, Oh is optimistic about Tech Superpowers’ new focus on everything from business customers and onsite services to data recovery and laptop rentals. And he’s simply resigned himself to the dual nature of his relationship with the company. “It’s two different Apples,” he explained. “The one Apple that we can deal with, we love. And the other Apple that we have to deal with, we’ll make sure that our business is complementary to it in every way that we possibly can, and hopefully that cooperation will work. And that’s the best that we can hope for.”