[MD1] Apple Streamlines Channel Policies
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[MD1] Apple Streamlines Channel Policies

Apple Streamlines Channel Policies to
Strengthen Customer Experience and
Improve Channel Advocacy

CUPERTINO, Calif.--Sept. 26 1997--Apple Computer, Inc. today announced
channel policy and program changes designed to increase Apple advocacy
among channel resellers, improve the customer experience, reduce channel
inventory, and bring more profitable revenues to both the resellers and the
Company. Consistent with these changes, Apple will allow more authorized
resellers to buy direct by lowering its volume bar and will provide greater
flexibility by offering its complete product assortment (except products
specific to Education market) to all resellers. Additionally, Apple will
strengthen the channel force with over 100 additional sales and support
representatives focused on communication, forecasting, training, and
channel advocacy.

"Today's policy and program changes are further proof of Apple's commitment
to providing its core customers and channel partners with industry-leading
products on a more timely basis while reducing channel inventories and
improving Apple's bottom-line costs," said Mitch Mandich, senior vice
president, Apple Americas. "Apple is fortunate to have many strong and
committed channel partners and we believe our increased focus and
commitment of resources directed toward them will result in success for
both Apple and our channel."

Prior to these policy changes, Apple conducted a comprehensive review of
its management of inventories from manufacturing to distribution. At the
same time, Apple evaluated its responsiveness to customers and channel
members including the Apple Reseller Association (ARA) board, an
influential independent association that represents all Apple resellers in
the channel. The most significant change in the Company's move to a closer,
more direct relationship with its resellers is the lowering of the
Company's direct purchase volume bar to $2 million annually on Dec. 15,
1997. The current volume requirements are $20 million for dealers and $5
million for retailers to purchase direct from Apple. Members of the ARA as
well as other channel partners see this as a positive move for Apple.

"We believe these changes will improve profitability for Apple and
resellers," said Jim Hancock, ARA chairman and Computer Town director of
corporate sales/Arizona. These changes will create a more level playing
field. And by opening the door for smaller companies, the current channel
will be forced to be more competitive with solutions and value benefits to
set themselves apart."

Apple also announced a series of other policy changes designed to improve
both Apple's and its channel partners' inventory positions, provide quick
turnaround time and support flexible configuration management. These
changes include Apple's move to a four-week price protection policy, a
revised product returns policy, the streamlining of its product assortment
and a reduction in the Company's AppleFund allowance.

"We believe that Apple is on the right track, along with the rest of the
industry, in focusing on their logistics and creating policies that
minimize channel inventory and incent increased turns," Larry Mondry,
executive vice president of merchandising for CompUSA, one of the nation's
leading retailers and resellers of computer products and services.

Apple is taking strong steps to improve inventory positions with changes to
the Company's product returns and price protection policies. The new
automatic four-week price protection policy, effective Dec. 29, 1997, is
designed to provide better customer satisfaction after pricing actions and
to drive increased inventory turns in Apple's reseller and wholesale
channel. Apple may provide price protection credits to direct dealers,
retailers, direct VARs, catalogers, and electronic resellers that comply
with Apple's sales and inventory reporting requirements for products
purchased directly from Apple. Previously, Apple provided price protection
only for products that were in the reseller's inventory or in transit at
the time of price reduction.

Under revisions to Apple's returns policy, dealers, retailers, direct VARs,
catalogers, and electronic resellers, who purchase directly from Apple, can
return up to five percent of the dollar amount of the previous quarter's
net purchases from finished goods products, beginning Dec. 29, 1997.
Previously, Apple's returns policy allowed product returns of up to ten
percent, including open box product. Indirect resellers will be asked to
work with their wholesaler(s) to obtain any return allowances offered by
their wholesaler(s).

Apple is committed to providing quality products, aggressive price, and
timely product availability to the channel. With these goals in mind, Apple
has continued to simplify its product offerings over the past year by
streamlining product designs and features. Now that Apple has unified its
product line, Apple will make all dealer and retail products available to
dealers, retailers, catalogers and electronic resellers who qualify to
purchase directly from Apple, beginning Dec. 15, 1997. This change is
designed to provide greater flexibility to members of the channel while
better meeting customer demand.

Apple believes that it is primarily Apple's responsibility to create demand
for its products at a global level, while its resellers play a critical
role in demand creation at a local level. On a local level, Apple will
realign its investment in marketing and promotional activities by
supporting reseller efforts that focus on Apple advocacy and to improve
return on investment for both the Company and its resellers. Beginning Dec.
27, 1997, Apple is revising its AppleFund allowance to one-half of one
percent (0.5%) on net purchases of eligible products. Apple will require
all of its eligible resellers to claim reimbursement of funds for
authorized promotional activities, and will discontinue Advance Promotional
Payments. Apple also may make additional funds available to individual
resellers for local demand creation. On a global level, Apple is planning a
high-impact, far-reaching, long-term advertising commitment that will
strongly leverage brand awareness.

The channel is a very important part of Apple's success, and Apple is
fortunate to have many strong and committed resellers. Apple believes these
changes will strengthen channel relations and result in greater success for
both Apple and its channel partners. Channel partners interested in
receiving additional information regarding today's changes should contact
their respective Apple account representatives. Dealers, VARs and
wholesalers may also contact Apple InsideSales at 1-800-GO-APPLE or
1-800-462-7753 between 8:30 a.m. and 5:30 p.m. (Monday - Friday), CST.
Apple-authorized resellers may also access Apple Channel Site at
https://channelsite.apple.com for additional information.

Apple Computer, Inc. ignited the personal computer revolution in the 1970s
with the Apple II, and reinvented the personal computer in the 1980s with
the Macintosh. Apple is now recommitted to its original mission--to bring
the best personal computing products and support to students, educators,
designers, scientists, engineers, businesspersons and consumers in over 140
countries around the world.

Tami Begasse Apple Computer, Inc. (408) 974-3156 email: begasse@apple.com

Cara Lewis Niehaus Ryan Group, Inc. for Apple Computer, Inc. (415) 827-7052
email: cara@nrgpr.com

If you are considering the purchase of an Apple product and would like to
have product information faxed to you, please call 1-800-462-4396 in the
U.S. or 1-800-263-3394 in Canada. If you do not have a fax machine or would
like to locate an Apple authorized reseller near you, please call
1-800-538-9696. Customers outside the U.S. should contact their local Apple
representatives for information.

 

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