Music City sours on Apple

23 Jul

July 23, 2007

By Geoff Meeker 

Just over a year ago, when this column appeared in The Express, I wrote that Music City was the only official Apple dealer in the province. It was clear that they loved Macs and were excited about selling them (and based on product sales, this excitement was clearly contagious).

However, about three months ago, Music City quietly dropped the entire Mac line. According to Steve Edwards of Music City, the deal breaker with Apple was its commission structure.

“It’s just a totally unprofitable product,” Edwards said. “That’s the only reason why. It takes so much time, and we like to give great customer service. It’s a sophisticated buyer and they have many questions, because most people are coming over from PC to Mac. The conversion can be a little bit frightening for people even though they are very interested, and so the questions are deep. We happily answered the questions but…”

In effect, the computers required a lot of time for customer service, Edwards said. Then he got right to the point: “The margins are ridiculous – from four to six per cent. For me, it’s impossible for a retailer to make money with Apple products. I don’t know how we could. It’s sad, because I love Mac. I love my Apple… I’d never use anything else now. From that standpoint, I really like the product.”

The company was also unpredictable in its pricing structure, Edwards said, sometimes changing prices without notice. “We were lucky in that we were considered a Pro Audio Mac Dealer and because of that we had price protection from the manufacturer. So we got some price protection… some margining against a lowering of price… but it still never covered everything.”

I asked Edwards why the retail margin is so slim. Is it because the Mac computer, being such a superior product, is that much more costly to produce? Edwards quickly shot down this notion.

“I can’t see that,” Edwards said. “They’ve got a captive market. I mean, an Apple laptop is $1200. You can get a (PC) laptop for $500. It’s an Intel-based system now. It’s only the property that they own, like the software, and that couldn’t be that expensive. They’re a marketing machine now. I would say that Apple is doing great. Their margins are fantastic, their stock price is doing great and as a company they’re solid…”

Music City sold hundreds of Mac computers through their dealership, which raises the question: what happens when something breaks? Where do customers go for service?

“We never were allowed to do service,” Edwards said, explaining that the only authorized local service provider is the Memorial University Computer Repair Shop.

However, there is a new Mac dealer in town. PC Medic on Stavanger Drive is now selling Apple computers, iPods and accessories. And they are working toward earning designation as a service provider as well.

Michelle Dawe, manager at PC Medic, said the company has most of the more popular computer models in stock, including MacBook, iMac and Mac Mini. “And we can order in anything else,” she said, adding that their store will be able to replace batteries in iPods once they are authorized by Apple to perform service.

Incidentally, for those who are wondering about the Apple iPhone, it will not become available in Canada for some months yet. According to Michelle Dawe, the Iphone, when released, will be serviced exclusively through Rogers Wireless, which is the only carrier using the GSM network technology in this country.

For those wondering if they should buy the iPhone, I advise you to wait and see. Like the iPod, the batteries in the iPhone cannot be replaced by the owner – the unit has to be taken in for service to perform this operation. This may be a deal breaker for me, depending on what the procedure costs.

Besides, I’ve been hearing wonderful things about the new Blackberry Curve…


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