Apple plugs iPod loophole discovered by clever resellers

As it struggles to maintain pristine control over its iPod inventory and manufacturing cycles, Apple Computer has decided to indefinitely bar the majority of its authorized resellers from placing direct orders for engraved iPods, AppleInsider has learned.

Apple offered no explanation in removing the option from its reseller online store, but sources with ties to the company say the word on the street is the option was discontinued due to "abuse" by its resellers channel.

The Cupertino, Calif.-based company's independent dealers have largely accused Apple of using its own chain of retail stores and a series of dirty tactics in an attempt to muscle them out of business.

Last year, a group of those resellers in conjunction with consumers filed a 26-page class action lawsuit against the iPod maker, accusing it of unlawful business practices, breach of contract, misappropriation of trade secrets and other practices deemed illegal under consumer law.

One of the accusations made against the company is that it unfairly withheld stock of popular iPods and Macs from its authorized resellers in order to supply its own brick-and-motar retail stores.

Often the last in the supply chain to receive stock of constrained Apple products such as the latest iPods, some resellers reportedly formed creative solutions to the problem in order maintain their flow of business and meet the needs of their customers.

According to one source, some resellers found that placing orders for engraved iPods allowed them to circumvent Apple's supply chain restrictions, effectively bypassing the long queue designated for orders from the reseller channel.

Crafty resellers were able to use the technique to quickly fill large orders for iPods by requesting each player with a simple engraving, such as a period ("."), sources have said.

Apple is reportedly considering an alternative method for allowing independent resellers to place orders for engraved iPods, but in the meantime has told the dealers to find their own means of engraving the players post delivery.

For the most part, Apple resellers are not sore over Apple's decision to plug the loophole, as they may now order non-engraved iPods directly from the company as a result of the change instead of relying on its two US distributors. Still, one reportedly quipped that only the Apple of today would consider "ordering too many iPods" a means of abuse.