Apple's store-within-a-store partnership with Best Buy is going to expand this year, according to Best Buy executives.
So says UBS analyst Ben Reitzes, who met with Best Buy during the Consumer Electronics Show this week in Las Vegas. Best Buy wants to have Macs inside 500 of its stores by February of next year, up from around 270 stores at present. The Blue Shirts already sell iPods in about 900 stores, but the Mac operation is a little different.
Best Buy allows Apple to set up its own retail space within its stores in an attempt to re-create the Apple retail experience inside of Best Buy. The strategy seems to have paid off for both companies, as Mac sales have risen sharply in the last year, while Best Buy continues to dominate the U.S. electronics retail market.
The less-heralded, but very visible, part of Apple's success over the past three years has been its retail operation, which no other company in this industry--save perhaps Sony--can match.
While other PC companies fight for space on the stark shelves of Best Buy and Circuit City, and smart-phone makers are mostly shackled to the carriers, Apple is able to define and control almost all aspects of how a consumer discovers, explores, and purchases its products. And the rise of that retail operation coincided nicely with an overall trend away from direct sales of PCs through companies like Dell to a preference for retail purchases, which even Dell has had to acknowledge.
Of course, Apple can't hope to match Best Buy's scale as the largest electronics retailer in North America, so these store-within-a-store partnerships are a good compromise. Apple gets to define how customers experience its products while gaining access to a broader network of stores in locations where Apple won't venture, while Best Buy gets additional foot traffic.
It will be very interesting to see if the two can keep that kind of special arrangement as Apple's Mac market share grows, one of just many challenges for Apple, as it scales that business. It's not hard to imagine Best Buy's larger partners, such as HP and Acer, starting to grumble about such an arrangement, if Apple starts taking more and more business away from them through these in-store partnerships.