Apple banks on retail stores
Apple's new store on the Upper West Side opens on Saturday at 10 a.m.
(Credit: Marguerite Reardon/CNET)NEW YORK--Apple hopes to grow its market share with an increasingly aggressive retail strategy that includes opening bigger stores in more locations.
At a media preview of its fourth store here, which is located on the Upper West Side, Ron Johnson, Apple's senior vice president of retail, said Apple's retail strategy is all about getting consumers to switch from PCs to Macs.
"Our Apple stores are a magnet for switchers," he said. "About half the people who come into our retail locations are first-time Mac buyers."
Johnson said that Apple's Genius Bar, which provides face-to-face customer service and support, and other services, allow people to switch from a PC to a Mac with confidence. For example, Apple offers its One-to-One service, which allows new Mac users to drop off their old computer so that files can be transferred from the older computer to a new Mac.
The new Apple store on the Upper West Side is the first to have a glass ceiling.
(Credit: Marguerite Reardon/CNET)The service, which costs $99 for one year, then allows users to meet one-on-one with an Apple representative to discover where the new content is on the computer and to learn how to use more advanced features. Customers can use the one-on-one instruction service as much as they like for that one-year period.
Johnson also said that the Apple stores provide a good way for customers to test out and play with new products before they buy them. Even if customers don't buy their Mac, iPhone, or iPod in the Apple store, the experience they get from looking at it in the store is often enough to help them make a purchasing decision.
The strategy seems to be working. Apple has been increasing its overall sales and market share for its products over the past year, particularly for its Macs. In the third quarter of 2009, the company sold about 3 million new Macs, which was a 17 percent increase compared to a year earlier, according to IDC. This was well ahead of the overall global PC market, which grew by only about 2 percent, according to IDC. For 19 of the last 20 quarters, Apple has outpaced the market in terms of sales.
Even though overall sales have increased, Apple hasn't made huge gains in market share. But it has made modest improvements. Over the past year, the company has managed to bump its market share up to 9.4 percent in the third quarter of 2009 from about 8.6 percent in the third quarter of 2008. Apple is in fourth place in the overall computer market, lagging PC makers Hewlett-Packard, Dell, and Acer.
In 2001 when Apple opened its first store, plenty of people questioned whether Apple's retail strategy would even work. But eight years and 279 stores later, the retail business has become a big revenue driver for the company. In fiscal 2009, Apple generated $6.6 billion of the company's $29.9 billion in revenue from its retail stores, Johnson said.
Some of the stores, such as the Fifth Avenue store in Manhattan, which sits below a glass cube across the street from the Plaza Hotel, have become tourist destinations.
Apple purposely puts stores in high-traffic areas to attract customers, Johnson said. And in the case of big stores like the ones in Manhattan, it's also important to put them where people visit. Worldwide some 170 million visitors entered an Apple store in fiscal 2009.
Apple's flagship stores, or as the company calls them "significant stores," are especially designed to draw in visitors with eye-catching design and architecture. And the new Upper West Side store at Broadway and 67th Street is no exception. The new store features a glass roof, the first ever for an Apple store. And it also features 45-foot-tall stone walls, a large ground floor to showcase products, and a glass spiral staircase that leads to the lower level of the store where Apple provides service.
Apple plans to open between 40 and 50 new retail stores in 2010. More than half of these new stores are expected to be outside the U.S. Some of the countries where Apple will open new stores include the United Kingdom, Canada, Australia, Italy, Switzerland, Germany, France, and China, Johnson said.
Apple's main competitor, Microsoft, is trying to emulate Apple's retail success by opening up stores of its own. Recently, the software maker opened locations in Scottsdale, Ariz., and Mission Viejo, Calif.
Apple's latest Manhattan store on Broadway at West 67th Street will open to the public at 10 a.m. EST on Saturday.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
Dont be a troll. Nobody likes trolls
think you just need to stop drinking your hater-aid and just try a mac. if it makes them money and it's bringing business, then let them do it. icrap software?! really? try turning on a new pc and seeing all the crapware that's on it like antivirus that slows your computer down like crazy and bunch of manufacture CRAP! see that on a mac? no.
I just don't understand the hate. Sure I prefer owning a Mac, but I used to own Windows. I can compare the two better than people that have never used one or other. I see it as simple, if you love to upgrade hardware to play the latest games - get a PC. If you want to edit media - get a Mac. Both can do email, office work and basic computer stuff.
"Does Win7 allow you to create home DVDs right out of the box"
Yes, it does actually. It's called Windows DVD Maker, and it's part of Windows 7. Unlike iDVD, which is part of iLife rather than OS X. And just because iLife comes with new Macs, does not make it part of OS X, so don't start. It's bundled software.
"Does the Windows version of MS Office allow you to make PDFs without giving Adobe hundreds of bucks?"
Save As > PDF or XPS...
Ta da!
Windows can edit media just as well as OS X can, by the way. Ever hear of AVID? Sony Vegas? After Effects? Photoshop? Other things of that nature? Yeah, they all run on Windows.
It seems to be working for Apple but some companies are going to loose a fortune by trying to copy and getting it wrong. You only have to look at the Sony stores to see how not to do it.
For a tech store to work, first you have to have the believers.
Also, if you haven't seen this, I'd suggest you take a look:
http://gizmodo.com/5403128/all-the-apple-store-data-you-could-possibly-want-to-read
Given those numbers, it would be pure, unadulterated stupidity for Apple to pull back now, and a no-brainer to keep expanding. Remember, Apple is sitting on ~$30B in cash -- more than any other tech company, including Microsoft. If there is any risk for Apple in retail, now is the perfect time to risk some of that $30B.
don't get me wrong. there will be a few. There just happens to be more on the mac.
Mac OS X Snow Leopard is a toy compared to Windows 7.
Only goes to prove how much of a slave you are to Microsoft.
What are those functions? what do they do? Microsoft copied those functions from Apple OS
lol!
Well said, most users don`t go shopping for a computer with a laundry list of PR material of functions they don`t understand. They buy what looks/feels right to them. BTW Cacheing, Homegroups, Libraries and Powershell? Mr Dee you really think those are going to move units on their own at BestBuy?, get a clue, no better yet just continue on, I need the consistent laugh you provide.
I can just see my 65 year old neighbour now... No Branchcache or Powershell?!? No SALE!!
Actually he`s smarter, he uses Linux Mint now... and loves it.
This is what it says on website: Print dialogs now display nearby printers so you can quickly identify and configure the most conveniently located printers on your network.
Some of these features are better done on windows and some on mac.
Have a look at the feature list of mac in addition to windows
http://www.apple.com/macosx/
I did a little experiment a while back. i went to Sony's Website and went to Apple.com
I build a Macbook Pro 13 and a Sony Viao SR, that was 13 inches as well.
I built up the Mac to $2249, then i did the same with the sony computer except it cost 2079
Well you got more bang for your buck as sony. Both Computers has 8 gigs of RAM and a 500 gig HDD. But sony has a 2.8gig Intel T9600 processor and the apple only had a 2.56 GHz processor. The apple comes with the Nvidea intergrated graphics card while the sony has a ATI mobiility radeon HD. also the sony has a blu ray while the mac has only stanrd DVD drive. OH, and before you mention it, i didnt add any software, the price is only the hardware, before adding things like Garage band, photoshop, Office, or anythiing else. so yeah, apple, from a hardware standpoint is over priced.
So I think most of the apple haters hate apple just because they can't afford it.
And by the record. I don't hate Microsoft I actually Had 3 Windows based machines but my main ones are Apple.
garage Band is free and doesn't even come on windows.
not to mention better service, better software, design (though sony has nice designs) and features like MagSafe
you think I'm interested in how to learn to play music? gosh!
GarageBand looks nice though! don't get me wrong
I would love to, but I haven't found a mac that even comes near the average price that people are spending on a laptop... not even within 30% of that price. Now why is that?
When a PC will do all the functions I want, right out of the box, then me spending $$$ more to do the same thing on a mac IS overpriced.
nice try... you're another one who can't back up facts with proof.
Did they break anti-trust laws? Did they force people, at gunpoint, to part with their money? Did they recruit people who are adept at making sales to consumers who are incompetent or uninformed?
Get over it. Microsoft will continue to make money no matter what Apple does. Difference is, Apple's stock has appreciated over 600% during the past five years while MSFT has laid flat.
Read into that whatever you like, but Apple's recent success is not a weakness.
So how will you spin the two companies' market caps? For those who aren't aware, the market cap is the total number of outstanding shares times the share price -- which gives you the total value of the company, as determined by the free market.
In March 2000, Apple's mcap was $16B, and Microsoft's was $510B.
Today, Apple's is $182B and Microsoft's is $260B.
(See chart here: http://www.businessinsider.com/chart-of-the-day-market-cap-apple-vs-microsoft-2009-11)
Any questions?
I'm sorry, but, isn't this common sense??? You know....if you have a brand and you want people to buy your brand....you put your brand in retail stores in high profile places?!?!
Why is this article trying to make it seem like this is something revolutionary? Every retail store does this. This is why many wal-marts are moving closer to highways and near malls. This is why churches are moving closer downtown. This is why mcdonalds is inside wal-mart next to the church near the mall!
This article is pointless....and yes, I have owned almost any mac product you can think of that came out recently. I know, I'm a hater I'm a hater I'm a hater blah blah blah mac vs windows yada yada yada
Take a look here:
http://gizmodo.com/5403128/all-the-apple-store-data-you-could-possibly-want-to-read
If you read that, and still think Apple's stores are no big deal, it's your problem, not theirs.
It will get fixed but I watched 18 months ago as my wife laughed at me when I brought my Asus home. She had purchased a Macbook the year before. She came home and started working right out of the box. I spent hours downloading updates to the OS adding A/V software, etc. She walked out of the store and was done. Say what you want about Apple hardware but I would have never thought a computer could run so well on a paltry 1gb of Ram. Until Sims 3 came out she had no issues. Then when it did and she tried to run it, it was so slow she couldn't bear playing it. I paid 75.00 for 2gb of Ram for her from New Egg and installed it in about 10 minutes. She booted it up and has been happy ever since then.
I am not saying that Apple products are perfect but what I will say is that for most people having a store that you can enter and talk to an expert about the product helps allot. It also helps people to know that they can walk in with a hardware or software issue and get it fixed. I have to package up my 1k Asus machine and send it in. That is nowhere near as nice as it would be to walk into a local store and drop it off knowing that it would be fixed or replaced and in a few days I would be on my way. Apple Care is also a decent deal when you consider what you pay for it. 150-300 dollars for 3 years of support whether hardware or software! The Geek Squad crew charge folks 80.00 an hour for most services. There aren't too many things that they are going to do for you in only one hour most things will be 2-3 hours which would be what Apple Care would have cost for 3 years. I'm a PC but I will be running my Windows on a Apple from now on and I will learn OSX as I go along. It's called the best of both worlds and its the way to go as long as you can afford the steep price of admission.
"Our Apple stores are a magnet for switchers," he said. "About half the people who come into our retail locations are first-time Mac buyers."
No other store gets requested to be in new high end centers like an Apple store-By the Landlords! They create traffic. $4,500 per s.f.+ in sales is up there with Tiffany's and no one else. Best Buy and all their PoC's cannot even make $500 per s.f.
If you have a PoC, it is only a matter of time before it is spyjacked, virused or tojaned (yes I made up those words you spellcheckers) and the Mac-nada If your real goal is productivity, and time is money, I'd rather get my iMac, pay for Applecare and know I can walk it into a store and get an English speaking American to see any problem and work on it while I learn what they are doing. If I choose, I can also get an English speaking American to help me on the phone. No Americans in Bangalore!
Microsoft stores can only dream of that kind of success. Zunes, Mobile MS on phones and Dells, HP's and Gateways all over their store will get buyers so confused, can you imagine their Genius Bar!
As for the energy use out of the big stores. Go visit Al Gore's huge energy waste HOMES and Gulfstream to gripe. So what if the Flagship NY store wastes energy even though it won't need lights on because of the natural sunlight, or on cooler days, the sun brings heat in also when it is needed, so it evens out. Based upon sales per s.f., it must be the most energy efficient store in the entire country! Isn't a Football Stadium an energy waster also since they play once a week?
BTW, great use of a HP computer to run Snow Leopard.
Back when dropping below a 45point margin required manger approval. Dropping under 35 points on a tender required regional manager approval.
In those days they use to take the sales staff bundle us up pop us on a plane to fly someplace to look at the new Compaq, or IBM lineups. I remember the big bash of Expo 86 with IBM renting a cruise ship, and bringing in a dance act for Vegas to perform for the sales guys.
Yes the days when margin was everything.
- by SteamChip November 15, 2009 3:55 PM PST
- Increase market share?
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(63 Comments)Increase GAMES for the platform