The Genius of Apple Stores
We have written critically here in the past about Apple Stores (and you readers have responded with 100's of comments). This was during a time when Apple stores were first coming out, and there were some growing pains. But as I type this from my local Apple store in Chestnut Hill, Massachusetts I have nothing but good things to say. It is 5 PM on a Sunday, and the store is packed. The mall isn't but this store is. This has been my experience recently visiting a number of Apple stores, no matter what, they are packed. And it isn't just people at the Genius bar. It is people looking at iPods, iPhones, Apple TVs, and, of course, Macs. There are people being trained by Apple staff members and people who have appointments with "personal shoppers". Then there is the Genius Bar where people come in with iPods that need resetting or replacing. Macs whose hard drives are dead. Or me, who had an Apple Cinema display that was non-functioning. After a quick test the Genius took care of all the paperwork to have it sent back to Apple to be fixed. It was handled quickly, politely, and without a lot of back and forth concerning paperwork (yes, I had Apple Care).
On the way out I bought an extra power adapter for my Macbook Pro and eyed the new Mac mini longingly. Such is the genius of the Apple store, where Apple products can be bought from knowledgeable, pleasant associates and, if need be, also be repaired by very knowledgable and pleasant Geniuses. As my item was being fixed I couldn't help but listen in to the other Genius conversations around me. There were frustrated users who, when asked if they were running Leopard or Tiger answered, "Safari". Nary a snicker or condescending tone from the Genius, just some follow-up questions to help this person out.
This is the zeitgeist of the Apple user experience made retail.
Yes, to be sure, there are issues, as there are always going to be when humans are involved. There are stupid salespeople, not-so-knowledgeable Geniuses, and the incontrovertible fact that they cannot help everybody. But, in spite of all this, the Apple retail store strategy has proven to be, well, Genius. The physical presence of Apple stores enables people to interact with the brand in a way that Apple can control entirely. Because of this there are things that you would never happen in other stores. Like no electronic security to catch shoplifters that subtly reinforces the notion of trust between Apple and its users. Like a tech support system that is unparalleled in the industry (don't get me started about Geeksquad). All in a no-pressure environment.
Like the original iPod Apple was lambasted when the stores were first announced. The thought was they were making a Gateway-like move that would soon lead to shuttered stores. But Apple stores aren't just stores. They are an example of a physical extension of Apple's core brand premise. I saw today in that store the same vision I observed when booting up my Mac Plus for the first time. The extreme attention to detail, both physically and in terms of human design, throughout the space. I saw something different.
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As Apple’s sales success continues I am apprehensive about the prospects of the Genius bar. Though the demand for sales support rises in proportion to sales, the demand for Geniuses (which is an after-sales support service) is dependent on the installed base. Apple will thus have to keep spending more and more to support the Genius Bars or they will have to start rationing free service, probably cutting off Apple products below a certain vintage.
Apple’s great store support is dependent on the fact that you only ask questions about the 5% of the things that you can use a computer for. It is the equivalent of the snack bar at a movie theater. If you want real food, then you need to dine elsewhere.
Apple has driven all its resellers out of business, and this latest “innovation” is a last gasp for marketshare.
It is a great irony that Jobs lured Sculley away from Pepsi by saying “what do you want to do, change the world or sell kids sugar water for the rest of your life.” It is Apple that now sells the “sugar water.” iPods, iPhones, computers to watch uTube, movies, videos, TV and music. The teenagers that have now become Apple’s base demographic are not going to change the world, are not “the crazy ones,” and the cereal companies have been pushing sugar on them for generations.
Oh, and they are fickle, too. The Walkman’s ride didn’t last forever
The stores are going to come crashing down with a great thud someday. Not because you can’t get great customer service on your narrow 5%, but because the long-term trends in retail are that nobody survives. There has never been a totally vertical company in retail. Apple may be the first (though they are not a true vertical company, since they now outsource everything they manufacture.)
Unique? Yes.
Competent? Yes.
Better than regular resellers? Debatable.
Profitable? Yes, for a while.
Look at the overhead: employees, rent, inventory are all extremely high. It works fine when sales are strong, but when sales are weak it sinks you quickly, which is why the retail landscape is littered with blow-outs. Apple has nobody to merge with, nobody they can buy, and there is no player to buy them out, either.
Enjoy the stores while you can, but something has to change eventually. The good times don’t last forever, and over-expansion comes back to hurt every company.
Apple’s best strategy for growth right now is to lower their prices, but because they have created all this overhead obligation they will be reluctant to do so. When they finally cut prices it will be too late.
Fortunately, there are many channels outside of the Apple Stores, so when the stores retract, Apple itself will still be fine. The American stores were the first to open, and will probably be the last ones to close.
Manufacturers belong at the top of the pyramid. Apple continually makes their world more difficult than it needs to be.
I still have to witness much use of the new addition to the Ó Boutiques: One-to-One sessions next to the E=MC^2 Bar.
I supposed that is either good or bad whichever way you look at it. It is bad knowing there aren’t that many Mac “newbies” switching or that may be good since the Mac is so intuitive, there isn’t much a need for One-to-One sessions.
How is O2O at your Ó Boutique - ahemm, Apple Store.
Steve,
that was a very well-written and thoughtful comment. However you are failing to consider two important points:
1. Apple’s retail stores are useful regardless of whether or not they make money due to their ability to get Apple products into the physical hands of shoppers. Out of sight, out of mind.
2. The complete lack of shelf space in existing retail chains made these stores necessary. No doubt this was due to Apple’s dismal market share, which created a vicious cycle resulting in ever decreasing shelf space. Ironically, now that Apple’s market share is rising (due in no small part to the stores) the larger chains are once again interested in carrying Apple products.
You’re right that retail almost always fails, ultimately, but in the meantime, they will play their part in increasing Apple market share, which experts now say should be well over 10% within the next year or two.
Lastly, you sound as if you are actually hoping that this happens. If that’s true, then you’re just being silly. the market is far better off with multiple strong players. Without Apple, it’s a safe bet that Windows would be less than it is today and the same goes for Apple.
@Steve & tfslayton:
Both of you have good points but I am leaning with TFS’ points, in this case.
Why? Apple’s slice of the pie is so humble that there is plenty of upside potential from sales, revenues, and market share (both real and inferred). Every one of those are heading upwards at the expense of the PC (hence, MSFT) market.
Like TFS mentioned, Apple has only but fewer than 10% of the US domestic market (<5% global) and that is without the enterprise segment. Can you just imagine if the iPhone enterprise strategy works as planned? It will be more of the same for Apple for many, many more years, if not decades of expansion.
As for the Apple Stores, they merely seems catering for the faithful and casual shoppers wanting to jump in but all statistics points to the Apple Store as the prime catalyst that has lifted the whole Mac platform’s mindshare and real share in less than a decade. They will do just fine in the long, long run. How long? Who knows but I doubt in the next 20 years.
What Steve C.‘s pessimism brings in is the Gateway case study. That is completely a different story. Gateway is/was only a Microsoft cog trying to elevate its mindshare by bringing out expensive storefronts when a PC customer is but a call/website away from going Dell or HP at Best Buy. It just doesn’t work when your partner(s) are selling the same old pie from the same oven. Not so with the Mac experience at any Apple Store.
The Apple Stores are not trying to be Gateway Country-esque stores and will never be as long as the Mac and its supporting casts (yeah, the iPods and iPhones, too) are better* than the rest out there.
Conclusion: Long live the Apple Stores.
*better = (from The Free Dictionary) is defined as:
adj. Comparative of good.
1. Greater in excellence or higher in quality.
2. More useful, suitable, or desirable: found a better way to go; a suit with a better fit than that one.
3. More highly skilled or adept.
4. Greater or larger: argued for the better part of an hour.
5. More advantageous or favorable; improved: a better chance of success.
6. Healthier or more fit than before.
...Well, 5/6 fitting definitions are not bad.
Oh I like the stores okay, but like many restaurants that I have loved, I can sense that they won’t be open forever. The Stores will last a while though, and will undoubtedly go through many more changes, too. Apple has been running in the black, and they have a healthy cash reserve, too, which most small businesses don’t have. But the big guys do fall. COMP USA seemed pretty secure, too, so did Circuit City. It’s expensive to own inventory, and now when they drain the channel, they are also draining their own sores for a refresh.
I agree something like the stores was needed, however, they “work” for a shifting demographic. They don’t NEED them for long-time loyal users, only for newbies.
Think of it this way: I have bought 10+ Macs over the last 20 years, but a PC iPod user spends $150 and may never buy again. The Stores cater to the iPod customer, but are just over-lap/redundancy for the big customers, at very high rent. No matter how many Apple Stores they build, there will still be a 100:1 ratio for places to get a PC. The problem wasn’t the demand for computers, or the places to buy them, but the underlying reason why people preferred a PC. It had a lot to do with support, which is why Apple has the genius bar, but the genius bar has very limited support, it doesn’t really solve the issue.
My point is that Apple needs the small business market that the resellers cater to. The Stores will never fill that niche, especially with premium priced products, like on displays. The Apple Store is a crappy store compared to what other computer stores offer. They have no selection, which puts them back where they started.
There has always been this funny assumption that Apple should and wants to take over the world, but they have never been willing to embrace an obvious strategy that would work: give people what they ask for, treat people fairly, value the services of resellers. They are still zero for three on that score. Other computer manufacturers will continue to fill that vacuum as long as Apple leaves it open. The stores don’t close this gap, they widen it more. The stores win the battle and lose the war, both financially and politically.
Only an idiot could have a superior product and fail to be able to sell it. Steve Jobs is that idiot. The stores were necessary because of his continuing marketing failures; they are not a sign of his prowess.
Today Blockbusters is soliciting to buy all of Circuit City for a song (~$1B) and MSFT is mulling to create its own Windows retail showroom - a la Apple’s own.
Hmmm…if imitation is the sincerest form of flattery…then Apple’s Ron Johnson must be blushing red right about now. Ron J. - being from our fave store Target - was the man who created the Apple Stores, not SJ.
So, yeah, SJ might be an “idiot” for not inventing the idea but for me he was a genius for hiring that brilliant retail man.
Apple needs the small business market that the resellers cater to. Steve C.
If ever Apple gets serious with its “enterprise” push with the iPhone and the Mac, it would need the support of VARs and small shops like in the old days of your man, Sculley.
The VARs can be an entirely Apple subsidiary or an affiliate like CDW or Ingram Micro that offer strong support to medium-large enterprises. The small shops of yesteryear that can cater to the smalltime biz and entrepreneurs like myself.
But Apple is being very careful of not falling into the old trap where the retailers shifts their attentions to competitors’ wares. This happened at Sears with the Performas & LC lines, CompUSA many times over, and Circuit City for a brief moment. Apple has learned these very mistakes and that is a motivation for the Apple Stores today - they control pretty much everything that goes on the shelves and salesfolks trained and employed by Apple themselves.
So, a future subsidiary of the Apple Stores may be in the offing to offer support for the enterprise. The small shops will just get their support from the likes of Radio Shack, et al. After all, RS already are authorized iPod retailer. RS would be a perfect fit for small shops.
Given how everyone is dressed, I suspect Steve Jobs might have had a little to do with it. LOL.
If imitation is the sincerest form of flattery, then his clones must be necessary so he can flatter himself.
Is that true about Microsoft?
The Big Box retailers shift constantly, which is why Apple needs their own stores. I agree on that point. But the VAR’s need to be independent, that’s what makes them a VAR. All the PC companies that currently exist would sell and support Mac’s if Apple would just give them a fair shake.
I wish it wasn’t true, but Apple is the one responsible for their dismal market-share. Also, to some extent, you and me, since our willingness to overpay has given them an inflated ego.
Funny, the infatuation with how “cool” they are in media, commercials, etc., is really just a cover-up for how uncool they are in real life. Steve Jobs is petty, demanding, insulting, self-aggrandizing, greedy, etc. Three cheers for the OS (Next) and all that, but he is still a liability for the company as a whole. Like the Tim Man, if he would just grow a heart, he would be great. But like the Lion, he is too afraid. So we get stuck with the scarecrow. He flaps his arms, but the world ignores him. Other companies are jealous of his success, you have that right, but the companies he needs most (VAR’s) he won’t do business with, and they have all abandoned him. Deservedly so.
We all reap what we sow. Not even Apple can reprogram that.
SJ, however great he has been for Apple’s fortunes, won’t stick around forever. I can hear <yeah! down with the dictator!> from Steve C. across the tubes just about now.
Reality is SJ will hand over his reign to someone we already know or someone we completely know nothing about soon enough. That is pretty scary for many. That may also be reasons enough to pop the bubbly or crack the wide-mouthed Guiness. Take your pick. I just hope that guy (or gal) has enough guts to fill SJ’s outfit - not to redo SJ’s antics but to grow out of his immense mold. That will be one tough job for any credible man (or woman).
So, we agree that Apple need the VARs, autonomous and blessed to power the retail channel - for the enterprise’s sakes. Apple might just have to do this in a limited way at first to test the waters. It has been a long time since they dealt with the enterprise lagoon so give them the B-o-D.
Apple might succeed. Apple might fail initially. It depends on what is going on with these VAR’s Windows-centric mindset. Gartner proclaims Vista is “imploding” and that OSX has a 2-3 year window of opportunity until Win7. Perhaps they are right.
These Mac VARs wannabes have to really give a hot (compared to a warm) fuzzy to SJ and Co. for them to give their blessings like you’re proposing there^^. Anything less than face value will be slapped, unfortunately.
Steve C, your inane comments about Steve Jobs show just how much you don’t understand re his contribution and the Apple story. Will we see your name listed as one of the most influential persons of the digital age? Will we see your name associated with game changing and era defining products such as the Mac, iPod, iPhone etc. Don’t think so. Give the man and the company some credit, instead of trying to drag down their success. So much negativity. Sheesh.
Cognitive dissonance is a funny, sad thing to watch.
All the VAR’s I’ve spoken to are interested in one thing: selling products profitably.
If Apple can’t supply that basic demand for them, then how will it do it for itself any better? The “genius of The Apple Stores” (see headline) just seems like an oxymoron to me. Anyway, I think you and I agree on this point Robomac.
If and when Apple gets in trouble, it won’t be because of their computers, but because of a reliance on a revenue stream that disappears and the overhead of the stores. It takes more than one hit to hurt a giant, in any case.
Chubba, I am not negative (or inane) I am just describing the situation as it exists. “Genius” is false praise, unless narrowly crafted. Is Wal-Mart a genius store, or Target? Apple is a retailer. How does one even be a genius retailer? All retail is is a warehouse. Decor and knowledgeable staff is just basic competency, isn’t it? A lot of people get that from PC VAR’s, just not many Apple users anymore.
As far as what I will contribute to the digital age goes, I ain’t dead yet. lol
Sometimes I wonder where Apple would be if they didn’t have “evil” Microsoft to compare themselves to. What if all the OS’s that used to exist still existed, and it wasn’t just down to these two players? Another question for another time perhaps.
Sometimes I wonder where Apple would be if they didn’t have “evil” Microsoft to compare themselves to.
I suppose you can inverse your equation the other way, too. What if Apple’s GUI never existed, would MSFT still dishing out plaintext DOS or that GEM (remember them? DRI, Atari ST?) completely obliterated them.
Your question is but hypothetical. We will never know unless one can travel back through time and keep young Bill (all of 17) from getting that $2000 loan, or something to that effect.