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http://www.macnn.com/articles/02/01/29/analyst:.caution/

Analyst: caution for Apple retail strategy

updated 06:25 pm EST, Tue January 29, 2002

 
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Needham & Company's analyst Charles Wolf issued a word of caution against Apple's retail strategy, saying that "Apple appeared not to be transforming high foot traffic numbers into sales of computers so far. At least 2 percent of the stores' visitors must buy computers to make the company's retail store gamble pay off."


by MacNN Staff

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  1. MacNN.com Reader

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    01/29, 08:13pm | report spam | Reply |

    Short-sighted

    Seems incredibly short-sighted to me. Why 2%? Doesn't raw numbers make more sense? And how do they now more customers don't go to the retail store to see the products and then go home and order their machines on the Apple Store online later?

  1. sc_markt

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    01/29, 08:52pm | report spam | Reply |

    Store comment

    I would never order a computer from Apple's web site. I would rather order from an online place such as smalldog where I don't have to pay tax.

    - Mark

  1. MacNN.com Reader

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    01/29, 10:14pm | report spam | Reply |

    Sales

    When counting sales attributed to the stores they have to include sales from places like Mac Mall that are enhanced by the stores. I am sure many people went to the store, saw what they liked and then went online and bought a Mac. No sales tax, free ram etc etc....the best of both worlds.

  1. MacNN.com Reader

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    01/29, 10:31pm | report spam | Reply |

    That's the whole point!

    Bean counters don't get it. Never have and never will. 2%! Jobs said they had 800000 people through in Nov-Dec. That means they would have to make 16000 sales. 8000 per month, 2000 per week, 285 a day, about 28 per hour (given the store is open 10 hours a day). So One computer every 2 minutes. THAT'S REDICULOUSE!

    I hate bean counters. Bean counters (at Roper Industries) bought out a company called Gatan. Gatan was mostly Mac based (made special digital cameras for electron microscopes). The bean counters there made them go all PC. So now we have to switch everything over to PC in our lab.

    I hate bean counter. I wish they would all die.

  1. gregbuchner

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    01/29, 11:10pm | report spam | Reply | delete

    Sales

    Well, from what I hear, the Mall of America store had been selling 18-20 Macs a day before the MacWorld SF Keynote address. Including over 30 (I think) on the Saturday after Christmas. One of the local CompUSA's that has an Apple employee there was happy to be selling one Mac a day there.

  1. MacNN.com Reader

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    01/29, 11:36pm | report spam | Reply |

    ...

    Like was already noted, how do these bean counters determine the amount of sales Apple gets from people who are persuaded to buy a Mac at an Apple store, but then buy a Mac online? The bean counters don't understand that the stores are a form of advertising for Apple.

    Come to think of it, bean counters don't understand much of anything. All the one's I've ever met were excruciatingly dumb.

  1. dneumann

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    01/30, 04:31am | report spam | Reply | delete

    Stores are Ads w/ income

    The stores don't have to make a single dime directly to be a huge win. I recall that Apple's original iMac ad budget was $100 million. These stores are just like that only longer lived and more interactive than billboards and TV commercials. And BONUS! they actually make some money too! At a net cost (loss) of $8 milllion, that sounds pretty awesome to me when you look at as an advertising expense which is precisely how I view it.

  1. G3CD

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    01/30, 04:39am | report spam | Reply |

    It's all about MARKETING

    What bean counters don't get: the retail stores needn't sell computers over the counter to account for some revenue. They're more of a marketing instrument - whoever goes in there, experiences the Mac and its capabilities better than any ad or tv spot could ever achieve. The person is later more willing to switch platforms, and that's what it's all about. Some beancounter please calculate how much the avereage Apple store costs to establish and then on a monthly base. Compare these costs to the advertising budget it would take to keep 800.000 people occupied with the Mac for 10 minutes. Add to that a couple of xx-million "contacts" with people just passing by and - while not entering the store - being reminded of Apple and it's different stance towards computing. From my experience, it would propably take something in the vicinity of 50 million bucks annualy to achieve anything nearly as distinct and remarkable with classical advertising and online ads combined. That's why I have no doubt that the retail stores pay off for apple, no matter how many CPUs they sell.

  1. poemtree

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    01/30, 03:18pm | report spam | Reply |

    Gamble?

    Needham is a fool...

    Apple needs to increase public awareness and debunk the price, performance and functionality myths. What better way to do that than take the case to the public. TV is good, but not great (remember the cheesy 30 minute infomercials Apple ran around 95-96?). People can't test-drive a Mac on the TV screen.

    There is no gamble involved. Apple has $4.4 billion in the bank (per Q1 conference call). The stores do not need to be profitable to survive. They just need to show people up close how great the Mac is. Apple can justify them as advertising and marketing expenses (and even as adjunct tech support centers, I got my dead Airport Base Station repaired under warranty at the Clarendon store recently).

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