Apple: It’s the Stores, Stupid!

Saul is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

When trying to explain Apple's (NASDAQ: AAPL) phenomenal success, some credit their innovativeness, their ability to reinvent whole categories of electronic gadgets which then become must-haves, Apple's cloud in which everything works together, or their huge generation of cash. They rarely mention the Apple Stores. However, I believe that the Apple Stores are one of the most important assets that Apple has! An asset which is very instrumental in attracting and keeping their incredibly loyal base of customers.

You may be thinking to yourself that the stores only account for a small part of Apple’s revenue, but let me explain…

Last fall I spent three months in New York City. I was thinking of getting an iPad, but I was hesitant, being an older guy, definitely not a techie, and not really knowing what an iPad was or what it did.

I wandered into the Apple Store on the Upper West Side, and here were all these friendly young people in blue shirts ready to help me. One of them took me to a demonstration table with a dozen iPads on it. She helped me get started with one, and then let me play with it myself for as long as I wanted. I bought it. 

What a difference from the usual big box shopping experience, where you have to search for someone to wait on you, and then he or she usually won’t have a clue about the product, and the product itself is in a closed box. 

Before I left the store they helped me sync the iPad with my Apple account and my computer. I was back the next day for a free workshop on “Getting Started with your iPad,” and a day or two later for another on “Going Further with your iPad.”

The workshops were downstairs, where there must have been twenty large tables, each with classes or demonstrations of one sort or another. The place was full. These workshops each had 20 to 30 people, most who were over forty like me, and many of who had never had a Mac product before. The workshops were clear, helpful, and supportive. Syncing with your iPhone and Mac through the cloud was demonstrated. The customers went away entranced.

When I had a question I couldn’t answer a few days later I walked back into the Apple Store and the first blue shirted marvel I encountered solved it for me in a flash.

A month later I bought a new iPhone 4S. The store was sold out so I bought it online because I knew that I could bring it into the Apple Store and that someone would help me set it up. Then I took the same kinds of workshops as I had for my iPad: “Getting Started with your iPhone 4S,” etc., as well as workshops like “Using the Cloud,” “ Getting More out of your Mac” and “Getting Started with Lion.”

My iPhone wasn’t counted as a Store sale but it was, as the availability of the Store and the workshops gave me the confidence to get the phone.

Once I had a problem that the blue shirts couldn’t solve and they sent me to the Genius Bar, where a tech support person solved my problem. All of this is free!

The workshops were going all day long and were filled with the same kinds of people as me. All of them went away happy. Many of the people who had always had PC’s were saying that they were going to get a Mac computer.

Do you think any of these people who were in these iPhone workshops will buy an Android or Windows phone when they want a new smart phone? Not a chance! This store experience has locked them in. It makes the Apple ecosystem extremely sticky. People who get started in this system simply aren’t later going to go out and get a different product that doesn’t fit, just to save a few dollars, or to get a cool feature.

Apple, after all, aims to sell products that “just work.” Their target customers aren’t techies, but are people like me who want their products to be simple and elegant and “just work.” This level of support is incredibly attractive for us. As I said above, the Apple Stores are one of Apple’s key assets.

Google (NASDAQ: GOOG) Microsoft (NASDAQ: MSFT) and Samsung are starting to open stores as well to compete, but they are years and years behind.

A look on the Microsoft Retail Store website shows 31 store locations. (Apple has well over 300). But of Microsoft's 31 locations, 10 are listed as "Coming soon," which leaves 21 functioning stores. The pictures of the stores on the website shows that Microsoft has copied the look and feel of the Apple Stores, much as they try to copy everything Apple. The difference between 21 functioning stores and over 300 is huge when it comes to finding a store! For example when I recently had a problem with my iPhone in San Antonio, Texas, I found there were two, TWO, Apple Stores in San Antonio, of all places. And a nice young man solved my "intractable" problem in five minutes or so by reinitializing my phone.  

A search for Google retail stores shows that Google plans to open a first stand-alone retail store in Dublin after a trial with a mini-store inside a computer store in London. The article noted that this represented a new front in Google's war with Apple (again, copying).

Samsung had a single "Samsung Experience" store in New York City which closed last December, and is planning to open Apple-like stores in Canada as a prelude to invading the US with them. Their first store opened recently in Vancouver, looking exactly like an Apple Store. Believe it or not, the pictures show that they even have their salespeople in blue tee shirts, have a genius bar of experts, and have the accessories on the wall.

As I said, Microsoft, Google and Samsung are trying to catch up, but they are years and years behind.


I have a long position in Apple and no position in either Google or Microsoft. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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