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Palo Alto, Calif. – Call it one of lifes funny coincidences that the address of the new Apple Computer retail store on trendy University Avenue here in the heart of Silicon Valley adds up to “10.”
Thats because Apples future hinges on the success of “10,” as in Mac OS X (the Roman numeral), the operating system Apple chief executive Steve Jobs introduced to Macintosh users earlier this year as the future on which he is banking the company.
And the success of that OS, it turns out, rests in part on Apples new string of retail stores. Located at 451 University Avenue and set to open this Saturday, the latest Apple store – the ninth to be opened by the company since mid-May – is an important vanity showcase for the Macintosh computer, OS X and Apple developers. The company, said Ron Johnson, senior vice president in charge of Apples retail strategy, is counting on the stores to help it with its 95/5 problem: with only 5 percent share of the market for personal computers, Apple says it needs to get the other 95 percent of users acquainted with its technology.
“Were here to expand Apple market share,” said Johnson, who joined Apple 18 months ago after a 15-year stint at retail giant, Target. Though he wont say how much market share Apple hopes to gain through the 25 stores it expects to have up and running by years end, Johnson noted, “If we do great stores in the right places where people gather. If we have phenomenally well-trained people, we think our market share will grow dramatically.”
A poster on the wall of its store says it all. Under a headline that reads “95/5,” Apple tells store browsers that if only 5 percent of the “95 percent of non-Mac users makes the switch to Apple, the company can double its market share and grow its user based from the current 25 million worldwide users to 50 million.”
The stores certainly cant hurt, says Chris LeToqc, an industry strategist in Los Altos, Calif. “When you have a vendor in a niche market, its important that they be able to control their message from start to finish. You cant do that today in most retail outlets because the salespeople there will try to sell you something else,” says LeToqc. “In an economy with financial and market problems, the people who gain market share are the ones who compete the best.”
Apples Palo Alto, Calif. store is similar to the eight other company outlets in every way except one: Its the first street-front store. Apples other stores are located in high-traffic malls like the Mall of America in Bloomington, Minn. and Tysons Corner Center in McLean, Va.
The approximately 50-by-80-foot stores all feature blonde-wood floors, flanked by blonde-wood countertops decorated with numerous Macintosh computers, from the companys popular iMacs to its ultra-slim, ultra-cool notebook computers. The latest version of OS X – Version 10.1, released last week – is also for sale.
Black shelving running down the middle of the Palo Alto store – the companys first outlet in Northern California – and houses more than 600 software titles. “We think,” said Johnson, “that its the largest collection of Mac software anywhere on the planet.”
Unlike other computer stores, where technical specifications are played up, the Apple store is built around “solution bays,” says Johnson. Each “bay” is designed to showcase Mac solutions for different functions: theres a digital photography bay, a digital movie bay built around the companys iMovie and QuickTime audio and video technology, and a music bay showcasing Apples iTunes music software and the MP3 devices that work with the Mac. The company has also set up an area for kids – with iMacs set on a tabletop at kids height and flanked by shelves of educational and games software.
At the back of the store, users will find a “Genius Bar,” where they can ask questions of two tech support specialists or bring in their Macs for service.
Johnson says Apple last week saw an average of 7,100 people visit its stores around the country. Its not saying how much in sales the stores are racking up, and instead says the goal of the outlets are to help build Apple awareness and support the companys other retail partners. Stores in the Saddle Creek mall in Germantown, Tenn., and the Crossgates mall in Albany, NY are set to open next.
Though Apple co-founder Steve Jobs was not on hand for the press introduction of the Palo Alto store, Johnson said he wouldnt be surprised if the companys hands-on leader stops by often. After all, the store is located within walking distance of Jobs Palo Alto home.