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Despite revenue decline, Apple Stores "turn the corner" - report

post #1 of 27
Thread Starter 
Apple's retail stores continued their year-over-year revenue slide last quarter, but a new report predicts that the brick-and-mortar locations could show growth again before the end of 2009, thanks, in part, to Windows switchers.

In a new investment analysis from Needham & Co., Apple's retail outlets are described as the "fourth leg of the stool." That echoes Chief Executive Steve Jobs' comments that his company is built on three legs: the iPod, the iPhone and the Mac. But analyst Charlie Wolf believes that Apple Stores justify the fourth leg because they play an instrumental role in attracting Windows users to the Mac platform.

Wolf highlights the stores' minimalist design and simple shopping experience; the abundance of employees and its effect on wait times; and the plethora of experts available to help customers.

"We estimate that Windows visitors represented well over half of the 150 million visitors to the stores in fiscal 2008. Indeed, the growing volume of traffic has created its own challenges," the report states. "With the growth of the Mac community, Apple has had to allocate increasing resources to servicing this community through the Genius and iPod bars."

He added: "These post-sale services are, of course, a major reason Windows users have switched despite the perceived premium at which Macs are priced. So it’s imperative that Apple maintain the level of service it provided when the Mac installed base was much smaller."

Wolf estimates that since 2004, Windows switchers have nearly doubled the size of the Mac install base. Of the 492,000 Macs sold in Apple Stores in the third quarter, more than half were bought by Windows users. That means that about 25 percent of Windows switchers bought their Mac at an Apple retail location.

Though the Mac-maker's retail year-over-year revenues increased 3.5 percent, the company expanded its total number of stores in the same period by 20 percent. As a result, the recession had a major impact: Year-over-year revenue for the June quarter, based on same-store totals, declined 14 percent.

But the June quarter showed a noteworthy improvement over the March quarter, when the year-over-year impact dropped retail revenue 17.2 percent. Similarly, same-store Mac sales were down 14.1 percent in June, compared to the 21.9 percent decline in March. The June quarter was boosted by the debut of new MacBook Pro models and a price cut.

A Needham & Co. chart shows the exponential growth of the total install base of Windows switchers.

"In our view, this signals that the recession-induced decline in same-store sales should diminish going forward," the report states. "In the year ago September quarter, same-store revenues grew 15.5 percent, setting up a difficult comparison for this September. However, same-store sales growth could conceivably turn positive in December."

The nearly half-million Macs sold at retail locations was 16,000 more than the 476,000 consumers bought in Q3 2008. With half of all new Mac purchases coming from customers who never owned a Mac before, Apple's One to One program might play a large role for those consumers. This past quarter, the "new and improved" One to One Program launched. The new program resulted in a record 667,000 personal training sessions, designed to help people become acquainted with their new Mac.

Taking a cue from Apple, Microsoft intends to open its own retail locations this year. One of the Windows-maker's first stores will be located near an already-established Apple Store in Mission Viejo, Calif.
post #2 of 27
Interesting use of a completely incomprehensible graph that is not explained in the text of the article.

"IB Windows switchers" vs. "New Windows Switchers"???
WTF?
In Windows, a window can be a document, it can be an application, or it can be a window that contains other documents or applications. Theres just no consistency. Its just a big grab bag of monkey...
Reply
In Windows, a window can be a document, it can be an application, or it can be a window that contains other documents or applications. Theres just no consistency. Its just a big grab bag of monkey...
Reply
post #3 of 27
Quote:
Originally Posted by Virgil-TB2 View Post

Interesting use of a completely incomprehensible graph that is not explained in the text of the article.

"IB Windows switchers" vs. "New Windows Switchers"???
WTF?

I was wondering the same, i found some reference of IB in Wikipedia, but nothing that poped out.
http://en.wikipedia.org/wiki/IB

i also didnt found a link on the AI-article.

maybe IB Windows means something like "international business windows" while "new windows switchers" means "private user"

anyone?
post #4 of 27
Great job Apple, keep up the good work :-)
post #5 of 27
Quote:
Originally Posted by fabiopigi View Post

I was wondering the same, i found some reference of IB in Wikipedia, but nothing that poped out.
http://en.wikipedia.org/wiki/IB

i also didnt found a link on the AI-article.

maybe IB Windows means something like "international business windows" while "new windows switchers" means "private user"

anyone?

It's in the graph caption.
Quote:
A Needham & Co. chart shows the exponential growth of the total Install Base of Windows switchers.

...emphasis mine.
post #6 of 27
"IB" must mean "Installed Base", since it appears to grow by the same amount of "New Windows Switchers" each quarter.
post #7 of 27
Quote:
Originally Posted by Guartho View Post

It's in the graph caption. ...

Yeah, *now* it's in the graph caption.
In Windows, a window can be a document, it can be an application, or it can be a window that contains other documents or applications. Theres just no consistency. Its just a big grab bag of monkey...
Reply
In Windows, a window can be a document, it can be an application, or it can be a window that contains other documents or applications. Theres just no consistency. Its just a big grab bag of monkey...
Reply
post #8 of 27
Did Needham actually use the term "Mac Faithful" to chart the number of returning Mac buyers? Is that how they would refer to customer loyalty for any other company and to any other product? Of course not.

After all these years, you'd think this idiotic cliche would finally go the way of the Dodo bird. But you'd be wrong.
Please don't be insane.
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Please don't be insane.
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post #9 of 27
The graph also appears to have been created in a 1980s version of Excel.
post #10 of 27
The Apple Store in SOHO sold me on my first iMac. It was the first time I ever got to see what one could do. Comp USA had Macs at the time but there was no content in them, so you couldn't really get a feel for what iLife was like. Much like the Best Buy boutiques.

The experience of the Apple Store is a very powerful inducement. It removes the rumors and hype about what Macs supposedly can't do and lets you see what it's really all about.

For a Windows user, a Mac is a glass of ice water to people in hell.
post #11 of 27
I thought Ballmer's idiotic decisions were Apple's fourth leg.
post #12 of 27
Apple has set the bar for computer retail extraordinarily high. And the past is littered with failures. It will be fascinating to see how Microsoft, with its abysmal record of creativity, and an entirely different business model, will compete.
A.k.a. AppleHead on other forums.
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A.k.a. AppleHead on other forums.
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post #13 of 27
Quote:
Originally Posted by Cubert View Post

I thought Ballmer's idiotic decisions were Apple's fourth leg.

Ballmer is the little rocket engine under the stool that's been propelling it skyward. So much hot air simply must cause an equal and opposite reaction somewhere
post #14 of 27
Quote:
Originally Posted by Galley View Post

The graph also appears to have been created in a 1980s version of Excel.

Right on! I see so many of these lame charts! One of the best kept secrets is iWork's charting capabilities! Just excellent.
post #15 of 27
Quote:
Originally Posted by Cubert View Post

I thought Ballmer's idiotic decisions were Apple's fourth leg.

Funniest post of the day! Or Ballmer is Microsoft's "middle leg!"
post #16 of 27
The "IB Windows switchers" line on that chart will skyrocket as soon as the Microsoft Stores open.
post #17 of 27
Quote:
Originally Posted by Robin Huber View Post

Apple has set the bar for computer retail extraordinarily high.

I'm not so sure on this one. Every time I've gone to the Apple Store to purchase something small, like a cable or piece of software, there is a lineup a mile long for the one cashier at the back of the store, and all those guys with credit card machines strapped to their hips are either busy with other customers, or busy chatting with their buddies.
post #18 of 27
Quote:
Originally Posted by guytoronto View Post

I'm not so sure on this one. Every time I've gone to the Apple Store to purchase something small, like a cable or piece of software, there is a lineup a mile long for the one cashier at the back of the store, and all those guys with credit card machines strapped to their hips are either busy with other customers, or busy chatting with their buddies.

Wow, sounds like your store needs an upgrade. There are four cashiers in the one I go to, up front by the door, along with the usual mobile guys.

As someone who was a part timer on the opening crew of one of the first stores (Newport Beach, CA) the report that there are too many customers is sweet revenge against the many naysayers who predicted utter failure of this enterprise.

I do hope Apple takes note and you get better service in the future at your branch.
A.k.a. AppleHead on other forums.
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A.k.a. AppleHead on other forums.
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post #19 of 27
Quote:
Originally Posted by guytoronto View Post

I'm not so sure on this one. Every time I've gone to the Apple Store to purchase something small, like a cable or piece of software, there is a lineup a mile long for the one cashier at the back of the store, and all those guys with credit card machines strapped to their hips are either busy with other customers, or busy chatting with their buddies.

So why don't you just walk up to one of those "chatting with their buddies", and say that you'd like to buy X? When I've "barged" in, and not even to buy something but to ask a possibly "dumb" question, I've yet to have any of them tell me to get lost.
"you will know the truth, and the truth will
set you free."
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"you will know the truth, and the truth will
set you free."
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post #20 of 27
I think it means "irritable bowels", which most Windows users suffer from....
post #21 of 27
Its sad to see that we, the mac faithful, are not increasing, nor ever have. We are always the same. To bad we can't get some of the IB's to become faithfuls.

How about an a new add campaign:

I'm a MacFaithful, I'm an IB.

This will work.
post #22 of 27
Quote:
Originally Posted by thrang View Post

I think it means "irritable bowels", which most Windows users suffer from....

I was thinking "incompetent boob", but your definition is more suitable, methinks.

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

Reply

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

Reply
post #23 of 27
Welcome Windows switchers!
post #24 of 27
Hi Macs,

This quote taken from report will never happen at MS Store:

Apple's One to One program might play a large role for those consumers. This past quarter, the "new and improved" One to One Program launched. The new program resulted in a record 667,000 personal training sessions, designed to help people become acquainted with their new Mac.


Since you would have to have each PC representative for Dell, Sony, Gateway, Lenevo, HP, Compaq (lots more) including MS to support this program.

PC users can laugh at us, but they just don't get it, Mac user get total service, no pointing the finger at PC manufacture or vice versa to MS. Apple is only computer maker that can offer this service and it is unique marketing startegy that is working.
post #25 of 27
Quote:
Originally Posted by Virgil-TB2 View Post

Yeah, *now* it's in the graph caption.

Yeah, along with a indication that someone needs to go back to math class.

Wikipedia: Exponential Growth
post #26 of 27
Quote:
Originally Posted by cdetdi View Post

Yeah, along with a indication that someone needs to go back to math class.

Wikipedia: Exponential Growth

I didn't think that curve looked right, but I was too busy trying to figure out what the hell IB meant to think about it.
post #27 of 27
Ha, I'm responsible for three of those IBs! : D (counting myself..)
You're welcome Apple!

I might have converted one more too just some days ago..

"Oh you run Mac?"

"Yeah"

"I don't think it's for me.. I need to right click you know.." *smirk*

"Really. Well, try clicking on the right side of the trackpad here.."

"Oh! You can right click! Is that new?"

"Erh, no. It's OS X. You just need to set it in the preferences.."

"And all apps like recognize right clicks and so?"

*secret mac-smile* "Yeah dude, where you've been like the last decade?"

Too easy.
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