Remembering Apple's First Store
Reporter's Notebook. Seven years ago today, I walked through the first Apple Store, at Tysons Corner Center, in McLean, Va. |
Apple CEO Steve Jobs led the parade of journalists from a briefing in a hotel across the street to the store located on the mall's second level next to L.L. Bean. May 15, 2001, would open a new era for Apple, not that many people guessed on that day or at the store's May 19 opening.
The context was grave. Apple's PC marketshare was stuck around 2 percent, according to analysts, and the March launch of Mac OS X hadn't gone so well for Apple. The new operating system lacked support for basic hardware, such as the CD or DVD optical drives shipped on Macs. Major Mac OS X applications from Adobe and Microsoft were MIA. Apple hadn't yet released iPod (that would come about five months later). Apple's universe was the Mac and Windows XP was about to invade it.
Steve Jobs at a May 15, 2001, press event for the first Apple Store
Meanwhile, Gateway was struggling with its Country stores, which were largely located in lower-rent areas. Apple chose to open its first stores in high-priced malls. Gateway cut back its stores by 10 percent two months before Apple's Tysons Corner opening (Gateway shuttered them all in 2004). Lots of people, me among them, questioned the rationale of Apple becoming a retailer—and also competing with its dealers. If Gateway couldn't run a retail store, how could Apple?
But Steve laid out this 5-percent vision, the idea that through retail stores Apple could increase its PC marketshare against Windows boxes. I was a skeptic. But I did believe in the store concept for another reason: Marketing. The Mac shopping experience was terrible in typical computer stores. Apple could offer a better Mac shopping experience, create more community around the Mac and expose the brand to more people in high-trafficked malls. As a marketing investment, Apple Store made sense to me.
Steve Jobs speaks with Wall Street Journal columnist Walt Mossberg
As a way of marketing a Mac lifestyle, the stores made even more sense. The most successful brands sell a lifestyle. Apple had a Mac lifestyle, but a small community of customers who knew about it. The stores stood to extend the community and bring more people into it. But with all the hype about Windows XP, which launched in October 2001, it was hard to imagine Apple gaining any serious share against traditional PCs.
Apple made no initial gains. The early retail stores were successful marketing tools, but they failed to increase Apple's PC marketshare one iota. Steve's 5-percent dream was just that: a dream. But Apple remained committed to retail and to expanding the stores. Meanwhile, iPod started to really take off about 18 months after its release. Then came the iTunes Music Store in early 2003. The combination—Apple stores, iPod, iTunes and tons of broadcast and print advertising—started to pay off for Apple by early 2005. It didn't hurt that Microsoft repeatedly delayed Windows XP's successor.
View from front to back of the Tysons Corner Apple Store
Apple would reach marketing crescendo by 2006 and exceed that 5-percent share goal, with the retail stores acting as important anchors for branding, community, sales, service, support and training. Millions more people embraced the Mac lifestyle, largely because of the Apple Store.
During Apple's 2008 fiscal second quarter, ended March 31, retail store revenue rose an outstanding 74 percent year over year. Apple stores sold 458,000 Macs, a 67 percent year-over-year increase; for the quarter, Apple shipped nearly 2.3 million Macs. Average in-store sales increased 48 percent. Apple stores had 33.7 million visitors during the quarter, up 57 percent year over year. The company claimed that 50 percent of customers were new to Mac. Those are huge numbers.
During the same quarter, Apple's U.S. PC marketshare reached 6.6 percent, according to Gartner. Apple PC shipments grew 32.5 percent year over year. By startling contrast, U.S. PC shipments grew by an anemic 3 percent.
Early Apple Stores put software in the center
Apple's gains seemed damned improbable to me seven years ago, listening to Steve gleefully talk about doubling marketshare. To make the point, Apple opened its first stores with supporting "five down, 95 to go" marketing campaign. It was bold, it was ballsy because Apple was so far down the, ah, apple barrel looking up.
I took the above pictures on May 15, 2001, with a Canon PowerShot S20 digital camera. The S20 was the first truly compact, 3-megapixel camera; 3MP was huge at the time. As I snapped the images, I was struck by the store's stark, modern European look and the very smart organization. Apple laid out the store around digital lifestyle activities like photos and movies. The Genius Bar was sheer genius.
Today, Apple opened its largest U.S. retail store on Boylston Street in Boston. Some people might wonder why Apple put its biggest store in Bean Town. The Boston area has about a quarter-million college students. Need I say more?
Comments (2)
Did you say hi to Walt and Steve? Well, I think the stores would probably still be in their 2001 state if it hadn't been for the explosion in popularity of the iPod. Yes, OS X played a part too, but the experience iPod offered led to further interest in other Apple technologies. Apple capitalized on this opportunity and have been successful ever since. This has led to many opportunities, such as the strong sales of Office for Mac, strong investment in hardware design and superb products like the iPod Touch and iPhone.
Posted by Andre Da Costa | May 15, 2008 6:15 PM
It looks like I stepped in at the right time. For 8 years, I had been using two PC's, one for linux and one for Windows (no, I never upgraded to XP - phone home anyone?). I used linux as my go-to computer and used the Windows box for multimedia stuff that the linux box couldn't handle. The Windows computer started having problems, and a Mac friend had already seen what I was going through a couple of months prior. He was getting ready to upgrade to a faster computer (works in the graphics business). He sold me his computer in exchange for the iPhone I helped him buy intead.
Dude, this machine will do everything both boxes could do. No more perplexing problems. I mentally gag whenever I see something about linux on slashdot.
Posted by Stephanie Ellison | May 20, 2008 3:10 PM