Apple's Retail Myth

By Steven Burke, CRN
February 11, 2008 12:00 AM ET

Apple CEO Steve Jobs loves the Apple retail stores. That's because Jobs can control every last bit of the Apple experience from the lighting to the ever-so-clever Apple Genius Bar where the company boasts that "our geniuses will answer all your technical questions, troubleshoot problems and explain it all in language that's easy to understand."

Geniuses? Is Apple serious? Of course it is. The Genius tags are just one more sign of the retail myth Apple has perpetuated, a myth that may be doing harm to the company's ability to successfully penetrate the business market with a full set of professional services that are being offered every day by Apple solution providers. Selling Apple solutions to businesses has nothing to do with Apple "geniuses" waxing prolific about the latest Apple product to a college student.

STEVEN BURKE
Can be reached via e-mail at sburke@cmp.com.

Apple likes to talk about the success of its retail business. But there is a lot more hype than substance. In its recent 10Q, Apple points out that it classifies certain stores as "high profile" and that they require substantially more investment than typical retail stores. For these so-called high-profile stores, the company allocates "certain operating expenses" to corporate marketing. Apple says these expenses amounted to $11 million and $10 million in the first quarters of 2008 and 2007, respectively. What that means is these retail stores are a lot less profitable than Apple would have you believe.

Michael Oh, founder and CEO of Tech Superpowers, a Boston-based Apple solution provider, for one, would like to build tight ties between his professional services business and the high-profile, four-story Apple retail store that is set to be opened in the spring directly behind his own business. Oh, an MIT graduate, founded Tech Superpowers 16 years ago when he saw that Boston lacked professional Mac support. Today, Tech Superpowers is a $3.2 million business with 25 employees that just had its best year ever. Tech Superpowers, by the way, even has put together its own Apple managed services offering that is winning raves from small- and medium-business customers.

Oh is hoping that Apple's new blockbuster Boston store will mean more corporate solutions business will come his way. What Apple needs to do to make that happen is some no-nonsense channel-building programs and policies that build relationships between the retail stores and the Apple solution providers. "I hope Apple understands how the channel works and how service providers work," he said. "If they don't, then me and everyone else in the Apple channel is in deep trouble."

What do you think of jobs' retail myth-making?
Let me know at sburke@cmp.com.

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