Sorry, Steve: Here's Why Apple Stores Won't Work (2001)

http://www.businessweek.com/magazine/content/01_21/b3733059.htm

by decadentcactus • 16 years ago

138 57 16 years ago

businessweek.com

ck2• 16 years ago

Well, just imagine if they didn't have the pod/touch/phone/pad.

How many computers do the stores move in comparison?

InclinedPlane• 16 years ago

5 months later, Apple released the iPod.

At the time, Apple knew they'd be releasing the iPod, but nobody else did. Given the shift in Apple's product line retail stores made sense.

erik• 16 years ago

It would take some work to find the historical numbers, but recent results are readily available.

In Q3 2010 apple reported $15.7 billion in revenue.

$4.4 billion of that was laptops and desktops.

Apple retail stores account for roughly 20% of macs sold. How this compares to other Apple product lines wasn't apparent in the small amount of time I spent searching.

Apple does approximately $880 million in revenue per quarter on mac sales at retail stores. That doesn't take into account any of the marketing value that the stores deliver.

http://twilightjunction.blogspot.com/2010/08/apple-retail-st...

http://www.betanews.com/joewilcox/article/Apple-Q3-2010-by-t...

borisk• 16 years ago

HN is so slow, this was on /. 9 years ago ;)

liedra• 16 years ago

Hah, I was clearing out my dad's collection of computer magazines (not throwing them away, just making them not a huge pile in a corner!) and there were some absolute gems from the early 80s. I ended up getting half way through and just flipping through the magazines looking at the ads :) thousands of dollars for a megabyte of storage! that sort of thing :) I love this sort of nostalgia :D

blahedo• 16 years ago

Yes indeed, and now I have to post: http://www.xkcd.com/768/

j_baker3• 16 years ago

Off topic, but I have to ask: why is floating point division the appropriate operator to use here? Or is this some other kind of notation not aimed at Ocaml programmers?

ptomato• 16 years ago

In this context, /. refers to http://slashdot.org, the grandaddy of all hacker-oriented sites.

philk• 16 years ago

This is a fine example of why I don't trust pundits. It's near impossible to tell those who are right from those who merely sound like they're right.

j_baker3• 16 years ago

Personally, I view pundit status as largely irrelevant. A valid argument is a valid argument whether it came from a pundit or not.

I tend not to trust anyone unless I've heard both sides of the issue. Of course, some people make evaluating their arguments easier by acknowledging the other side. It's the ones who present their side of the story as the only possible way of viewing things that you have to be careful of. A quick skim of this article convinces me that it falls into the latter category.

nooneelse• 16 years ago

> "I tend not to trust anyone unless I've heard both sides of the issue. ... other side..."

Just two?

TomOfTTB• 16 years ago

With all due respect I think you miss the point of punditry.

The point of good punditry is not to convince someone you are right and have them follow you blindly. It’s to take an insight that you have and transfer that insight to other people by explaining the thought process that led you to that insight. In doing that a good pundit expects the people who receive their insight to then evaluate it on an on-going basis and those people need to use their own knowledge to judge the original insight’s accuracy.

So it isn’t about having the reader say “that guy is right” as much as it’s giving the reader something to think about.

To use this as an example I think this guy was right when he wrote the piece. He had no way of foreseeing the iPod/iPhone/iPad and their halo effect. But as a reader in 2001 people should have taken this piece with all the negatives it lists and weighed it against Apple’s strengthening product line. Then used all that knowledge to form a new opinion based on it.

delano4• 16 years ago

Good punditry? Punditry is just listing all of the ways something can fail. That doesn't take much insight.

Insight would tell you how that crazy plan could succeed.

bbgm• 16 years ago

The challenge with punditry is that you don't (never?) know the complete picture, just parts of it. Good ones try and extrapolate from "what the hell are they doing" to "these guys are too smart to be doing this without some other less obvious purpose", but good ones are few and far between.

msie• 16 years ago

I think many pundits miss your point of punditry too.

hrabago• 16 years ago

To me, this is more of an example of how difficult it is to value arguments that sound, or actually are, valid.

People who make really good arguments can certainly gain an advantage over people who can't formulate their thoughts into a convincing assertion, but it doesn't make one viewpoint better than the other. I don't know if there is an alternative to arguments, though.

metaguri• 16 years ago

Your latter point is a tautology. You win arguments by making really good ones and gaining an advantage over those you don't. By the measure of "able to win arguments" the former viewpoint is better than the latter. If you're using other measures to evaluate viewpoints, you shouldn't do so in the framework of arguments.

Regarding this particular argument and how difficult it is to value ones that sound valid: at the time, this argument was quite cogent and I would have agreed with it. The author made a well-researched, well-formulated, convincing argument. He (along with many others, I'm sure) was later proven wrong, but at the time of the argument, he had a convincing case. Nothing wrong with that, in my opinion.

Often old articles with predictions that turned out to be horribly wrong come up on here. I think that whether the person turned out to be right or wrong is not very relevant. When you make an argument you are stating your opinion at that time, and so the quality of the argument should be measured in that context. That isn't to say that you can just make wild predictions without risk of losing credibility; again, your prediction can and should be measured at the time you make it, and I think that baseless ones should be critiqued appropriately.

dkarl• 16 years ago

In this case it isn't a matter of the pundit being wrong, it's a matter of everybody being wrong about one thing, and the pundit having a pretty decent insight relative to that error. Everybody thought the Apple Store would be a place to buy computers. The pundit thought that wouldn't work. He was basically right, but we were all wrong about the Apple Store being about selling personal computers. Probably Steve Jobs was wrong about it, too. The pundit doesn't deserve any more blame than anybody else.

leoc2• 16 years ago

The Apple Stores seem to have been doing well even before the October launch of the iPod. (See http://www.nytimes.com/2001/07/12/technology/to-cash-in-on-a... from July: "But Apple estimates that the stores will break even by the end of this year.") However, it would also have been difficult to predict that Apple would redesign the computer retail outlet so effectively.

mattmanser• 16 years ago

This is stuffed full of howlers now we can look at it with hindsight. Just goes to show how out of touch the core computer market was growing with its customers.

Still, one wonders how the market would have looked if Vista hadn't been such a disaster.

tiles• 16 years ago

It's an interesting ratio, how many articles on Hacker News are new articles and stories, and how many are old news submitted ironically.

It's hardly news, but you can learn a lot from looking at old articles--one benefit HN has over alternative news sources is that it values this.

Judson• 16 years ago

In an odd way, given what the pundit knew and all things being equal from the opening of the fist store, they probably would have closed down in two years.

BUT, Apple debuted the iPod that october and put it in its retail stores so customers could get a hands on for the device. I always believed (after watching my friends buy iPods, followed by Mac purchases a year or so later) that the iPod was a huge growth driver for the Mac, by making it easy for consumers to get acquainted with the Apple brand.

j_baker3• 16 years ago

I think it was the iPod that saved Apple from dying, but I honestly think it was Windows Vista that propelled them to the limelight (whether the criticism of Vista was valid or not).

wwortiz• 16 years ago

The criticism was pretty valid as when vista came out many of the computers weren't really up to recommended requirements with laptops (probably the biggest vista seller) having celerons and 1gb of ram.

It could have gone so much better if the computers didn't seem so slow to respond.

But in addition to that there were indeed criticism that wasn't valid and any program not working or anything else wrong with the computer was blamed on vista, mac just seemed to grab a hold of these ideas and advertise in the right way (I'm a mac).

dieterrams• 16 years ago

I don't think nearly enough credit is being given to the advances they made with the Mac following Jobs' return. The original iMacs were a big deal, and they've been nailing the all-in-one desktop ever since. Likewise with their laptops. Switching to Intel and supporting dual boot, also a huge deal.

iPods were definitely a huge growth driver for the Mac, but Apple without the iPod or the benefit of Vista would still be far from dead.

philwelch2• 16 years ago

What Apple did for the Mac in the late 90's saved Apple from dying in the run-out-of-money sense. The iPod and Mac OS X in the early 00's made Apple a relevant, high-growth company again.

flatulent13• 16 years ago

The iPod was a good thing for Apple, but the real kick start out of the dismal Performa days in consumer space started earlier with the original iMac. Some may recall Steve getting the nickname of iCEO after that.

antidaily• 16 years ago

But didn't the iPod take a while to catch on? It wasn't a store-saving juggernaut right out of the gates. It took a couple years.

grinich• 16 years ago

Once it was available for Windows users, it took off.

delano4• 16 years ago

The iPod was also Apple's first step towards to the corporate market. It looked like a purely consumer play at the time, but with the iPhone and now the iPad, it turns out they were just taking the long road.

acgourley• 16 years ago

I find it hard to believe they were thinking that at the time.

JeremyHerrman• 16 years ago

I remember reading this article in my high school computer lab.

This is a perfect example of journalistic hubris that has only gotten worse in recent years. Rather than a non-sensational headline Cliff Edwards speaks as if he has a crystal ball. This happens all the time - looking at HN right now I see the sensationalist "RIP Java, 1995-2010" (6 points) and a more humble "Analysts: Oracle vs. Google May Hurt Future of Java as Dev Platform" (28 points). I'm happy that people seem to be up voting the latter.

Kudos for posting this, hopefully it will show that headlines like this tend to make people look stupid in hindsight.

eavc• 16 years ago

Often the author of an article does not choose the headline. That would be the editor.

aneth• 16 years ago

Why you should listen to doers, not talkers. Makers not breakers.

Unfortunately, people who know how to do usually spend their time doing instead of writing in magazines and blogging.

hakl• 16 years ago

> In early 1999, Best Buy Co. (BBY ) dropped the iMac line after refusing a Jobs edict that it stock all eight colors.

That's pretty amusing.

zephyrfalcon• 16 years ago

That would explain why Macs are colorless now... <0.5 wink>

samratjp• 16 years ago

I think the mac success story could be very well be attributed to students and Starbucks.

Students because of the back to school deals that got better with each iteration of a better intel chip and that was a comfortable bet for parents enough.

And Starbucks, well, that's just a metric I've found to be useful in measuring the mac's proliferation in the american zeitgeist - I mean, the macbook has been somewhat of even a jewelry to adorned in public these days it seems, not just at Starbucks.

marbletiles• 16 years ago

2001 writing is so quaint. Didn't they know they should have called this "Rotten Apple: 10 reasons why Steve's Stores Are Going To Fail" and had each reason on a separate page? Saps.

maukdaddy• 16 years ago

He also talked to experts and gave real facts and figures! Why waste so much time doing that?!

flatulent13• 16 years ago

Is it "real" to predict Apple failure based on the margins seen by PC vendors, and to assume that the buyers are just a percentage of existing Mac owners upgrading?

Yes he had figures for both of those things, but they're the wrong numbers to look at!

kloncks• 16 years ago

Reading this text with this stylesheet is so painful. My my, look how far we've come with CSS.

Even something as simply as some line-height and a "double-spacing" effect would be so welcome here.

philwelch2• 16 years ago

Some people still had smaller screen resolutions at this time. I had 1024 by 768 but 800 by 600 was still known and there were still some people with 640 by 480 as well.

S_A_P• 16 years ago

OOOOOOOOO IN YOUR FACE CLIFF EDWARDS! HOW DOES THIS ONLINE SMACKDOWN 9 YEARS LATER FEEL!!!!

T_S_• 16 years ago

It's fun to chuckle at the mis-punditry on display here but the author had no idea how strong Apple's product line would become. Jobs had a clearer picture. A balanced article would have talked more about the drivers and risks, but that's no fun to read.

Even today the question still remains, did the stores drive the product success or the other way around? But nobody even bothers to ask. The success bias ("All's well that ends well.") buries all mistakes. That's why business people learn more from failure than success.

saint-loup• 16 years ago

Pundits are mostly a bunch of self-proclaimed experts acting as if they had a crystal ball.

Nontheless, punditry is important. We have to trust certain people, trust they're smarter and informed than the average.

blhack• 16 years ago

To me, one of the most important things that apple did was offer free internet access in their stores; I go in there and use it all the time.

This is good for two reasons: it makes it look like everybody cares about apple (even though a lot of people are just there using what is effectively the free internet cafe) and it gets people into the store looking at the products.

Good job on that, Apple.

thought_alarm• 16 years ago

I think there has always been tremendous curiosity about Apple's products, especially in the early 2000s. The hardware looked interesting, and if you knew anything about the origins of OS X then the software looked very interesting too. But if you weren't already part of the club then it was hard to satisfy that curiosity, due the increasing scarcity of the hardware and the retail environment of the time.

Apple Stores were designed to take advantage of this curiosity.

Every town already had an authorized Apple dealer, and these stores were very nice, but they usually felt overwhelmingly exclusive rather than inclusive. If you were a curious outsider who simply wanted to play with this stuff it was a very awkward experience, and it always left me unsatisfied.

The official Apple Stores solved this problem masterfully.

habitue• 16 years ago

All this guy is saying is that the Apple stores weren't going to get Apple booming. And they didn't, the iPod and it's successors did. Does anyone really think the Apple stores are what saved Apple?

jsz0• 16 years ago

Sure. It certainly helped sell iPods in the days before deals with WalMart, Best Buy, etc. The iPod was a major shift in how people listened to music. Being able to try it out in the store before buying it was probably a big reason it caught on so quickly. As someone else pointed out the author didn't have all the relevant information at the time. Apple Stores only selling computers would have probably been much less successful but Apple was fully aware they wanted to make a push towards consumer electronics with the iPod.

CamperBob• 16 years ago

Since PC retailing gross margins are normally 10% or less, Apple would have to sell $12 million a year per store to pay for the space...

Yeeeah, I think I see the author's problem.

philiphodgen• 16 years ago

The story reminds me of the "Man in the Arena" speech by Teddy Roosevelt. Apple is in the arena creating its own (and our) future. Journalists are in the stands, yelling at the ump and drinking $6.00 beers.

EDIT: Apple, damn you and your spellcheck on the iPhone. :-)

Sorry, Steve: Here's Why Apple Stores Won't Work (2001)

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