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9-502-063 REV: MAY 20, 2010
LUC WATHIEU
Apple Stores
Ron Johnson (HBS ’84), Apple Computer’s Senior Vice-President of Retail, never missed a chance to show a customer through the nearest Apple Store. A former Vice-President of Merchandising at Target (a leading department store chain), Johnson joined Apple in January 2000 with the mission to oversee the creation of the company’s own stores. The first store opened in May 2001—and just seven months later, 27 identical stores had been opened across the United States.
During his store visits, Johnson tried computer applications, listened to a store employee make a presentation in front of the 10-foot screen at the rear of the store in “the theater,” and respectfully introduced his guests to the local “genius,” the official title of a very knowledgeable employee who stood behind a “bar” (complete with stools and water bottles) and helped solve consumer problems. Every detail of the store experience had been carefully designed, and as much as Johnson enjoyed each tour, he was also checking that all the store’s elements were perfectly under control. “The store experience has to be the same every day, every hour, in every store. We care passionately about that,” he often said.
The stores were expanding to new territories, mostly in high traffic shopping malls, with the explicit purpose of “enriching people’s lives” and converting new customers to Apple products. To complete that mission successfully, Johnson’s focus was on choosing the right locations, selecting and training knowledgeable and dedicated employees, and defining the most effective utilization of the innovative store elements such as the theater and the genius bar. On each of these three fronts, Johnson felt fortunate that he was endowed with unique gifts: a store concept that shopping mall owners found very attractive; a large base of loyal Apple users who found working in an Apple store a dream; and store elements that could provoke consumer involvement. However, using these gifts diligently, without wasting them, required constant reflection on what the stores were all about.
A second important challenge for Johnson was to determine the best ways to evaluate the success of the stores. Traffic was high (a total of 800,000 visitors across all stores in December 2001), and sales were gaining momentum ($48 million in total sales over the quarter ending in December 2001). However, store traffic and sales were only surface indicators of the stores’ intended effects. A deeper understanding of the dynamic impact of the stores on consumer behavior would help Johnson and his team to monitor progress more adequately.
On that sunny afternoon of January 2002, Ron Johnson was returning to his office after a quick visit to the Palo Alto, California store, where he had met an alert 90-year-old man who had never ______
Professor Luc Wathieu and Research Associate Kevin Morris prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2002, 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545- 7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
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owned a computer. Johnson decided it was time to sit down and reflect on the nature of his mission, and on the best way to maximize his chance of success with Apple’s retail venture.
Genesis
Founded in 1976 by Steve Jobs and Steve Wozniak, Apple Computer established a brand based on constant innovation, design, brand image, and product integration (hardware-software). Apple quickly became the market leader, with more than 15 percent market share in 1980. When IBM entered the market in 1981, however, Apple’s share declined rapidly, to 6 percent by 1982. Apple sales stabilized over the next few years, and its Macintosh computer fared well at a time when computers were mainly used as productivity tools, particularly for word processing. Later, the word “Mac” remained commonly used as a nickname for an Apple computer.
In 1985, Jobs left the company in 1985 to start the NeXT software company. Over the next 12 years, with three CEOs and limited innovation, Apple’s market share slowly declined to 3 percent. In July of 1997, Jobs returned to the company as an interim CEO, and he immediately reintroduced a focus on innovative designs and the message of user-friendliness. In 1998, Apple introduced the more affordable iMac, a colorfully designed machine marketed to domesticate the internet. At the time, the personal computer was widely becoming a communication tool, and the iMac was an instant bestseller for Apple. It sold 6 million units between 1998 and 2001.
These developments and the company’s advertising mantra to “Think Different,” however, ultimately didn’t do much to increase the company’s market share, which remained at about 3 percent in the US and 5 percent worldwide (there were about 25 million Mac users worldwide). To skeptics, Steve Jobs often pointed out that these percentages were greater than what BMW or Mercedes achieved in the car industry. (See Exhibits 1 and 2 for financial history and sales forecasts.)
The personal computer industry had meanwhile taken another route, one that didn’t focus on innovation as a driving force. Rather, the emphasis was on logistics, supply chain efficiencies, business customers, and price. Computers were mostly being sold direct online, in electronics stores, or in computer megastores – not unlike televisions and other consumer electronics products. All non- Mac computers were conceived to support Microsoft’s Windows software and incorporated Intel microprocessors. In 2001, Dell (with a telling slogan: “Easy to buy, easy to own” and 18.4 percent operating margins) was the market leader with 14 percent market share, followed by players such as Compaq (12 percent) Gateway (8 percent), IBM (7 percent), or HP (7 percent), though more than 50 percent of the market belonged to small producers and less-established brands. “What we face,” said Johnson, “is a commoditized industry. And consumers follow the same logic: many people buy their computer simply as a box, without much effort spent into thinking about what they will need it for.”
Digital Hub
It had become clear to Jobs that beyond personal productivity and communication, the digital age was impacting the way people consumed music and images. Many of the new digital products were defining consumers’ lifestyles. Jobs saw this as a great time for Apple to bring about its mix of innovation, design, and image of user-friendliness. He felt that this was an occasion to leverage Apple’s unique strategy of product integration. After all, it appeared that current Mac users were doing a better job coping with the new digital environment: for instance, 62 percent of Apple users owned a digital camera vs. 33 percent of PC users, and 20 percent of Apple users had an MP3 player vs. 9 percent of PC owners.
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By 2002, Apple contributed tools such as the iPod (a best-selling MP3 personal music player), iPhoto (a software to organize and display digital images), and the new iMac, launched in January 2002 would become the digital hub where consumers could “control their digital lifestyle.” In this regard, Apple believed users could benefit from their integrated products: operating system, application, hardware—a much different proposition than what commoditized PC’s had to offer.
Besides this new incarnation of the “Think Different” mantra, Apple was taking a number of initiatives to improve their small market share. Steps were taken to tackle the concerns of potential buyers who believed that Apple products were not compatible with other PC products. To cut short a potentially detrimental conversation with consumers about whether Macs are better than PCs, Apple also started to explicitly promote the claim that “everything is easier on a Mac.” Apple’s Retail Manager Angela King explained the concept:
Interestingly, compatibility means different things to different people. Incompatibility could be a software issue, a problem with the sending of files, a problem of transferring files, or a problem of switching files from PC to Mac. We have developed easy and effective solutions to address all these issues. Now, the best way to address these perceptions is to create an umbrella message that really welcomes new users to our world. Hence we coined the phrase: “Everything Is Easier On a Mac.” This is a much broader idea than compatibility. It’s the essence of our value proposition. We are not banging our head over it. Why would you bother? Everything is easier!
And to further highlight the fact that the creative vitality of Apple contrasted with the surrounding commoditization of personal computers, the slogan “5 down, 95 to go” (referring to the current and potential market share) was used internally as a powerful motivator of the troops.
Shop Different
Consumers who perceived personal computers merely as boxes to support Windows applications had little consideration for Apple’s value proposition. Somewhat paradoxically, enriching and simplifying people’s lives was perceived as a complex value proposition for the non-initiated. “According to our data, two-thirds of the people who buy personal computers do not consider Apple,” Johnson recalled. “What we needed was a tool to break through the consumer mind.”
Apple’s experiences led them to believe that their value proposition could not be supported in the conventional retail environment (3,000 dealers were involved in selling Apple products), which was tailored to the goals of the “wintel” competitors. The concept of the computer as a digital hub had little or no chance to make an impact in that context. Roughly 40 percent of Apple products were already sold direct, through the online Apple stores.
It became clear that selling computers as empowering tools could not be done in an environment that didn’t support consumer involvement, and Apple’s stores were born with the intention to engage consumers in an active exploration of their digital needs. It was hoped that, as a result, the commoditized personal computer would look like an irritatingly inadequate machine. Said Allen Olivo, Senior Director, Retail Marketing:
We wanted to show people what they can do with the computer. They would walk in the store, and every computer would be connected to the internet, and equipped with all the major applications. Consumers could see and experience the full Apple experience. From a brand perspective, we always put “what you do with the computer” first, as opposed to “what the computer can do for you.”
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To which Ron Johnson added:
We have a great brand. We didn’t need a store to build the brand. We needed a store that lives out what the brand represents, but we want to enrich people’s lives. We want them to come back with what they bought. Learn, understand, get help.
In order to develop the notion of “shop different,” Ron Johnson gathered together a group of 18 people of various backgrounds who “thought different.” There was someone from Apple’s advertising agency, and someone from a large hotel chain, for example:
Their only assignment was to think about their own best experience as a customer. Only two of the reported experiences were from retail situations. The others were all from hotels and restaurants, as they’re places where you are not sold, but where you are being served. Something is sold in a restaurant, but there are many built-in pure service points too. My view is: service has moved away from personal terms to operational terms. Service is thought in terms of cleanliness, access and easiness of check out, etc. Thinking service in one-to-one personal terms needs to be re-invented.
From that meeting came a set of expectations that were summarized in a document called “the Credo.” The Credo later took the form of a small, folded cardboard document which all employees carried with their identification card in a plastic pouch around their neck. “It’s a description of their mission,” Johnson said. “It was there before the stores were actually designed. It’s our mission.” The Credo’s cover carried the motto “Enriching people’s lives with innovative, easy-to-use technology.” Inside, standards of conduct and motivational reminders spelled out for the employees the conditions under which the store experience could be re-created on a daily basis.
A budget of $84 million was put together to start up the retail project and get the first 25 stores going.
Store Elements
The average store was 7,000 square feet, with 4,500 square feet open to consumers (see Exhibit 3). The rear of the store was dedicated to inventory and a service workshop.
The frames of the store’s windows and central door had bold, black borders. There was no scripture, only Apple’s homonymic logo, approximately two feet high in white, placed on both sides of the doorway, at eye level. Behind the windows were some creative presentations of new ideas and products, but without the usual background of store windows. Instead, the windows gave an inviting view of the inside of the store.
The store was divided into four areas, delineated by translucent floor-to-ceiling white dividers that protruded about four feet from the walls on both sides of the store. A small circular white display, shaped like a truncated column, was attached at the end of each divider, and displayed non- Apple digital equipment available for trial and for sale. One column had 6 models of digital camcorders, and others displayed 6 digital cameras, 6 digital music players, and 6 handheld organizers.
Along the center of the store, the “Marketplace” featured massive 5-foot-high black shelves running parallel from the front to the back of the store, stocked with 300 software titles. The welcome desk, which also served as a checkout, a black rectangular block at the front of the store topped with
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two computer screens, faced customers as they entered. There was no indication that you could buy or pay there.
The store had light-colored wooden floors, white walls and ceilings. There was general overhead lighting, and rows of spotlights shining down on each of the computers and workstations. Wall lighting was also prominent, giving an impression of extreme brightness, perceivable even from the outside of the store. There were no boxes or stocks kept in the store area, and the stores were carefully kept clutter-free.
Each section’s wall had large didactical poster boards attached slightly above eye-level, featuring text and close-ups of happy faces experiencing Apple products. Examples of poster titles included “So you have a digital camera. Now what?” or “Turn your home movies into DVD’s. Here’s how.” Below those posters were waist-high workstations. In total, there were 36 computers on display in the store, all connected to the internet, for liberal use by consumers. All portables were connected through Apple’s wireless connections.
Products Area
The entire Apple line of computers was on display in the front quarter of the store. On the right side was a display of the latest home products, with a large slogan on the wall: “Everything is easier on a Mac.” On the left side was the “pros” section, with posters promoting Apple’s OS X operating system, “the biggest breakthrough since point and click.”
Other peripheral products (printers, scanners, tablets, cables, paper, ink) were in display in the rear-left corner of the store, with little emphasis.
Solutions Area
The center half of the store was devoted to solutions. There were four sub-areas, each indicated by a small, lighted, overhead sign: Music, Movies, Photos, and Kids. The Kids sub-area had a daisy- shaped low table equipped with five computers, placed on a bright green circular carpet with darker green ball-shaped cushioned seats.
The Movies area, and the Photo and Music areas, each had two stations set up for consumer experimentation, conveniently placed on top of a white bean-shaped altar.
Theater
The theater area had a black floor and a black wall, a speaker desk on the left, and a 10-foot screen. The projection system could play content from computers, DVD players, and satellite broadcasts. MacWorld (Apple’s annual consumer show), for example, could be viewed live in every store. Four benches, in a square formation, faced the screen.
Genius Bar
The Genius Bar was conceived as a place where customers could ask questions, receive service and advice. They could bring their computer and have it hooked up in a way that mimicked their home installation. There were stools for customers to sit down, and water drinks could be served.
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Black and white portraits of geniuses such as Miles Davis, Amelia Earhardt, and Alfred Hitchcock, together with a representation of molecules and atoms in motion were hanging behind the bar.
There was a red telephone, visible on the counter behind the bar. In case of doubt, the genius could directly call technicians at Apple headquarters in Cupertino.
On the wall behind the bar, this poem was posted:
To the crazy ones.
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently.
They’re not fond of rules. And they have no respect for the status quo.
You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them.
Because they change things. They push the human race forward.
And while some see them as the crazy ones, we see genius.
Because the people who are crazy enough to think they can change the world, are the ones who do.
Store Employees
Besides the store itself, store employees were key ingredients of the formula. Ron Johnson explained:
Who wants to work in a store? The pay isn’t high, customers are demanding, and you have to work over the weekends. The average yearly turnover in retailing is between 50 percent and 80 percent of the staff. But for us, we don’t want turnover. Our staff needs incredible product knowledge. By design, our stores allow employees to exclusively focus on the consumer experience, which is the most rewarding part of the job. What they try to do is to enrich the life of customers. As a result, out of 705 store employees hired so far, we only had 37 instances of separation.
Moreover, working with us is a dream come true for many loyal Mac users. We can tap into a more mature employee base. People who show up to do the job. For our first two stores, more than 200 very qualified people applied.
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Consumers experienced their encounter with store employees as a normal, completely non-pushy, conversation. As conceived by the Credo, many consumers were presented “a personalized ride suggestion, recommendation, or solution.” For instance, an interested visitor could be invited to come back to the store with a CD of photos that could then be used to create a webpage on one of the store’s terminals. Said Johnson:
The concept of a ride is something all our employees know. It’s part of their training and a key element of the Credo. But the customer doesn’t know it. A ride is something short, fun, something you want to talk about. Think of a rollercoaster ride. Employees in the store want to give customers a ride. That gives consistency to what we are doing.
The opportunity to do a theater presentation (there normally was one presentation per hour) was an appealing aspect of a store employee’s job. About one out of four employees volunteered to do it. There was a guideline to help employees determine what they should cover, but mostly they were in charge and took great pride at sharing their experience.
A typical team included about 20 members, including sales associates, one or two “geniuses” and the store manager. Twelve employees attended the store during the weekends and 6 to 8 would be present in the store during weekdays. Job descriptions were written with great care, to convey a sense of mission and excitement (Exhibit 4).
A mock store and a training center had been built in a warehouse near Apple’s headquarters, and the executives in charge of opening the first stores were sent to participate in the opening of a Ritz hotel.
Locations
There were 7 stores in California, 3 stores in New York state, 2 stores in Virginia, Florida, Massachusetts, and Ohio, and 1 store in Arizona, Colorado, Illinois, Minnesota, New Hampshire, New Jersey, Tennessee and Texas. The stores were located in high-traffic malls such as the Cambridge Side Galleria, or Tyson’s Corner in suburban McLean, Virginia. There were a couple of street locations too, such as in Palo Alto, California. “My view is: people think on streets and shop in malls,” said Johnson, “you can spend more time with the customer in a street store. But there are very few good street locations in the United States. The advantage of malls is that consumers only need to walk 6 feet on their way to Williams Sonoma to give us a try.” He added:
Malls are usually not a place for high price point technologies. But malls love our stores. They are different. They may bring more males to the mall, and higher income people too. Plus, we have a great balance sheet, very uncommon for a retailer.
Events
Store Openings
Apple’s first two stores opened on May 19, 2001, in McLean, Virginia, and in Glendale, California. The first weekend, 7,700 visitors entered the two stores, with sales totaling close to $600,000. In several places, 400 to 500 fans waited outside the doors on opening days, happily shouting “Apple, Apple, Apple!”
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Theater Events
In their conversations with visitors, store managers came across a number of professionals who had creative uses of their Mac. These professionals were frequently invited (or volunteered) to come in and contribute a presentation (unpaid) in the store theater, in the context of what was called the “Made on the Mac” series. Advertised by email, these events featured people such as national parks photographer Steven Johnson, who gave a three-hour presentation to explain his work, and how Apple fitted in.
Television producer and writer J.J. Abrams, co-creator of TV series “Felicity,” who wrote everything from his screenplays to musical scores on his powerbook (Apple’s portable computers) attracted 85 television and film people to the store when he presented. He insisted that Apple was for him the “shortest distance between coming up with an idea and being able to show it.” “Now think about it,” reflected Allen Olivo:
We try to convince people. If I said to a Windows-user aspiring screenwriter: “Hey I think you should buy a Mac,” (s)he would probably say that (s)he already has a PC, and that “it works just fine, thank you.” Now if I said: “Hey J.J. Abrams is speaking at the Apple store tonight,” it’s different. We start with what you do as a person and this is much more attractive than starting with the computer. The “Made on a Mac” series gives you a chance to come into the store and to learn about things you are interested in as a person. Hopefully six months later you buy an Apple.
The theater also built a sense of community with User Group Nights. Apple had user groups everywhere. For instance, there was a very active Stanford University user group. The Palo Alto store would open exclusively for the group on a Sunday from 6 p.m. to 9 p.m., and they made extensive use of the theater.
Early Results
In the quarter ending in December 2001, the stores generated $48 million in sales. There were 800,000 visitors in the stores in December. It was estimated that 40 percent of sales were to new Mac users, and that half of the people entering the store were new to Apple.
Challenges Ahead
Upon review of the above data and events, Ron Johnson concluded that there were three areas that needed attention as he was moving forward:
Improving the Store
“We might not look exactly like a store, but we really don’t want to be a showroom,” said Johnson, who had decided to slightly increase the signing in the store, and to display flyers (e.g., for the new iMac). There were suggestions that salespeople could be just a bit more pressing to conclude a sale, and that the theater could carry more persuasive materials. Ron Johnson strongly felt that the non-store flair of the store was critical, and his instinct was to reject those suggestions.
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Keeping the theater busy 84 hours a week proved to be a challenge. Sometimes two hours would pass without a presentation, when all employees were busy on the floor. In fact, research revealed that most people didn’t get to see a theater presentation during their store visit.
Expansion
As the number of stores expanded, what elements of the formula should be kept across all locations, regardless of the local popularity of Apple, and what elements should be adaptable? Should employee positions be kept open for PC converts or creative pros, above and beyond the pool of Mac enthusiasts?
In terms of location, should Apple focus on places where it has been popular (coastal areas and major cities) or should there be stores in Dallas or St. Louis as well?
Evaluation
The store was as much a reflection of Apple’s assumptions about consumer behavior as it was a tool of research. The phases that led to conversion were probably different for people who never owned a computer, who were switching from personal computer to Mac, or who had been fans and were coming back to the brand. Johnson said: “Every interaction we have with the customer should account for his or her particular stage of conversion.” Research based on the effects of Apple’s past marketing campaigns had suggested the existence of three essential stages of conversion: 1. engagement of curiosity, 2. overcoming of objections, 3. enrichment of the experience.
More knowledge about the typical process of conversion would help refine the way the stores were evaluated. After all, the conversion rate of this new type of store should have been quite different from the conversion rates expected from destination stores targeted at people who already were on the market for a computer.
There was a challenge of tracking the impact of the store over time and across channels of distribution. For instance, if someone was converted in a store but bought a computer online one month later, should there be a mechanism to trace back the influence of the store experience? Said Angela King:
We could use the markets where we have not been strong historically (say, Buffalo) and see how sales progress there, across the three channels, as a result of having opened the store. For instance, Buffalo and Tennessee are new territories for us. If sales start to pick up there, it would be a breakthrough.
Two waves of in-store interviews had been carried out. As the customer was leaving, (s)he was approached and asked to participate in a 8-10 minute questionnaire for a $20 cash incentive. 1500 customers were polled in five stores in September 2001, and then 750 customers were polled in a second wave of interviews, in three stores, in December. Interview questions varied depending on whether the customer had purchased a computer unit, something else, or nothing at all. Specific areas covered by the questionnaire (besides demographics) included:
Characteristics of store visit (e.g., Were you planning to visit the Apple Store today, or were you just walking by? Had you heard of the Apple Store prior to today? How did you hear from it? Is this your first visit to an Apple Store, or not? How many times have you visited this store?).
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Purchase decision process (e.g., Prior to entering the Apple Store, had you already decided to buy an Apple Computer, or not? Had you already decided on a specific type of Apple computer? A specific model? Did a salesperson help you choose the specific type or model, or not?).
Satisfaction with the experience (e.g., Overall, knowledge and courtesy of staff, software selection, etc.).
Usage of store elements (e.g., Did you visit the genius bar today, or not? Did you watch a theater presentation or not?)
Computer Ownership/Mac history (e.g., Is this the first computer purchased for your household, or not? Do you only own Apple computers, only Windows PC’s, or both types of computers? Is this the first Macintosh computer in your household, or not?)
Computer use and digital devices (e.g., Did you purchase the computer as a gift? Who will be the primary user? How interested are you, personally, with each of the following areas: digital photography, digital video, digital music? Which, if any, of the following devices do you own?)
Outlet choice (e.g., Did you visit other retail stores, or not? If the Apple Store had not yet opened in this area, where are you most likely to have purchased your Mac?)
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Exhibit 1 Apple Computer: Selected Financial Information, 1981-2001 ($ millions, except employee and per-share data)
2001 2000 1999 1998 1997 1996 1991 1986 1981
Net sales 5,363 7,983 6,134 5,941 7,081 9,833 6,309 1,902 334 Cost of sales 4,026 5,733 4,353 4,462 5,713 8,865 3,314 891 170 Research and development 441 380 314 310 485 604 583 128 21 Selling, general, and administrative 1,568 1,546 1,310 908 1,286 1,568 1,740 610 77 Operating income (loss) (333) 620 386 261 (1,070) (1,383) 447 274 66 Net income (loss) (25) 786 601 309 (1,045) (816) 310 154 39 This document is authorized forThis document isauthorized use only by Henny in2015. Mark Cash, cash equivalents, and short- term investments 4,336 4,027 3,226 2,300 1,459 1,745 893 576 73 Accounts receivable, net 466 953 681 955 1,035 1,496 907 263 42 Inventories 11 33 20 78 437 662 672 109 104 Net property, plant, and equipment 564 313 318 348 486 598 448 222 31 Total assets 6,021 6,803 5,161 4,289 4,233 5,364 3,494 1,160 255 Total current liabilities 1,518 1,933 1,549 1,520 1,818 2,003 1,217 138 70 For theexclusive useofM. Henny, 2015. Total shareholders’ equity 3,920 4,107 3,104 1,642 1,200 2,058 1,767 694 177 Cash dividends paid ------14 57 -- --
Permanent full-time employees 9,603 8,568 6,960 6,658 8,437 10,896 12,386 4,950 2,456 International sales/sales 44% 46% 43% 45% 50% 52% 45% 26% 27% Gross margin 25% 28% 29% 25% 19% 10% 47% 53% 49% R&D/sales 8% 5% 5% 5% 7% 6% 9% 7% 6% SG&A/sales 29% 19% 21% 15% 18% 16% 28% 32% 23% Return on sales NM 10% 10% 5% NM NM 5% 8% 12% Return on assets NM 12% 12% 7% NM NM 10% 15% 24% Return on equity NM 19% 19% 22% NM NM 19% 25% 38% Stock price low $13.63 $25.38 $14.25 $13.50 $12.75 $16.00 $40.25 $10.88 $7.13 Stock price high $27.12 $75.19 $40.06 $43.75 $29.75 $35.50 $73.25 $21.94 $17.38 P/E ratio at year-end NM 10.6 15.1 17.5 NM NM 21.9 16.8 27.7 Market value at year-end 5,443 8,644 10,181 5,540 1,671 2,598 6,650 2,578 1,224
Source: Case writer compilation from company documents.
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Exhibit 2 2002 sales forecast
Units (thousands) Price ($) Amount ($ in million)
Original iMac 758 830 629
New iMac CD-RW 250 1,170 293
New iMac Combo 225 1,350 304
New iMac Super-Drive 200 1,620 324
1,433 1,081 1,550 Total iMac iBook 710 1,319 936
PowerMac G4-733 Mhz 422 1,375 580
PowerMac G4-867 Mhz 290 1,975 573
PowerMac Duo G4-800 200 2,800 560 Mhz
912 1,878 1,713 Total PowerMac G4 Displays 447
Powerbooks 341 2,425 827
3,396 1,612 5,473 Total Macintosh iPod 500 328 164
Earthlink subscriptions 38
Services/other 410
OS upgrades 150
6,235 Total Sales
Source: Company reports and Needham & Co estimates.
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Exhibit 3 Store Floor Plan
Genius Kids Music Home
Theatre Software Greet/ Checkout
Etc. Photo Movies Pro
Source: Company document.
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Exhibit 4 Examples of job specifications
Store Manager
Fearless Leader Are you as passionate about growing a business, leading a team, and providing outstanding service as you are about the latest PowerBook? Does the thought of working for Apple make you grin like a kid eating birthday cake? If so, you might have what it takes to become an Apple Store Manager.
If you are accepted, you'll lead an intelligent and enthusiastic team on a mission to engage and educate Apple customers in surprising and delightful ways. You’ll help the Apple brand through unparalleled customer service, store contribution, and profitability.
Of course, not just anyone has what it takes to be an Apple Store Manager. But that's the whole idea. You just aren't anyone, right?
Key Features: • Always led during Follow the Leader. • Drives friends crazy with deep discussions about philosophy and vision. • Lives, eats, breathes, and sleeps technology. • Thinks different. • Would ride the space shuttle if only it wasn't so slow. • Comfortably translates "techno-speak" into laymen's terms. Job Description: • Passionately lead and unite your store team on a journey to enrich the lives of Apple customers. • Promote fearless feedback-up, down, and sideways-to create the most knowledgeable and customer-oriented team in the world. • Make your store the most popular gathering place for Mac aficionados-a fun, exciting, fresh place to be. • Recruit, hire, and retain a diverse and talented team to strengthen the Apple brand. • Develop your management team and geniuses to reach the next level of achievement-both theirs and the store's. • Sniff out, refine, and communicate innovative ideas that improve store processes and performance. • Set the standard for keeping your store in tip-top shape. • Think Different. Challenge the status-quo - and encourage your team to do the same. • Communicate positively with store team members, customers, channel partners, and headquarters. Remember, you represent the Apple brand. • Manage profitability through sales, scheduling, payroll, and shrink goals. • Maintain a fit and healthy Mac mind.
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This document is authorized for use only by Mark Henny in 2015. For the exclusive use of M. Henny, 2015.
Apple Stores 502-063
• Oh yeah-and have fun! After all, this is Apple.
Mac Genius
Ambassador to the local Macintosh community Do you love Macs and enjoy interacting with other Mac users? Does the thought of working for Apple make you tingle more than those three seconds right after a sneeze? If so, and you enjoy working with people as much as PC's, you might have what it takes to become a Mac Genius. Millions of users around the world know that when done right, a computer can be much more than a bland box made for the left side of the brain. They know the elegance and power of the Macintosh. As a Mac Genius, you'll play host to this remarkable community of people. Whether someone wants a casual conversation about Digital Video or needs an emergency Hard Drive replacement, you'll be there. Your fundamental mission: Ensure no Mac User ever again receives inadequate service or second-class treatment. Now we realize not just anyone has what it takes to be a Mac Genius. That's the point. You have to be the best. Still interested? Key Features: • Confidently manages other operating systems, but handles a Mac like Yo-Yo-Ma plays the Cello. • Would rather be in the front row of a MacWorld Keynote than have free cable for a year. • Can delicately identify the difference between a misguided User and an unhealthy Macintosh. • Instinctively straightens the Mac software shelves when shopping at the local computer store. • Genuinely enjoys helping others make the most of their Macs. • Comfortably translates "techno-jargon" into laymen's terms. • Skillfully restores ailing Macs back to full health. • Has been able to find Cupertino, CA on a US Map since the age of 12. • Would move to Timbuktu if they required all computers to be Macs. • Always eager to discuss cutting edge technology and why Macs rule. Job Description: • Lead an interactive environment where people can gather with their Macs to ask questions and learn new things. • Enrich the Apple/Customer relationship by quickly resolving and documenting technical support events. • Provide ongoing technology coaching to a terrific service oriented sales team. • Help snuff out any new and unusual gremlins by quickly notifiying Apple's engineering teams.
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This document is authorized for use only by Mark Henny in 2015. For the exclusive use of M. Henny, 2015.
502-063 Apple Stores
• Make Apple's Support Site the best in the business by contributing your own tips and tricks. • Keep your store in tip-top shape and give customers what they've always wanted; a little piece of Apple in their own backyard. • Communicate positively with store team members, customers, channel partners, and headquarters. Remember, you represent the Apple brand. • Be responsible and take good care of Apple's assets. • Maintain a fit and healthy Mac mind and oh yeah, have fun. This is Apple after all. Sales Associate
The Ultimate Mac Consultant Are you as passionate about customer service as you are about the latest MP3 player? Does the thought of working for Apple make you tingle even more than those three seconds right after a sneeze? If so, you might have what it takes to become an Apple Sales Associate.
You and millions of other Mac users around the world know that when a computer is done right, it can be much more than a beige box made for the left side of the brain. You know and love the power and elegance of the Mac.
As an Apple Sales Associate, you'll have the opportunity to share this life-enriching tool with other people. Whether someone is a new user, a lifelong Mac enthusiast, or a PC switcher, you'll be the person who shows them how a Macintosh can change lives. Some stores have salespeople who are just filling a hole in the schedule. Our salespeople are the cream of the crop. Are you one of them?
Key Features: • Would rather be in the front row of a MacWorld keynote speech than have free cable TV for a year. • Gets frequent compliments about being a good listener. • Can comfortably translate "techno-speak" into laymen's terms. • Lives, eats, breaths, and sleeps technology. • Loves interacting with people as much as Macs. • Walks friends to their car and waves goodbye as they drive away at the end of the evening. Job Description: • Enrich the lives of Apple customers by providing unparalleled customer service. • Provide complete and appropriate solutions for every customer, regardless of the potential revenue they represent. • Help sniff out innovative ideas to improve store processes and performance. • Keep your store in tip-top shape. • Give customers what they've always wanted: a little piece of Apple in their own backyard. • Be responsible and take good care of Apple's assets.
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This document is authorized for use only by Mark Henny in 2015. For the exclusive use of M. Henny, 2015.
Apple Stores 502-063
• Follow all company policies and procedures faithfully. • Execute all transactions quickly and accurately. • Communicate positively with store team members, customers, channel partners, and headquarters. Remember, you represent the Apple brand. Maintain a fit and healthy Mac mind. Oh yeah-and have fun! After all, this is Apple.
Source: Company documents.
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This document is authorized for use only by Mark Henny in 2015.