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  • Apple and the 50% Factor

    October 29th, 2008

    There’s a key figure that’s touted at every recent quarterly meeting with financial analysts, and it may give a clue why Apple’s sales are soaring. You see, some 50% of the people buying Macs at an Apple Store are new to the platform.

    Some, no doubt, are buying their first personal computer. Others are evidently migrating from Windows. Regardless, it signals a rapidly growing user base; that is, if the figures are to be believed. You see, those analysts usually tend to ask arcane accounting-related or softball questions. They seldom try to probe or even follow up a particularly intriguing response, so we can only guess at Apple’s survey methodology.

    Now, it may just be their registration database. Are the new owners already there? Then again, if that’s a component of these surveys, what about customers who have simply moved? What about the newly-married, where one spouse assumes the other’s last name?

    For the sake of argument, however, and lacking evidence to the contrary, I’m going to assume those statistics are fundamentally correct. It goes to show that, if Macs are displayed and demonstrated in a properly-controlled sales environment, people will buy them.

    Indeed, one of the factors that hurt Macs in the 1990s was the fact that, despite efforts by Apple to push their products into as many dealers as possible, they were treated badly. I recall visiting a Circuit City store around 1995 or thereabouts, where several Performas were left catching dust in the corner. When I asked a nearby sales person about them, he told me that very few people bought Macs anymore, but they kept them on hand in case anyone asked. In that setting, I doubt they had many inquiries, and surely their efforts to push a customer to a PC box resulted in lots of unsold Apple product.

    There was one notable meeting with dealers where Steve Jobs used very blunt, and sometimes vulgar, language to attack the resellers who gave Macs short shrift. That explained, also, why he pulled Macs from lots of stores in those early years while he struggled to remake the company he co-founded into something the employees and shareholders could be proud of.

    Not to mention the customers, of course.

    That’s a lesson the PC makers have yet to learn. If you visit a Best Buy with an Apple section, just examine how the other products are presented. The PC boxes are generally all lumped together, row after row, with little to designate one manufacturer from another. Of course, it’s fair to say that, except for a few niche companies, such as the Alienware division of Dell, you can buy a Windows PC based on price and specs alone — regardless of the brand name on the box — and get essentially the same product built in the same factories, and using the very same parts.

    In contrast, even the Macs at a Best Buy store get their own small dedicated sales area, which to some degree resembles the environment at an Apple Store. From a cursory examination of the setup, it also appears that Best Buy has trained their staff to understand the distinctions between the Mac and the Windows PC, and they are showcasing the former to their best advantage. That may be why Apple continues to expand its presence at Best Buy, assuming the sales picture is also highly favorable, and I expect it must be for this grand experiment to continue.

    Dedicated Apple resellers also seem to be taking the hint. Just recently, a long-time local dealer, Re-Mac, which has two stores in Arizona, renamed them to “iStore.” They have also remodeled the interiors to more closely resemble an Apple Store, and the sales and support area somewhat conforms to the Genius Bar motif. No, it’s not a 100% matchup, but store traffic appears to be decent, and they appear to be doing a fair amount of business.

    Of course, their future success, particularly in the Scottsdale area, may be impacted by the fact that a Best Buy with an Apple section is only a two-minute drive from them, and a new Apple Store will debut in the spring only a few miles distant.

    Then again, having three authorized Mac outlets from which to select might actually attract more people to check them out. Of course, they won’t be able to price shop, since that won’t change, but at least they can feel secure in the feeling that if one dealer doesn’t provide satisfactory service, they can go to another.

    I also wonder whether the ongoing expansion of Apple’s own retail chain is eventually going to put third-party resellers — other than major chains — out of business. Its pretty well known, for example, that Apple’s own stores get new stocks first. Even with the iPhone 3G. When it first came out here in the states, if you wanted a specific model, you would be well served to go to an Apple Store. AT&T got far less stock, though it does seem as if things have settled down lately.

    In any case, if Apple can continue to record half of its Mac sales to brand new customers, the skies may indeed be the limit.



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    4 Responses to “Apple and the 50% Factor”

    1. Jim says:

      Para. 7: this sentence doesn’t seem to fit either the preceding nor the succeeding paragraphs. On the other hand, the confusion may be due to my prefrontal lobotomy. FWIW.

    2. John says:

      FWIW, I doubt the Apple store inside Arrowhead Mall is helping MacMedia (another local Apple reseller) just across the street in Peoria, either.

      And, (if I read you correctly) Apple is adding another store in Scottsdale (where I believe MacMedia has another, also), I believe that will make four Apple stores in the Valley. How many other locations have that many, I wonder?

    3. Andrew says:

      Los Angeles area has even more.

    4. Jon Schoen says:

      I lived in the Phoenix area for nearly ten years, and I continue to enjoy reading Mr. Steinberg’s Column on the net. I live in Albuquerque now, where we have one “official’ Apple Store, and the University of New Mexico, which sells a ton of new MacBooks. We also have 2 Best Buys, which is what I wish to comment on. The Best Buy near where I live (West ABQ/Cottonwood area), has a Best Buy, and at that particular store, here are my observations regarding Apple product, layout, ect:

      1. This Best Buy almost always is well stocked with Apple Product, although peripherals labeled “Mac Compatible” still carry a premium price tag. Why? I don’t know. Around the corner of the aisle, a “standard” 500GB external hard drive costs around $100, usually much less. However, on the Apple side of the aisle, the lone external hard drive found there, an Iomega triple interface, costs $250!

      2. While the Apple ‘table’ does resemble the construction within the official Apple Stores, I have to say that is as far as the resemblance goes. All the Macs on the Best Buy Apple table are dirty, all the hard drives have been renamed something like…. $6flfglhuigh!__T and there are Untitled folders everywhere! Why doesn’t Apple ship the same protective software and/or imaging software that exists at the Apple Stores?

      3. As I first walk in to the Best Buy, on the ‘clearance’ rack, exists a White MacBook which is completely covered in dirt and fingerprints. They are also asking $1299 for this model! an older MacBook, not the new model. I am pretty sure this laptop stands a better chance of being given away than actually selling. Who is in charge of Apple product at this store? I wish I knew.

      4. Several keys on the Demo MacBook Air, MacBook and MacBook Pro keyboards are missing or falling off. Again, who is taking charge of Apple product at this store? It’s disturbing.

      5. Apple & Best Buy both have an “Older Model” 2.1 Ghz MacBook available for $850, I just bought one at Best Buy for my wife, but when I went in to inquire about it, the first two “Computer” associates I talked to didn’t know a thing about it. I had to get a manager, because I KNEW that this particular store did have that item in stock. Sure enough, when they looked in the warehouse, there it is! The $850 MacBook. So I grabbed it up. I was asked, do I want the extended warranty? Nope! I’ll buy Applecare instead. Darn Apple batteries. No matter what I do, they consistently lose their charge after about 6 months. And I’ve tried everything…

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