Wednesday, January 24, 2007, 02:00 pm PT (05:00 pm ET)
Apple stores increasing focus on Windows stragglersApple's retail stores will begin courting Windows users with added finesse this spring, as new product launches from the company help pique interest in its Mac line of personal computer, one analyst says.
In the Wednesday edition of "Wolf Bytes," Needham and Co. analyst Charles Wolf explains a strategic shift in focus for the international retail chain, which was originally conceived to provide Macintosh users with a shopping experience that was superior to what they found in computer and consumer electronics chains.
"Their key priority is to convert Windows users to the Mac and grow Mac sales," the analyst wrote. Come the launch of Mac OS X 10.5 Leopard this spring, he expects "the stores to play a pivotal role in educating the hoards of Windows users" about the system's Boot Camp feature, which allows for Windows installations to coexist on a Mac.
Following the release of Leopard, Apple in June will roll out the iPhone, and again, Wolf says company stores will play an important role in signing up customers to this multimedia phone. "Unlike the iPod, whose distribution has become ubiquitous, the iPhone will be sold only in the Apple online and retail stores, along with Cingulars carrier stores," he wrote.
In his report Wednesday, the Needham analyst also rationalized the recent performance of Apple's retail segment, which upon first glance appeared to turn in a dismal performance during the company's December quarter. He noted that while total visitors during the three-month period reached a record 28 million, visitors per store declined by 18 percent, reflecting the higher store count in the quarter. Likewise, he said, record revenues of $1.14 billion translated into a 19 percent decline in same store sales.
"But looks can be deceiving," the analyst wrote. "The decline in same-store sales solely reflected a sharp decline in iPod sales. Last year, the Apple Stores were the only reliable source for iPods. This year, iPods were available in 40,000 locations, mostly in the U.S. There was an inevitable decline in iPod sales at the Apple Stores, then, because of the rapid expansion of the iPods distribution."
Wolf said better news for Apple retail came in the form of same-store Mac revenues, which rose by 25 percent to account for 47 percent of total store sales in December. That latter figure, he noted, is up from 30 percent during the same quarter one year ago.
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