Everyone (myself included) misses the point when considering this perspective. The first thing you do is compare Apple’s four /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 349.95, -0.49, -0.14%) items — Mac, iPod, iPhone and iPad — with IBM’s /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 161.07, -0.30, -0.19%) huge range of products, services and licensing. Or with H-P /quotes/comstock/13*!hpq/quotes/nls/hpq (HPQ 42.10, -0.04, -0.10%) and its scope. Even Microsoft Corp. /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 25.40, -0.01, -0.04%) delves into more things than Apple.
Jomo Moir/MarketWatch
Consumers line up for the iPad2 at an Apple store in San Francisco.
Yes, well, what’s overlooked is that Apple is not getting rich from four products. Apple is not first and foremost a hardware maker, a software maker or a dream maker. Apple turns out to be one of the world’s greatest retailers.
And that is the real reason why Apple is huge. It should not be compared with H-P, IBM or anyone else in the tech industry. Apple should be compared with Wal-Mart Stores Inc. /quotes/comstock/13*!wmt/quotes/nls/wmt (WMT 52.12, -0.07, -0.13%) , Target Corp. /quotes/comstock/13*!tgt/quotes/nls/tgt (TGT 49.55, -0.40, -0.80%) and even Macy’s Inc. /quotes/comstock/13*!m/quotes/nls/m (M 23.17, +0.01, +0.04%) . Best Buy Inc. /quotes/comstock/13*!bby/quotes/nls/bby (BBY 29.35, +0.13, +0.44%) is a better point of comparison than H-P.
Heck, Apple has more in common with McDonald’s Corp. /quotes/comstock/13*!mcd/quotes/nls/mcd (MCD 75.29, +0.29, +0.39%) than with H-P.
Apple stores, which are modern event-driven showcases, have made the company what it is today. Using some of the most advanced ideas in retailing, Apple married Silicon Valley to retailing, using its sense of style to make each store a Vegas-like experience.
The store itself is a form of entertainment, and often when people are bored, they will just go to an Apple store, hang out and help create the atmosphere of a perpetual “happening.” The store itself is an event.
It's not a smartphone; it's a Snapfon
While there were plenty of smartphones on display at CTIA, the Snapfon is decidedly at the other end of the spectrum — and proudly so. Like the better known Jitterbug, the Snapfon prides itself on big buttons and simplicity, aiming at the growing market for seniors.
Even before the first Apple store opened, I often said that computer companies need their own owned-and-operated sales palaces so they can control the sales pitch just like an auto dealer. Other companies have tried, but their formulas were off.
Not being in any meetings regarding these failures (CompuAdd, IBM, Gateway, etc.) I don’t know what they were thinking. Someone at Apple thought different, and it had to be Steve Jobs and his esthetics.
I say this because an Apple store is actually a Bang & Olufsen store writ large: a high-concept store selling high-concept designer items. The Apple store wouldn’t work if its products looked like black-box Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 14.79, -0.27, -1.79%) computers. The Apple store is a gestalt of appealing modernity.
These observations will become more apparent when Microsoft rolls out more stores, and their designs seem to ape Apple’s — as far as the stores themselves are concerned.
However, this won’t work because the Bang & Olufsen product-design element will be missing. The experience will be incongruous and off-putting.
I think I need to get a look at Microsoft’s effort. All I know is that the company predates Apple with an experimental retail store in San Francisco (since closed).
Few people ever went to this Microsoft store, but it was slick and professional and could be best described as one of those Discover stores where all the nature and science toys were replaced by boxes of Microsoft Office.
Back to Apple. What I’ve concluded is that to understand the future of Apple and its valuation, you have to have a firm understanding of what the company really does that makes it different and so successful. And that’s retailing. This is not your father’s Apple.
The famous venture capitalist, John Doerr, years back once described Apple jokingly as a vertically integrated advertising agency. It was a cute comment that didn’t quite make sense, but was memorable.
