Apple Is Expanding Its Distribution Channels

Topics: Apple Inc., IPhone, Steve Jobs Pages: 13 (4696 words) Published: April 1, 2010
Apple is Expanding its Distribution Channels
Cliff Edwards of Business Week harped on conflicts with existing retailers such as CompUSA and Sears, quoting CompUSA’s Lawrence N. Mondry, who declared, “When you choose to compete with your retailers, clearly that’s not a comfortable situation.” Mondry could have been describing the experience Mac buyers had when they stepped into most CompUSA stores. It was even worse at Sears. Realizing that they were being held over a barrel by big retailers that were used to calling the shots with computer OEMs and frequently provided a horrible purchasing environment for Apple products, the company did what it had to and took control of distribution. Apple retail stores would give the company the opportunity to “leapfrog” past dependence on other retailers. Daniel T. Niles of Lehman Brothers also saw the possibilities, telling MacWorld, “Apple has the ability to start attracting new customers with the launch of their higher-end retail store strategy.” You can’t mention the surge in Mac sales without touching on the “Halo Effect” of the iPod. Apple made the iTunes/iPod combination available for Windows users. That move created several new distribution opportunities for Apple. First, it gave Windows users the opportunity to try Apple products without having to take the frightening plunge into the world of Macintosh. Apple finally had access to a vast pool of Windows users it had previously been unable to touch. Second, it opened up a secondary market for iPod accessories and tie-ins. Had the iPod only been available for Macintosh users, a secondary market would have developed, but it would have been much, much smaller. Apple would never have been able to strike deals with auto manufacturers, for example. The connector on the bottom of every iPod (except the shuffle) became the point of entry to an incredible array of third-party products, and as that market grew, the iPod rapidly became the de facto standard portable multimedia device. Third, it gave the iTunes Store a tremendous head start. While a digital music store is handy in itself, none of the previously-existing stores had made much of a dent in consumer behavior. They didn’t operate particularly well with Windows-based MP3 players, and they didn’t offer broad enough music libraries. Apple struck deals with all the major labels and created a store that provided an easy, addictingly-convenient interface and seamless integration with the iPod. As the universe of purchased iPods grew, so did the market for the iTunes Store. The integration of iPod and iTunes also created a gestalt effect as Apple moved beyond music. Just as the Apple retail stores bypassed middlemen, the iTunes/iPod combination created a direct link between Apple and its customers. As Apple adds more capabilities to the iTunes Store, and does the same with the iPod, the two should continue to energize each other, provided Apple rolls out the right kinds of features. In 2001 Apple Computer has been taken a decision to open a series of retail stores that would display their entire line of Apple computer products, software and peripherals. Part of the decision, Apple's declining share of the computer market. Now the company has opened over 130 stores, including in Japan, Canada and the UK. It's latest annual report states that they will continue capital expenditures for retail operations, indicating that they have a long-term strategy for opening more stores. Apple Computer Store Products

Hardware: It includes, iMac, Mac Mini, iBook, Mac Book, Mac Book Pro, iPod, Apple Cinema Displays, Airport Cards, iSight, Apple accessories etc. These are purchased from the Apple Store Online or by the phone. Apple Software: It includes iLife, iWork application bundles, Mac OS X, DVD Studio Pro, FinalCut Pro, and other miscellaneous Apple software titles. Third Party Software: It is made for Mac OS X, such as productivity software, design...
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