Apple 2.0

Covering the business that Steve Jobs built

Apple: Another opening, another show

July 26, 2009: 7:19 AM ET

Apple's (AAPL) 258 retail stores may be drawing fewer visitors and bringing in less revenue than they did before the economic downturn (see stats below the fold), but they can still make a splash.

Witness the grand opening video -- shot by No. 2 in line -- of the company's 21st U.K. Apple Store in Brighton on Saturday, complete with the usual long snaking queue, 1,000 free T-shirts and over-the-top high-fiving Apple employees.

Below: the curious economics of Apple's retail stores.

The purpose and function of the Apple Store has been underscored in recent weeks by leaks of Microsoft's (MSFT) plans to deploy its own chain of retail outlets -- some of which will be located near Apple's and will reportedly have the same look and feel, with bright open layouts, wall-sized digital screens, spaces for free public events and Guru Bars to deal with customers' software complaints. (See here.)

Picture 60

As Microsoft seems to now understand, the real purpose of the Apple's retail outlets is not to move product -- although they generated a total of $1.5 billion in revenue last quarter.

Rather, the Apple Store is the company's steel-and-glass public face -- a high-tech oasis as close as the local mall where one can experience first-hand the attention to design, the hand-holding support and the unrelenting focus on the user's experience that make Apple different from every other computer maker (and are used by company and customers alike to justify Apple's extraordinary profit margins).

So it's not as important as it might seem at first glance that store visits were down for the second quarter in a row or that average revenue per store has sunk back down to 2007 levels. (See the spreadsheet below provided by ifoAppleStore, which covers Apple's retail division like Variety covers Hollywood.)

The fact is, no one leaves an Apple Store feeling quite the same about computers. "It really is like entering another world," wrote Silicon Alley Insider's Henry Blodget earlier this month after what was -- believe it or not -- his very first visit.

And it doesn't hurt that every store opening still draws a crowd, and that Apple employees still care enough who whoop and holler and act the fool for the entertainment -- and often apparent embarrassment -- of the people waiting for the doors to finally open.

Thanks to Ian Thomas (twitter: ianthomasuk) for the video, Gizmodo for the Microsoft slide and reader Donna in Mountain View for the tip.

Below: ifoAppleStore's quarterly stats. For more of their charts and graphs, click here.

ifoApple Store stats

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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