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Todd Walker sent me another great insight into how Apple continued to innovate in the previous recession—it launched its retail stores. Lots of folks thought it was a mistake at the time, including Business Week.
Here’s a great quote from the 2001 piece:
“The way Jobs sees it, the stores look to be a sure thing. But even if they attain a measure of success, few outsiders think new stores, no matter how well-conceived, will get Apple back on the hot-growth path. Jobs’s focus on selling just a few consumer Macs has helped boost profits, but it is keeping Apple from exploring potential new markets. And his perfectionist attention to aesthetics has resulted in beautiful but pricey products with limited appeal outside the faithful: Apple’s market share is a measly 2.8%. “Apple’s problem is it still believes the way to grow is serving caviar in a world that seems pretty content with cheese and crackers,” gripes former Chief Financial Officer Joseph Graziano.”
Wow. Good thing Jobs continued to sell caviar, right? On the other hand, do you think the iPod and iPhone are “caviar” because of price or design/innovation? The later, certainly. And the world seems content with them.
“Indeed, rather than taking on the retailers who ought to be its partners, Apple would do better improving how it works with them. A good step would be to end the “think secret” approach that shrouds every new-product announcement. Covert operations worked beautifully when Jobs first arrived on the scene; his charismatic stage presence and Apple’s eye-popping designs created priceless buzz. Now, retailers complain that the secrecy prevents them from doing advance advertising to hype sales and clear out inventory. “They are the most secretive company I’ve ever done business with,” says one top retailer. “They should let the news leak out, to convince the world how exciting their stuff is. That’s how everyone else does it.” Maybe it’s time Steve Jobs stopped thinking quite so differently.”
More wow here. Apple stores tend to generate as much revenue per square foot as jewelry stores—not retail stores, like Best Buy or Wal-Mart. Think about that.
In the last economic slowdown, Apple innovated its product line and its business model (stores). It poured MORE into innovation, not less.
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