IPad Could Redefine Apple's Stores

Ashesh Shah
March 31, 2010
720 Views
3 Comments

A store redesign is the least Apple can do for the iPad, a device whose ability to sell content might bring the company a fresh bonanza.

A few weeks ago, Apple (AAPL) decided to start taking preorders for its widely anticipated iPad. It’s one of those products that if successful, will redefine the computing landscape, much as its cousin the iPhone has done.

There’s also a chance that the world may not be impressed with the iPad’s brilliance. Given how excited I’ve been about the product, many of my friends and colleagues are wondering why I didn’t preorder one. The answer is simple: I want to write about the iPad launch from the point of view of a retail buyer. I plan to head over to the Apple store in San Francisco on Saturday, stand in line, and see if I can actually get my hands on one that way.

What I really want to see is how Apple reorganizes its retail experience to fit the iPad. Right now, when you walk into a typical Apple store in the U.S., you get a fairly binary experience: Macs on one side of the store, iPhones and iPods on the other. Apple has used this clear demarcation of its two major product lines—computers and entertainment devices—to create a brilliant retail experience.

A floating row of alternating iPads?

Soon the iPad will join the mix—not quite an iPhone and definitely not a traditional computer. On which side of the aisle will Apple put this device? I think the retail display will pretty much define the category in which the iPad falls. I’m hoping that Apple redesigns the stores, carving out a whole new space for the iPad.

If it were up to me, I’d line up a single row of iPads, with their front and backs alternating. They’d be mounted on a transparent stand, so that from a distance it would look as though they were floating in the air.

Analysts are expecting a hit. Morgan Stanley’s (MS) Katy Huberty expects Apple to ship more than 6 million iPads this year, far higher than the consensus expectation of 3 to 4 million units. Huberty expects 2.5 million iPads to ship between March and May and an additional 750,000 during the June quarter. She points out that iPad suppliers are estimating that Apple will make between 8 and 10 million of these devices. For each million iPads sold, she estimates that Apple will earn an additional 25¢ a share.

I think Huberty might herself be underestimating the iPad’s money-making potential. Having played around with one for 20 minutes, I can tell you that this device will make users spend far more money on apps, books, music, and other content than they do via the iPhone. Given that Apple takes roughly 30% of sales, the iPad could be another bonanza in the making.

Now, back to waiting for the weekend.

Resource:
http://www.businessweek.com/technology/content/mar2010/tc20100330_376043.htm

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