Becoming the Apple of retail’s eye

So I’m officially back on the Apple bandwagon—not that I ever really fell off. But it’s been a while, 2,106 days to be exact, since I last wrote admiringly about Apple. And with everything the company has done since then—iTunes, iPod, iPhone, iTouch—it kind of makes you wonder why I waited so long.

But the truth is, as impressed as I’ve been with Apple products, I haven’t always been impressed with its retail strategy. Sure, I can appreciate some of the strategic decisions, like selling desktop computers through “authorized Apple retailers” that not only understand the benefits of the Mac OS but can use those benefits to help trade up consumers.

But let’s face it, the number of Apple strategies over the years that reek of obstinate thinking have outweighed the good. Consider Apple’s longtime insistence on creating a sense of expectation by rolling out limited supplies; or limiting distribution to channels deemed “worthy” of its higher-end offerings; or insisting on minimum pricing standards that preclude promotion-driven retailers from discounting their stock; or, of course, its old-school mentality of creating product that not only uses a proprietary operating system but also is incompatible with earlier generations of the same line. (Think power cords that are incompatible from one generation to the next. Is there anything more annoying?)

Given this pent-up frustration, it should come as little surprise that I was very pleased to learn Apple is changing its ways. In addition to the same old great product we loyal users have come to know and love over the years, Apple is now rolling out product in a way that shows it is finally playing the game of a seasoned distributor, conscious of the market forces that currently control the retail space.

This point was punctuated earlier this month when news came out of Apple headquarters in Cupertino, Calif., that the company was slashing the price on its newly launched iPhone, easily one of the hottest CE products ever to hit the U.S. market. For a company that goes around acting like it has no blemish, a major price cut is a big deal on several levels. It’s an acknowledgement that a $600 phone, no matter how amazing, is not exactly a green light for mass adoption. It’s a concession to the retail industry (from a company that doesn’t make many concessions) that the iPhone is at home in every channel, with every consumer. But most importantly, the recent price cut to the iPhone should have retailers rejoicing from Miami to Seattle thanks to the secondary affect it will have on the sales floor.

The spike in hardware sales is a no-brainer. But with more units out there, the real dividends will pay off in the wake of the subsequent surge in high-margin ancillary sales, such as cases, FM transmitters, docking stations, music downloads, video downloads, ring tones, chargers, and so on.

Between the cheaper iPhone, the brand new iTouch, the video iPod Nano and the 160-giga-byte iPod Classic, Apple is offering more products, at more prices, through more channels than ever in the history of the company.

For the retailer of consumer electronics products (from warehouse clubs to drug stores) this means that no matter how detestable you may find that trademark turtleneck worn by Steve Jobs, you have to swallow your pride and raise your glass to a strategy that finally makes sense. If things play out like early forecasts would suggest, the 2007 holiday selling season could be a banner year for the tech sector—particularly for Apple and all the companies that have jumped on the Apple bandwagon.

Even if you’re not a devotee of Apple products, you have to admit Apple’s retail strategies are back on track. And in the wake of the news that better, cheaper iPods and iPhones will be arriving in the market in 4Q, it’s nothing short an early Christmas gift from Steve Jobs to the entire retail sector.