Starbucks and Apple begin fruitful partnership
CUPERTINO, CALIF. —For years, Apple has lived in its own retail universe supported by millions of Apple zealots. It even stages its own convention each year at the same time that the rest of the retail world is at the Consumer Electronics Show in Las Vegas. But Apple has become more receptive to mainstream retail this year as it branches beyond its own Apple Store chain.
Apple’s newest venture with Starbucks is scheduled to launch Oct. 2 at hundreds of coffee shops in Seattle and New York City. The deal will allow customers to buy songs wirelessly from Apple’s iTunes inside Starbucks without paying Wi-Fi connection fees.
“We know a lot of people are going to be very happy with this new combination of coffee and iPods,” said Apple ceo Steve Jobs. Neither company disclosed the terms of the agreement, which will launch at 600 stores next month and expand to other cities later this year.
Meanwhile, Best Buy is rolling out Apple Shops that will be in more than 300 of its stores by the end of the year. The small Apple sections will be located in the PC department and feature a selection of Mac laptops and accessories on a display backed by a sign bearing the Apple logo. Analysts see the Best Buy test as a sign that Apple has become more receptive to traditional retailers as it takes tentative steps beyond its 192-store chain of Apple Stores.
“I think you’ll be seeing them [Macs] in more retailers,” said Andy Hargreaves, an analyst with Pacific Crest Securities, “and I think it’s part of Apple trying to expand its distribution base to more outlets.”
Apple is also testing Apple Shops at a handful of Circuit City stores and could be ready for a larger rollout there. But NPD Group vp of industry analysis Steven Baker said not to expect Macs and other Apple products to show up on the shelves of mainstream retailers anytime soon.
“They’ll only go into a retail space that can provide real merchandising prowess and a high level of service,” said Baker. “There’s a reason they only sell their products at Fry’s, MicroCenters and CompUSA, and Best Buy is an extension of that.”
He said that teaming with Starbucks for music downloads is different because the iPod is low-tech and not an integral part of Apple’s culture.
“Starbucks is just a natural partner for the iTunes deal, since their stores are ubiquitous and most of them have Wi-Fi connectivity,” said Baker.
However, Apple is likely to keep a tight rein on where they sell their other products such as computers and the new iPhone.
“The genius of Apple is that they’ve been able to combine the sales experience with their brand experience,” said Baker. “And that’s something they’re going to preserve.”