When Steve Jobs first proposed the idea of opening Apple Stores, many were unsure whether the idea would succeed or be a colossal failure. For years, Apple had relied on traditional big-box electronics retailers to be the primary distributors of its products. Fast forward almost eleven years and 360 stores later, and the Apple Store brings in excess of $10 billion per year. It goes without saying that the idea paid off.

The Apple store was successful for several reasons. For one there is the intangible “cool” factor that Apple had worked so hard to establish over the years that gave the company a head start on any of its competitors considering entering the retail space. Second, Apple owns the hardware, they own the software and they own the retail channel. When consumers walk into an Apple store, they know they’re going to find Apple hardware. In theory, the consumer knows exactly what they’re going to get. And, if in the off chance they aren’t familiar with all things Apple, there’s an army of Geniuses that look the part and, hopefully, know the product inside and out to sell them on why they need that sleek brushed aluminum piece of hardware. The formula has worked very, very well.

Recently, several of Apple’s competitors have decided that they also should open brick and mortar stores. First was Microsoft. Attempting to sell desktop and laptop computer systems from various manufacturers, as well as a few Microsoft devices such as the Zune. Success has been mixed.

Recently, and perhaps more interestingly, came announcements from Google and Amazon that they had plans to test the brick and mortar waters. Google, as is fairly typical, has made slow, calculated and subtle moves towards entering other channels of commerce. Some of these efforts have been successful, some have not. One move that perhaps flew a bit under the radar was Google’s acquisition of Motorola Mobility. While the first and most obvious assumption is that this had to do with having dedicated Google branded Android mobile phones and other devices, the purchase also gives them perhaps a gateway into the living room. Motorola makes a large percentage of the set top boxes issued by US cable companies. This could give Google a foothold in the home entertainment market, and in the case of technology, getting a head start is often invaluable.

As amorphous and unclear as Google’s future plans in expanding, Amazon’s plans are even less clear. While it is fairly obvious that Amazon plans to sell Kindle devices in their stores, it would be difficult to have an entire store dedicated to various versions of the ubiquitous e-reader. Amazon is the electronic version of Costco, selling basically everything to everyone. How this plan would successfully translate into a brick and mortar store remains to be seen. But, if there is anyone other than the late Steve Jobs, who could successfully plan and implement such a seemingly odd transition and alteration to a successful business model, it is Jeff Bezos and company.

The bottom line to all of these tech giants plans, and a point proven by Apple, is that the key to retail success is establishing a strong brand identity, making the target markets aware of it, and sticking with it. Microsoft has already, to some extent, failed in this regard. However, Google and Amazon have a very interesting opportunity before them. For now, these two giants are testing the waters. But these companies are run by some pretty smart folks, so the next few years will be interesting to say the least, should they decide to make their run in other endeavors long term.

One Comment

  1. Great post Jonathan.

    Apple maintains a position in the market as a premium brand with a strong loyal following that supports their price point. I think that’s a testament to their innovation and product functionality. Google is on the opposite side of the equation. In many cases their products are free of charge to the market or at some nominal charge. Of course they make their real money in a different way. As a general retailer Amazon fits all over the map from lowest cost competitor to premium brands.

    To your point, Google and Amazon are making plays in the market with branded products/services. Amazon made a real splash with the Kindle Fire as a low end tablet at a more affordable price point. Google is in more places now competing with Microsoft on the productivity suite, with Apple in the music and app market, with the phone services, with Facebook, etc.

    The competition is good for consumers and great for innovation.

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