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Apple Pursues Shoppers With `IPod Bar,' Faster Help (Update2)

By Connie Guglielmo

Sept. 21 (Bloomberg) -- Apple Computer Inc. is unveiling a new store design to add more show room for iPod music players and Macintosh computers and stations where shoppers can get technical help for their products.

The new stores will have an ``iPod Bar'' and Studio where artists and musicians will offer advice on creative projects, said Ron Johnson, who runs Apple's retail operations. Apple stores already have ``Genius Bars'' for repairs and questions on Macintosh computers.

The new design puts twice as many Macs and iPods on display and should speed customer service, Johnson said. More than 10,000 people visit each store a week. Apple, which opened its first store in May 2001 to fuel sales of Macs, said in July that retail revenue rose by 29 percent in its fiscal third quarter to $715 million.

``We launched stores with the Genius Bar in 2001 with no real understanding'' by people outside of Apple where the value was in offering that kind of service and support, Johnson said in an interview yesterday. ``The service has become a hallmark of what the stores offer.''

The new design is modeled after Apple's New York store on Fifth Avenue, which opened in May and has become the company's most visited outlet. It includes stainless steel walls, Italian stone floors, illuminated displays and larger tables for showcasing Mac and iPod models. The design also lets Apple display 50 percent more products from other companies that sell Mac software and iPod accessories.

The IPod Bar

Apple is starting with two new stores in Providence, Rhode Island, and Columbia, Maryland, set to open this weekend, Johnson said. That brings the total to 164 outlets. Stores average about 4,000 square feet. Apple worked on the new design for about a year and built a prototype at a warehouse near its headquarters to test it, he said.

The company added the iPod Bar because the music and video players are selling faster than Macs, Johnson said. Apple, which introduced the iPod in October 2001, sold 8.11 million last quarter, compared with 1.33 million Macs. The iPod is the best- selling digital music player in the U.S. according to NPD Group in Port Washington, New York, and Mac shipments are at a five- year high, based on Apple data.

Shares of Cupertino, California-based Apple fell 61 cents to $74.65 at 4 p.m. New York time in Nasdaq Stock Market composite trading. They have gained 3.8 percent this year.

Genius Bar Reservations

About 70 percent of customers seeking technical help use the company's online reservation system to make an appointment to visit the Genius Bar at their local store. The reservation system also takes appointments for store iPod Bars and Studios. Apple has added iPod Bars and Studios in a few existing stores. They will now be a standard feature in every new store built.

``The bigger the bar, the more people we can serve,'' Johnson said. Sales through the retail stores rose 29 percent in the quarter ended July 1 to $715 million, and accounted for 16 percent of revenue.

Apple this year reached its highest rating in customer satisfaction among U.S. consumers since the University of Michigan began its American Customer Satisfaction Index 11 years ago. Services such as the Genius Bar are helping Apple score ahead of other PC makers, Claes Fornell, marketing professor and head of the Michigan index, said when the scores were announced in August.

Apple's redesign comes as rival computer maker Dell Inc. is experimenting with retail stores. Round Rock, Texas-based Dell opened its first retail showroom in Dallas on July 25, a 3,000- square-foot center featuring 36 products. The store doesn't carry any inventory, so customers have to order products online for delivery.

Dell Tries Retailing

Dell, the world's biggest personal computer maker, plans to open another showroom in West Nyack, New York, this year, said Ro Parra, head of Dell's U.S. consumer business. The company is using customer comments on its Dallas center to alter its store design to make the next one less noisy, with enough seating so customers can talk with sales representatives, Parra said.

The company also is dealing with unexpected issues, like the customer who came in and loaded a screen saver on its PCs that said ``Apple is the best,'' Parra said.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.

Last Updated: September 21, 2006 16:33 EDT

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