Apple’s Mid-Life Opportunity

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Apple’s retail stores are in the midst of a fundamental shift. Is this the start of a more open, less insular Apple?

A more open, community-driven space: Apple’s new flagship San Francisco Store on Union Square (Image: Foster & Partners)

Just this past April, the world’s favorite brand turned 40 years old. To celebrate, the company announced its first disappointing earnings in well over a decade, and its first iPhone sales decline in nine years, sparking speculation that perhaps the world’s hippest company was starting to age. It’s been nearly four years since Steve Jobs passed, goes the logic — at some point the company has to fall back to Earth.

Maybe, but what I’ve heard in the company’s more recent announcements don’t sound like the protestations of a has-been hiding a middle-age bulge. Instead, they indicate a more fundamental change in posture, one that has the potential to reposition the famously secretive and — let’s admit it — rather arrogant company as humbler convener of community, a better corporate citizen, and a more reliable business partner.

Apple kicks off its worldwide developers conference in San Francisco this week, and the big news so far has been the company’s new approach to its app store. Nearly a decade and $50 billion into the app revolution, Apple has announced it will add search advertising to the app store, and allow all apps to sell their services as subscriptions. To encourage such sales, Apple said it will only retain 15% of all subscription revenues after the first year (the rake had been 30% before).

A 15-point increase in any business’s bottom line is a welcome (and major) bit of news, and was greeted with nearly universal praise — as Stratechery’s Ben Thompson put it, Apple has always been about Apple first, customers second, and developers third, so this was a sign that developers’ pain had begun to be felt by Apple itself.

The “Genius Grove” at the new Apple Store, a more welcoming approach to interacting with Apple staff. Outside to the right is “The Plaza,” a public space with free Wi-Fi and outdoor programming. (Image)

But to my mind the most declarative statement of a new Apple comes with its flagship Apple Store in downtown San Francisco. The first major update since the famously profitable outlets opened in 2001, the new store takes a decidedly open approach to just about everything. Forty-two-foot doors slide open to Union Square. Million-dollar glass staircases welcome you to a cantilevered second floor featuring a large performance space, a massive connected screen, and a wifi-enabled public plaza. While you can still find all the same products, they’re minimalized — the point of the space isn’t to sell you stuff, it’s to sell you on the idea that Apple is a solid member of its surrounding community, that Apple adds value to the city itself. I can only imagine that Apple’s vaunted position as retail’s perennial sales-per-square-foot champion is going to fall — there’s far more air in this space than commerce.

Huge doors open to the street

Wandering through it, I felt like I was experiencing a new Apple, one that was a bit tentative and eager to please — at least half a dozen Apple staffers asked if I needed help or thanked me for coming in as I walked by. It was the opposite of your typical Apple madhouse, where crowds of people jockey for the attention of frazzled salespeople, and queues of frustrated customers peck at broken phones while waiting for their appointment with a “Genius” behind the counter. In fact, the new Flagship stores abandon the Genius Bar altogether and create a “Genius Grove” with plenty of space for seated conversation. Apple plans to add nearly a dozen Flagship stores over the next year (Istanbul and Hangzhou already up and running), and the Flagships will inspire changes in all 500 or so going forward.

With this new approach, Apple is making a play, once again, for the future of retail, which will be much more about experience and connection than selling physical product. “We are not just evolving our store design,” said Angela Ahrendts, Apple’s senior vice president of Retail and Online Stores in a statement, “but its purpose and greater role in the community as we educate and entertain visitors and serve our network of local entrepreneurs.” Added Jonny Ive, Apple’s head of design: “We have a deep commitment to the cities we work in, and are aware of the importance that architecture plays in the community. It all starts with the storefront — taking transparency to a whole new level — where the building blends the inside and the outside, breaking down barriers and making it more egalitarian and accessible.”

Apple staffers told me the plan is to use the store for much more than retail, in fact, the San Francisco store has already been host to several events ranging from free concerts to master classes in photography and business. Each new flagship will also include a “Boardroom” where local entrepreneurs can meet with Apple executives — the design touches and artwork are meant to make visitors feel as if they are on site at Apple’s soon-to-be-completed headquarters, which itself will be open to the public — a major shift for a company that operated in extreme secrecy for most of its life.

The new Apple store is Apple’s most tangible and analog expression of its corporate philosophy, and it’s chosen to make that expression about openness, inclusiveness, and transparency — and the modern city. This follows a slew of decidedly controversial and, to my mind anyway, laudable positions the company has taken in the Tim Cook era — on everything from encryption to civil rights. Maybe as the company rounds into middle age, it’s finally outgrowing its youthful arrogance, and learning to open up. Maybe you can both change the world and be part of it at as well.

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