John Martellaro writes on TechNewsWorld about OODA, military warfare, decision loops and…well, who knows what the heck he’s talking about here? It’s all so psychological and strategic, likening competitive business to warfare, an analogy so inappropriate these days as to be outrageous. At one point he says, “Apple will get so out of sync with the mind of the Internet that it will no longer be able to function effectively.” Huh? But the article also misses some realities of Apple’s way of doing business: we determine what the electronics consumer would like to have, and what features it should include, and then we create them. The oft-used term “innovation” explains it. Unlike HP, IBM, Microsoft and others that Martellaro mentions, Apple doesn’t have to use military reasoning to position its products to match or block out the competition. They innovate new products and features. If those products are imitated by others, you simply come up with new features and products. It’s a much simplier way of doing business—and more effective.

The American consumer has become much more saavy about shopping, especially during the holiday season. Retail analysts say that Black Friday sales were strong this year, but then consumers cut back on their spending in the following weeks. How come? They’re all waiting for the price cuts and sales. And consumers know the price cuts are going to come, too. On the other side, retailers know that consumers are waiting, but they can’t afford to maintain their prices. Eventually (actually, this weekend), the prices will come down. Retailers are just hoping that consumers come in droves and spend wildly. And they also just hope that generating revenues via price cuts will be successful. Interestingly, Apple doesn’t have to worry about all this–they offered small discounts on Black Friday, but have never resorted to other sales or discounts during the holiday season to boost sales. And their financial results for the holiday quarter have always been phenomenal. P.S.–Circuit City reported a third-quarter $16 million loss, while Best Buy revenues rose a disappointing 8.7% because of price cuts.

You really have to examine the numbers. That’s apparently what research firm Forrester did, and came to the conclusion that Apple’s iTunes Music Store sales have dropped off dramatically during the first six months of 2006. In minutes, every Web site and newspaper was crowing, “iTunes Sales Down 60%,” or “sales are flatlining.” It just didn’t make any sense. First of all, there are an increasing number of iPods in use, with each one contributing at least a small number of songs to the sales figures. And if you weren’t skeptical at first, you have to remember that human behavior doesn’t change that quickly. How could sales drop over one-half within six months? The negativism lasted about two days, and then Forrester tried to patch their original story, saying the figures they gave were correct, but that the media put an odd spin on them to make iTunes appear on-the-ropes. The company also pointed a finger at Apple, saying the company is never forthcoming with sufficient information to draw conclusions. Either way, Apple stock took a nose-dive, apparently prompting phone calls to Forrester execs to clarify their research. From what I can gather, they compared 2005 holiday sales figures as a starting point, and then tracked sales downward from there. But it turns out that Holiday 2005 was off the charts (good), and so any post-holiday comparison would naturally look bad.

Scott Finnie has been using a Windows computer for many years, but recently tackled a three-month trial use of a Macintosh for Computerworld magazine. What complicated his migration of data from Windows to Mac was his use of Eudora for e-mail. Well, perhaps it’s more accurate to say that complications arose because of his organization scheme using Eudora: he has 1,500 mailboxes, 500 mail-filtering rules and an unstated number of entries in his address book. His e-mail data totaled 2 Gb spanning 14 years of use. He discovered that there’s no good method of moving all this data from Windows to PC, but did come up with a technique that used TextWrangler to massage the Eudora files, but it took four days. Yikes! In Mr. Finnie’s defense, there ought to be a way to fairly easily move data in and out of e-mail programs. On the other hand, I feel overwhelmed when I have 200 or so old emails, maybe 100 spam rules, and just 1-2 Mb of old mail. Should an e-mail program ever become that key in life that it grows so large with 14 years of information? I suppose for Mr. Finnie, it has.

Eletronics retailer Best Buy announced they will open their first store in China later this month, the first of many retailers who have publicly said they will locate in the country. China has been on Apple retail project list, but until lately there have been some political and economic barriers to opening a store that would bring the American Apple retail experience to the country. The last two years have brought some regulatory changes, and you’ve have seen Wal-Mart, Carrefour and now Best Buy start to move into the country. Interestingly, Best Buy says their China store will feature company-trained employees that are paid salaries, not commissions. Apparently many large Chinese retailers use product-trained employees who have a huge incentive to steer customers to their products. You can bet that Apple will be monitoring Best Buy’s entry into China. You might even speculate that Apple’s retail team might be working with Best Buy on the project to create an Apple area within the China store, hoping to gain some insights for a future stand-alone retail operation. Either way, putting that back-lit logo up along a street in Beijing or Shanghai would be a giant first step for a company that wants to maintain its current sales momentum. China is now, if nothing else, a land of momentum. Update: on Dec. 15th Home Depot announced that it had purchased the China-owned Home Way chain of 12 stores, giving it an immediate presence in the country.

The PopSyndicate Web site has interviewed an unnamed Mac Genius by e-mail, and revealed a very strange side of the job. Most of the interview reinforces previous blogs that say retail employees are often abused by arrogant customers looking to belittle the employee or get something for free. The Genius admits to having some good cutomer experiences, and provides some insights into how to get the most from your visit to an Apple store Genius Bar. However, the interview also shows a darker side of the Genius Bar: customers should expect sarcasm when they come to the Bar, which the Genius classifies as either “nice” or “condescending.” Some of the Genius’ language and attitude on this point are unacceptable for someone working customer service, and especially for Apple, even taking into account potential customer abuse. Even worse is the statement that “all Mac Geniuses are thoroughly trained in” sarcasm techniques to deal with customers. Pretty shocking to think that being a sarcastic jerk has somehow become a standard behavior within the entire store customer service structure. Makes you wonder what techniques the AppleCare telephone support staffers are using when you call–and can’t see them. I certainly don’t condone idiot customers. But Apple must be giving their Genius staff techniques if they do encounter jerks, right? And and it shouldn’t be sarcasm.

Even without spotting the SmellMaster 3000 at the edge of the Sony Style store’s entrance, it was pretty obvious. The toaster-sized machine was pumping out cinnamon, presumably an odor that would attract passersby in the giant mall to come into the store. Well, at least it would make the store seem cozy and homey after you came in the door. Exactly how do you match up a technology store with the appropriate odor? What goes with computers, DVD players, camcorders and DVD movies? If you were selling baked goods, bedspreads or even sporting goods, I could think up a few smells that you might want to pump into your store. But techno? I have no clue what smell to use.

As reported by AppleInsider, Bear Stearns analyst Andy Neff has written clients about his meeting with Apple CFO Peter Oppenheimer and V-P of iPod Product Marketing Greg Joswiak. “Ultimately, Apple’s goal is to create a product that customers would want (as opposed to creating new technology merely for the sake of technology), while focusing on areas where it can differentiate,” he wrote. He then went on to talk about the iTV project possibilities, and also raised his target price for Apple stock to $100 per share ($91.80 now). That is the key goal of an innovative company. You can only imagine what technology and human resources Apple is able to tap within its organization. But not all of those resources are something that people actually want to use. There’s wireless gear, LCDs, memory, hard drives, circuits, on and on. Combine it, integrate it, manufacture it and get it to consumers. But it has to make sense at the end of that work cycle. Something I’d be interested in buying–wait, no. Excited to buy! Something useful, enjoyable, creative. Sure, iTV sounds interesting. But really…what do you actually want/need in that living room space? Sometimes it’s not easy for me to figure it out. But Apple does. P.S.: If they can just make a better Tivo, I’d be happy!

I visted an Apple store in the San Franciso area on Black Friday, noting that they were using the portable, hand-held computers for check-out, but had not resorted to coverting a display table to POS duties as they did last year. The store was crowded, but also well-staffed, and the check-out line never got too long. There were staffers handing out the holiday gift guide at the door, and telling visitors of the “one-day sale” (on selected merchandise!). There seemed to be more than the usual number of couples pushing strollers, and more people actually asking about systems, rather than just browsing. The usual crowd of teen Photo Booth users was absent, and so were the people who come in just to check their e-mail. Overall, the operation seemed to be operating on all cylinders. On the other hand, my visit in the early afternoon didn’t demonstrate that merchandise was flying off the shelves. I only saw two laptops and one system come out of the door in about 90 minutes. And those gift guides…well, some ended up in a nearby trash bin outside the store. Does it say something that there’s also an empty box of wine and Starbucks cups in the trash bin?

I found an iPod owner’s on-line saga pretty interesting, mostly for how much arrogance there is as the writer encounters problems and tries to solve them. I suppose it’s typical of today’s mildly tech-savvy consumer, who wants things to work, and work in a certain way. This blogger didn’t seem to research the product too well, didn’t realize he needed to download the latest sofware updates, criticized the design and software, and then marched off to the nearest Apple store for a solution. Of course, nothing is right at the store: employees are waddling and wearing cute red shirts, the store has no PC for trouble-shooting, and other sarcasm. If you’ve guessed by now that this blogger is a Windows PC user, you’re right. But that’s beside the point. Read and take heed–customers in general are a very demanding lot, even if their criticism needs to be more self-directed.

With the holiday shopping season just about to start, and Apple stock at an all-time high (over $90), it’s time to ponder what sales might be in the next quarter or two. Apple is generally firing on all cylinders, with increased sales of computers and iPods. Retail and shopping malls associations say that sales should be up 4% to 5% compared to last year. To all that, add the new Gen 2 iPod shuffle, the updated laptops, the future iPhone, and a continuing string of new retail stores (average $6 million per store, per quarter in revenues). It’s what the analysts call incremental revenue–that is, new sources of revenue for the company. In contrast, Dell (and others) has to limp along trying to squeeze out additional revenues from its existing operation–reduce costs, increase efficiency, whatever. When you’re dealing with a speculative market like the NY Stock Exchange, you can’t beat the smell of new revenue to pump up the stock price.

Most of Apple’s retail stores are in mall locations, and the street-level stores are in large cities. But now Apple is working on several future stores that target street-level stores in smaller towns, or in local neighborhoods of big cities, and it’s raising red flags with neighborhood groups or city planning boards. San Luis Obispo (Calif., pop. 44,100) and Los Gatos (Calif., pop. 28,500) are both on Apple’s radar for retail stores, but both are small, quaint towns that want to preserve their historic charm against chain store architecture. And in neighborhoods of San Francisco and Portland (Ore.), residents are concerned about how a stainless steel façade will fit in to their corner of the city. All four cities have an active group of residents who are committed to preserving some part of their neighborhood, either architecture, lack of vehicle congestion, or diversity of commerce. In some cases they also have elected officials who are concerned about the balance between a business opportunity and the changes it might bring to their city. It’s not clear if all this signals a trend to smaller towns for Apple. But apparently it does signal some local resistance.