The Apple Store in Sendai, Japan is closing after 13 years, according to a report in ITmedia News. Historically, Japan has been key to Apple’s retail strategy, as the first international Apple store opened in the Ginza shopping district in Tokyo in 2003. With the closing of the Sendai location, Apple will have only eight stores in Japan, four of which are in Tokyo, and one each in Osaka, Kyoto, Nagoya, and Fukuoka.
When the Sendai location closes on January 25, no Apple Stores will be open north of Tokyo on Japan’s main island. The second largest (and northernmost) island, Hokkaido, lost both of its Apple Stores in 2016. Combined, the Tohoku region (in which Sendai is the largest city) and Hokkaido have a population of 14.1 million. The economy in the Tohoku region has not returned to levels prior to the Great East Japan Earthquake in March 2011.
This announcement immediately follows Apple’s lowered revenue guidance for Q1 2019-the first since 2002-which led to countless editorials about the company’s woes. At TechRepublic’s sister site ZDNet, Adrian Kingsley-Hughes asks if this is the “beginning of the end, or a new beginning,” and points to battery replacements causing lowered iPhone sales, and prognosticates on “tough times ahead” for Android device manufacturers. Liam Tung reports on speculation of production cuts for the iPhone XS and XR, while Ed Bott points out the deficiencies of tracking monthly “market share” numbers.
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Fundamentally, none of this analysis is wrong. The market is changing, but year-over-year, changes to smartphones have become less and less noticeable, giving users less reason to upgrade. Some users may have negative incentive to upgrade, as many despair over the loss of the headphone jack in new models, while others malign the utility of a notched display. For the Japanese market specifically, increasing phone sizes are a negative incentive-the diminutive iPhone SE was released in March 2016, while Sony produces Compact versions of their flagship XPERIA phones annually.
As a company, Apple relies as much on word-of-mouth as traditional advertising, though the efficacy of their television advertising may be weakening. ZDNet’s Chris Matyszczyk points out the similarity of the iPhone XR “Color Flood” campaign to a award-winning Sony ad from 2006. As a heuristic, using groups of people sort-of dancing to sell a technology product (not related to music) should be considered an admission that the product is doomed. For example, the original Microsoft Surface and Surface Pro running Windows 8 and the Palm Pre smartphone used the gimmick. (Granted, the Surface still exists, though Windows 8 retains its poor reputation.)
Japan certainly has no shortage of phone stores for mobile network operators-even small towns are littered with Docomo, Softbank, and AU storefronts-with Apple product sections common in big-box electronic shops like Yamada Denki. However, these storefronts do not provide the same level of service and expertise found in Apple Stores; likewise, mobile network carriers do not sell and are unable to support iMac and MacBook systems.
Apple’s strategy is difficult to understand, as the company opened a new location in Tokyo’s Shinjuku district in April 2018, while the two locations in Tokyo’s Shibuya and Omotesando districts are just over one mile apart.
It remains to be seen if Apple’s adjusted revenue forecast will impact how the company divides and targets market segments in either geographic or consumer and enterprise terms, likewise, how enterprises plan their device lifecycle strategies as the discounted battery replacement program ended on December 31, 2018.