It's a little after 5pm on a Friday evening in early December and Apple's store in Tokyo's Ginza district is bustling. The store opened just over a year ago as Apple's first retail location outside of the US and it's a been a good year, said the manager of the company's Japanese retail operations.

When it opened, the buzz was as much about the store and its location as the products within. The large rotating Apple logo on the roof watches over stores with names like Louis Vuitton, Coach and Chanel. It's about as far away symbolically as Apple could get from traditional computer retailing or the Tokyo geek hang-out of Akihabara.

The location didn't come about by chance. Apple has placed flagship stores in high-profile retail locations: Its second Japanese store is in Osaka's fashionable Shinsaibashi area, its recently opened London store is on Regent Street and its New York store is in the trendy SoHo district.

High standards

Steve Cano, regional director for Japan of Apple retail and manager of the Ginza store, said he often visits the neighbouring shops to benchmark Apple's store and its customer service.

"Two hours ago I took a tour of all the stores in Ginza to see what other people are doing and I'm still very impressed with our store. I like the standards, I like the employees and how friendly and approachable they are," he said. "We don't benchmark against computer retailers, we benchmark against service leaders."

Right now, Apple store employees are fielding plenty of questions about the iPod, he said.

Even in Japan - the home market of rivals like Sony and Toshiba - iPod players have been selling very well. Since the last week of August until the first week of December (the most recent data available) the iPod Mini has been the top selling digital audio player in Japan, according to data from Nikkei GfK Salesweek, which collects point-of-sales system data from 3,500 shops. For many of those weeks the 20GB version of the iPod has been number two.

With many of Japan's salaried workers about to get their year-end bonuses, the music players are sure to be noticed by many people walking past the store.

Break the barriers

Selling the iPod doesn't just mean a few hundred dollars - or tens of thousands of yen - for Apple. It also helps break a psychological barrier that some people have to owning an Apple product and can lead to future computer sales, said Cano.

"When a new user walks into our store, who has never even owned a computer before, the iPod is a simple way for them to feel comfortable with our technology," said Cano. "Then they purchase the iPod, fall in love with the iPod and buy Mac."

Perhaps it's not quite that easy, but Cano says the store and the iPod are giving Apple some success in attracting new users. Among customers buying computers, more than half have either never owned a computer or are switching from Windows to Mac OS, he said.

Product delays cost market share

However, Apple's market share in Japan doesn't reflect this, said Kumi Shingyouchi, a senior PC market analyst at IDC Japan.

"Currently, Apple's share is declining but it's because of lack of products," she said. "They had a delay in introducing the new iMac. They finished production of the old iMac in May or June and had a lack of entry (level) products. It's due to product misplanning."

For the first three quarters of this year, Apple held a 3.5 per cent share of the Japanese consumer PC market versus a 4.3 per cent share during all of 2003, according to data from IDC. Apple's total market share, with business users taken into account, was 2.2 per cent during the first nine months of this year against 2.8 per cent last year, said IDC.

"Frankly, I'm quite positive about the Apple store in Ginza," Shingyouchi said. "PC sales there aren't really too much but they have access to the consumer and so I think it's working well to regain their brand awareness and for the promotion of the iPod."
More stores in planning

Looking ahead, Apple is typically tight-lipped about plans for additional stores. Earlier this year, it opened the store in Osaka and a third store is planned for Nagoya in central Japan, possibly opening sometime during the first quarter of 2005. The company won't disclose if it has plans for additional stores, either in Japan or elsewhere in Asia, but Cano said he's getting requests.

"In the last two months I've had certain trips to Australia, China and other places and they always say 'we want a store'," he said. "The word of mouth is getting out."