Apple's Chain Reaction

In contrast, Apple went in the other direction, as the company showed again last month when it reported second-quarter earnings. In the most recent quarter, Apple's retail division garnered $555 million in sales, up 106% from the same period a year earlier and far outpacing the company's overall sales growth.

And that wasn't just a one-quarter fluke. Last fiscal year, sales through Apple's retail stores jumped 91% to $1.19 billion. The division posted a $39 million operating profit last year after showing a $5 million operating loss the year before.

Much of that growth can be attributed to expanding the store base. The company now has about 120 stores, up from 86 at the end of last fiscal year and just 65 at the end of fiscal 2003.

But Apple's retail success isn't just a factor of more stores. The company also is selling more products through these stores. On average, Apple's stores posted about $5.3 million apiece in revenue in the company's just-completed quarter, up 56% from the same period a year earlier.

The benefits go beyond just raw sales and income figures, analysts say. Apple launched the stores at a time when other retailers were cutting back on shelf space they had devoted to Apple products, or had stopped carrying them altogether.

Apple launched the stores to develop a "high-quality buying experience" it believes is "critical to attracting and retaining customers," the company said in a recent regulatory filing.

The company didn't provide comment for this story.

But the stores not only have opened new channels for Apple's products, they've also acted as a billboard for the company, extending its brand. Further, they've given customers a chance to test the company's products, an important factor, particularly in the computer arena, because Apple's wares are so distinct from those of its competitors.