Why Is Apple Showing So Much Love To Chicago?

Over the past 6 months, there has been one major announcement after another from Apple about second city – Chicago. In October 2017, Apple opened a newly designed flagship store along the Chicago River. In December 2017, the Cupertino-based company announced that they would be partnering with the City of Chicago to teach every Chicago Public School student to code. In March 2018, Apple plans to host an education themed event at Lane Tech High School on the North Side of Chicago. For the largest publicly traded company in the world with a market capitalization as of $836B (as of 3/23/18) and a global reach, Apple is showing an awful lot of love to Chicago. Let’s take a closer look at these initiatives so we can gain a better understanding as to why Apple is showing so much love to Chicago.

From pioneers like Sears & Marshall Fields, Chicago has always been a major destination for retail development and innovation. When Apple first sought to disrupt the retail environment, Chicago became home to one of the very 1st flagship retail stores in 2003. Yes, apple has had a retail store in Chicago for the past 15 years; even preceding the launch of the iPhone in 2007. Since launching these disruptive retail environments, Apple has become the leading retailer in sales / square foot at $5,546 – higher than both jewelry stores and automotive dealerships. In the most recent launch, Apple has taken advantage of the emerging resurgence of real estate along the Chicago River to create an iconic and immersive retail environment. However, this was not a simple refresh of their existing location. Instead, Apple is again pushing the definition of retail with their latest locations. In fact, they are envisioning something more along the lines of a town square – a place where everyone in the community can come to gather. As you enter the new Chicago store, one is struck by the stadium seating that looks out on the Chicago River. Until you descend down the large staircases onto the main floor, is where the hardware and software products are. However, prior to that, there is a large classroom/viewing space that Apple has designed to teach you about their products. Given the projections, that a majority (70%) of the world’s population will be moving to large urban centers by 2050; it seems as though Apple is getting a head start on how their retail environments can be purposely designed to fit within these cities. Chicago makes for an exceptional use case given our large population, diversity of people groups, wide range of income distribution and diversified economy.

Since launching the iPhone in 2007, the app store has become a big business for Apple. In 2017, the Apple app store generated over $11B in revenue. The Apple iPhone has over 1 billion devices in the hands of customers around the world. In order to continue that growth, you need to have applications that customers will want to use on their devices. The language that Apple uses for iOS development is Swift. So, to make sure that the ecosystem remains healthy, you need the next generation of developers to understand how to program using Swift. Not only is application development beneficial for Apple but it is also profitable for their developers. Since the app store launch, developers have earned over $70B dollars. Within the City of Chicago, there are approximately 500,000 students that Apple would like to influence that their programming language, Swift, is easy to use and can generate a lucrative earnings throughout their career should expertise be developed. The overall tech ecosystem in Chicago has been rapidly developing over the past several years with hubs like 1871 and accelerators like TechStars. While our level of venture investment has lagged areas like Silicon Valley, Boston and New York; the return on investment has been at the top of the leader board. If Apple is able to influence students within Chicago to program with Swift, it will help strengthen their device and application network while also further advancing the Chicago tech ecosystem.

From the very beginning, Apple has had a focus on the education market. Having their hardware and iOS software used within the classroom was instrumental to the development of the company. In fact, one of the very 1st markets Apple entered was education. As they have become more focused on consumer applications (iPhone and iPad) along with retail (Apple Store) & ecosystem (App Store), they have ceded education market share to Google & Microsoft. However, from a strategic standpoint, if elementary, middle and high school students use Chromebooks and Windows; they might not be as likely to purchase a MacBook when they become professionals.  While early stage ecosystem investments are a longer term play, they are one of the most important elements to sustainability. Habits once developed can be hard to break. While I was in college, we used Mathematica to do much of our modeling. After I graduated into my first full time role as an engineer at Ford Motor Company, the 1st software license that I asked for was Mathematica. Along a similar line, if students get comfortable, even skilled, at using Apple products from a very young age; they are more likely to continue on throughout their career. While we don’t yet know what Apple plans to announce on 3/27, it makes a lot of sense to invest in the early part of the education market. And, as discussed above, Chicago has some great advantages from a population and demographic standpoint that should reap rewards for Apple over time.

While other major tech companies are also recognizing the value of investment in Chicago, it is illustrative to see that the world’s largest company, Apple, which has a choice to launch retail concepts, initiatives, and new product offerings anywhere in the world is choosing Chicago. To the employees and leadership at Apple, thanks for the love!