10.5 Acres Means Apple Is Planning on Going Huge

Sherlock Holmes and Dr. Watson, on a camping trip, awoke in the middle of the night to a stiff, cold breeze. Holmes, as was his custom, asked Dr. Watson what he could tell them about their current situation. Watson replied:

“From the constellations I can tell that we are in the northern hemisphere. And, I dare say Holmes, that we are fairly far north. I would say somewhat above 65 degrees latitude, since I can plainly see the Aurora Borealis. The wind, while cold enough to wake us, is not as cold as it would be if we were anywhere but Scotland which is warmed by the Gulf Stream. The intensity of the colors convinces me that we must be early in the cycle of sunspots placing the year at 1902 or 1903. I can also smell the remnants of a fire and see a tendril of smoke flowing into the breeze. Thus, we have been asleep long enough for the fire to burn out, but no long enough for it to stop smoldering. Birch is the predominate wood here and it burns quickly, we’ve been asleep for more than hour but less than two. That, Holmes, is what I can deduce!”

As if on cue, Holmes replied with a laugh and several shouts of, “Capital.” Watson, flummoxed by Holmes condescending attitude broke down and asked:

“Pray tell then, Holmes, what is it that you can deduce from the situation?”

Holmes replied, “I deduce, my dear Watson, that someone stole our #[email protected] tent!”

Which is an old joke but one that is particularly instructive given recent (and not so recent) news about Apple.

Let us begin with the most recent, and controversial, news. Apple is opening a support facility in India. The facility will employ 3,000 tech support staffers and cover some 150,000 sq ft. The number of tech support staffers Apple currently employs is difficult to ascertain but it is doubtful that number is close to 3,000. According to the company profile, Apple has 14,000 full-time employees. Keeping in mind that the average Apple Store employs around thirty folks, half of them full time, and that there are 135+ Apple stores we can see that retail accounts for around 2,000 full-time employees. With the burdens of programming, design and associated support staff it is hard to imagine that Apple currently employs anywhere close to 3,000 people giving technical support over the phone.

Apple hasn’t announced that they are definitely laying off their US support staff, and an Indian call center will probably drive more people to the Genius bar at the Apple store (good chance for an impulse buy the cynical will opine). Still, even if Apple does shut down US support it will be a big jump in the number of people working in tech support. If Apple doesn’t need 3,000 people offering technical support over the phone now, why would they need 3,000 folks offering tech support in a year?

The second bit of news to consider is Apple’s purchase of a huge data center (107,000 square feet) in Newark, California. To most prognosticators this purchase is clearly paving the way for the Apple Movie store. The theory goes as follows: Movies will eat up a lot of bandwidth, Steve Jobs is intimately connected to the movie business and a true video iPod is coming any moment now. Since the popularity of the iTunes movie store will surely match, if not exceed, the popularity of the iTunes music store the datacenter is there to provide enough data transfer to handle the load. Sound reasoning from the info available, most people think, but not a stone-cold lock by any stretch of the imagination. Oh, and don’t forget shortly after that acquisition Apple also snapped up a 90,000 square foot data center.

Finally, we have the news that Apple has been leasing office space in Cupertino at a rate that gives real estate salespeople everywhere a tingly feeling in the wallet area (116,380 square feet to be exact). Which leaves one wondering, if Apple is going to kill US technical support couldn’t they stand to snap up a lot less of the empty office space? Honestly, they’ll have a veritable ghost town where the phone staffers used to work. They must need all that new office space for something, but speculation on just what they need the space for has been minimal.

In the end, a lot of people are worried about Indian technical support and pining for an iTunes movie store while realtors just hope Apple keeps writing the checks. Like Watson, in the supposed joke that started this column, they all have key bits of evidence supporting their views, but they all miss the larger picture. This is a good time to try mix in a little addition: 150,000ft² + 107,000ft² + 90,000ft² + 116,380ft² =10.5 acres of new space. And to any real Sherlocks out there, 10 acres of new space purchased by a company that runs notoriously lean adds up to one thing: Apple is planning on something huge.