Apple (AAPL)

Expanded Distribution

The Company believes a high-quality buying experience with knowledgeable salespersons who can convey the value of the Company's products and services greatly enhances its ability to attract and retain customers. The Company sells many of its products and resells certain third-party products in most of its major markets directly to consumers, education customers, and businesses through its retail and online stores. The Company has also invested in programs to enhance reseller sales, including the Apple Sales Consultant Program, which places Apple employees and contractors at selected third-party reseller locations. The Company believes providing direct contact with its targeted customers is an efficient way to demonstrate the advantages of its Mac computers and other products over those of its competitors.

At the end of fiscal 2007, the Company had opened a total of 197 of its own retail stores, including 174 stores in the U.S. and a total of 23 stores in Canada, Japan, U.K. and Italy. The Company has typically located its stores at high-traffic locations in quality shopping malls and urban shopping districts.

One of the goals of the retail initiative is to expand the Company's installed base through sales to customers who currently do not already own the Company's products. By operating its own stores and locating them in desirable high-traffic locations, the Company is better positioned to control the customer buying experience and attract new customers. The stores are designed to simplify and enhance the presentation and marketing of the Company's products and related solutions. To that end, retail store configurations have evolved into various sizes in order to accommodate market-specific demands. The stores employ experienced and knowledgeable personnel who provide product advice and certain support services. The stores offer a wide selection of third-party hardware, software, and various other accessory products and peripherals selected to complement the Company's own products.

Expanded Distribution

The Company believes a high-quality buying experience with knowledgeable salespersons who can convey the value of the Company's products and services greatly
enhances its ability to attract
and retain customers. The Company sells many of its products and resells certain third-party products in most of its major markets directly to consumers, education customers, and businesses through
its retail and online stores. The Company has also invested in programs to enhance reseller sales, including the Apple Sales Consultant Program, which places Apple employees and contractors at
selected third-party reseller locations. The Company believes providing direct contact with its targeted customers is an efficient way to demonstrate the advantages of its Mac computers and other
products over those of its competitors.

At
the end of fiscal 2007, the Company had opened a total of 197 of its own retail stores, including 174 stores in the U.S. and a total of 23 stores in Canada, Japan, U.K. and Italy. The
Company has typically located its stores at high-traffic locations in quality shopping malls and urban shopping districts.

One
of the goals of the retail initiative is to expand the Company's installed base through sales to customers who currently do not already own the Company's products. By operating its own stores and
locating them in desirable high-traffic locations, the Company is better positioned to control the customer buying experience and attract new customers. The stores are designed to simplify
and enhance the presentation and marketing of the Company's products and related solutions. To that end, retail store configurations have evolved into various sizes in order to accommodate
market-specific demands. The stores employ experienced and knowledgeable personnel who provide product advice and certain support services. The stores offer a wide selection of third-party hardware,
software, and various other accessory products and peripherals selected to complement the Company's own products.

Expanded Distribution

The Company believes a high-quality buying experience with knowledgeable salespersons that can convey the value of the Company’s products and services greatly enhances its ability to attract and retain customers. The Company sells many of its products and resells certain third-party products in most of its major markets directly to consumers, education customers, and businesses through its retail and online stores. The Company has also invested in programs to enhance reseller sales, including the Apple Sales Consultant Program, which places Apple employees and contractors at selected third-party reseller locations. The Company believes providing direct contact with its targeted customers is an efficient way to demonstrate the advantages of its Macintosh computer and other products over those of its competitors. The Company has significantly increased the points of distribution for the iPod product family in order to make its products available at locations where its customers shop.

By the end of fiscal 2006, the Company had opened a total of 165 retail stores, including 147 stores in the U.S. and a total of 18 stores in Canada, Japan, and the U.K. The Company opened 5 additional stores in October and November 2006. The Company has typically located its stores at high-traffic locations in quality shopping malls and urban shopping districts.

One of the goals of the retail initiative is to bring new customers to the Company and expand its installed base through sales to computer users who currently do not own a Macintosh computer and first time personal computer buyers. By operating its own stores and building them in desirable high-traffic locations, the Company is able to better control the customer retail experience and attract new customers. The stores are designed to simplify and enhance the presentation and marketing of personal computers and related products. To that end, retail store configurations have evolved into various sizes in order to accommodate market demands. The stores employ experienced and knowledgeable personnel who provide product advice and certain hardware support services. The stores offer a wide selection of third-party hardware, software, and various other computing products and supplies selected to complement the Company’s own products. Additionally, the stores provide a forum in which the Company is able to offer specialized service and personalized training.

Expanded
Distribution

The Company believes a high-quality buying experience
with knowledgeable salespersons that can convey the value of the Company’s
products and services greatly enhances its ability to attract and retain
customers. The Company sells many of its products and resells certain
third-party products in most of its major markets directly to consumers,
education customers, and businesses through its retail and online stores. The
Company has also invested in programs to enhance reseller sales, including the
Apple Sales Consultant Program, which places Apple employees and contractors at
selected third-party reseller locations. The Company believes providing direct
contact with its targeted customers is an efficient way to demonstrate the advantages
of its Macintosh computer and other products over those of its competitors. The
Company has significantly increased the points of distribution for the iPod
product family in order to make its products available at locations where its
customers shop.

By the end of fiscal 2006, the Company had opened a
total of 165 retail stores, including 147 stores in the U.S. and a total of 18
stores in Canada, Japan, and the U.K. The Company opened 5 additional stores in
October and November 2006. The Company has typically located its
stores at high-traffic locations in quality shopping malls and urban shopping
districts.

One of the goals of the retail initiative is to bring new customers to
the Company and expand its installed base through sales to computer users who
currently do not own a Macintosh computer and first time personal computer
buyers. By operating its own stores and building them in desirable high-traffic
locations, the Company is able to better control the customer retail experience
and attract new customers. The stores are designed to simplify and enhance the
presentation and marketing of personal computers and related products. To that
end, retail store configurations have evolved into various sizes in order to
accommodate market demands. The stores employ experienced and knowledgeable
personnel who provide product advice and certain hardware support services. The
stores offer a wide selection of third-party hardware, software, and various
other computing products and supplies selected to complement the Company’s own
products. Additionally, the stores provide a forum in which the Company is able
to offer specialized service and personalized training.

Expanded Distribution

The Company believes that a high quality buying experience with knowledgeable salespersons who can convey the value of the Company’s products and services is critical to attracting and retaining customers. The Company sells many of its products and resells certain third-party products in most of its major markets directly to consumers, education customers, and businesses through its retail and online stores in the U.S. and internationally. The Company has also invested in programs to enhance reseller sales, including the Apple Sales Consultant Program, which consists of the deployment of Apple employees and contractors to selected third-party reseller locations. The Company believes providing direct contact with its targeted customers is an efficient way to demonstrate the advantages of its Macintosh computer and other products over those of its competitors. The Company has significantly increased the points of distribution for the iPod product family in order to make its products available at locations where its customers shop.

From inception of the retail initiative in 2001 through 2005, the Company had opened 116 retail stores in the U.S. and 8 international stores in Canada, Japan, and the U.K. The Company opened 2 additional stores in October 2005.  The Company has typically located its stores at high traffic locations in quality shopping malls and urban shopping districts.

One of the goals of the retail initiative is to bring new customers to the Company and expand its installed base through sales to computer users who currently do not own a Macintosh computer and first time personal computer buyers. By operating its own stores and building them in desirable high traffic locations, the Company is able to better control the customer retail experience and attract new customers. The stores are designed to simplify and enhance the presentation and marketing of personal computing products. To that end, retail store configurations have evolved into various sizes in order to accommodate market demands. The stores employ experienced and knowledgeable personnel who provide product advice and certain hardware support services. The stores offer a wide selection of third-party hardware, software, and various other computing products and supplies selected to complement the Company’s own products. Additionally, the stores provide a forum in which the Company is able to present computing solutions to users in areas such as digital photography, digital video, music, children’s software, and home and small business computing.

Expanded
Distribution

The Company believes that a high quality buying
experience with knowledgeable salespersons who can convey the value of the
Company’s products and services is critical to attracting and retaining
customers. The Company sells many of its products and resells certain
third-party products in most of its major markets directly to consumers,
education customers, and businesses through its retail and online stores in the
U.S. and internationally. The Company has also invested in programs to enhance
reseller sales, including the Apple Sales Consultant Program, which consists of
the deployment of Apple employees and contractors to selected third-party
reseller locations. The Company believes providing direct contact with its targeted
customers is an efficient way to demonstrate the advantages of its Macintosh
computer and other products over those of its competitors. The Company has
significantly increased the points of distribution for the iPod product family
in order to make its products available at locations where its customers shop.

From inception of the retail initiative in 2001
through 2005, the Company had opened 116 retail stores in the U.S. and 8
international stores in Canada, Japan, and the U.K. The Company opened 2 additional
stores in October 2005.  The Company
has typically located its stores at high traffic locations in quality shopping
malls and urban shopping districts.

One of the goals of the retail initiative is to bring new customers to
the Company and expand its installed base through sales to computer users who
currently do not own a Macintosh computer and first time personal computer
buyers. By operating its own stores and building them in desirable high traffic
locations, the Company is able to better control the customer retail experience
and attract new customers. The stores are designed to simplify and enhance the
presentation and marketing of personal computing products. To that end, retail
store configurations have evolved into various sizes in order to accommodate
market demands. The stores employ experienced and knowledgeable personnel who
provide product advice and certain hardware support services. The stores offer
a wide selection of third-party hardware, software, and various other computing
products and supplies selected to complement the Company’s own products. Additionally,
the stores provide a forum in which the Company is able to present computing
solutions to users in areas such as digital photography, digital video, music,
children’s software, and home and small business computing.

Expanded Distribution

The Company believes a high quality buying experience with knowledgeable salespersons, who can convey the value of the Company's products and services, is critical to attracting and retaining customers. As such, in addition to expanding its indirect distribution channels, the Company has expanded its product distribution strategy to include its own retail locations, Apple online stores worldwide, and the Apple Sales Consultant Program. The Company sells many of its products and resells certain third-party products in most of its major markets directly to consumers, education customers, and businesses through its retail stores in the U.S. and internationally, or through one of its online stores around the world. The Company has also invested in programs like the Apple Sales Consultant Program, which is designed to enhance reseller sales by the placement of Apple badged employees at selected third-party reseller locations. The Company believes enabling a direct interface with its targeted end customer provides an efficient means to effectively demonstrate the advantages of the Company's Macintosh and other products over those of its competitors. For certain of its consumer electronic products, including the iPod product family, the Company has also significantly expanded the points of distribution in order to make available its products at locations where its customers shop.

Since inception of its retail initiative in 2001, the Company has opened 84 retail stores in the U.S. and 2 international stores in Tokyo and Osaka, Japan through the end of fiscal year 2004. During the first quarter of 2005, the Company anticipates opening 14 additional stores, and expects to exit the calendar year at approximately 100 stores. The Company has typically located its stores at high traffic locations in quality shopping malls and urban shopping districts. Approximately half of the stores expected to open during the first quarter of 2005 are in the new "mini" store design, which is the Company's smallest store format to date, allowing them to be placed in a variety of new locations to introduce the Company's products to even more customers. The Company also opened its third international store in London, England during the first quarter of 2005.

One of the goals of the retail initiative is to bring new customers to the Company and expand its installed base through sales to both first time personal computer buyers and those switching to the Macintosh platform from competing operating system platforms. By operating its own stores and building them in desirable high traffic locations, the Company is able to better control the customer retail experience and attract new Apple customers. The stores are designed to simplify and enhance the presentation and marketing of personal computing products. To that end, retail store configurations have evolved into various sizes in order to accommodate market demands. The stores employ experienced and knowledgeable personnel who provide product advice and certain hardware support services. The stores offer a wide selection of third-party hardware and software products selected to complement the Company's own products. Additionally, the stores provide a forum in which the Company is able to present entire computing solutions to users in areas such as digital photography, digital video, music, children's software, and home and small business computing. Apple retail stores host customer events and free

2

classes, including the popular "Getting Started" class, and have brought back the concept of customer service with innovations like the Genius Bar.

Expanded Distribution

The Company believes a high quality buying experience with knowledgeable salespersons, who can convey the value of the Company's products and services, is critical to
attracting and retaining customers. As such, in addition to expanding its indirect distribution channels, the Company has expanded its product distribution strategy to include its own retail
locations, Apple online stores worldwide, and the Apple Sales Consultant Program. The Company sells many of its products and resells certain third-party products in most of its major markets directly
to consumers, education customers, and businesses through its retail stores in the U.S. and internationally, or through one of its online stores around the world. The Company has also invested in
programs like the Apple Sales Consultant Program, which is designed to enhance reseller sales by the placement of Apple badged employees at selected third-party reseller locations. The Company
believes enabling a direct interface with its targeted end customer provides an efficient means to effectively demonstrate the advantages of the Company's Macintosh and other products over those of
its competitors. For certain of its consumer electronic products, including the iPod product family, the Company has also significantly expanded the points of distribution in order to make available
its products at locations where its customers shop.

Since
inception of its retail initiative in 2001, the Company has opened 84 retail stores in the U.S. and 2 international stores in Tokyo and Osaka, Japan through the end of fiscal year 2004. During
the first quarter of 2005, the Company anticipates opening 14 additional stores, and expects to exit the calendar year at approximately 100 stores. The Company has typically located its stores at high
traffic locations in quality shopping malls and urban shopping districts. Approximately half of the stores expected to open during the first quarter of 2005 are in the new "mini" store design, which
is the Company's smallest store format to date, allowing them to be placed in a variety of new locations to introduce the Company's products to even more customers. The Company also opened its third
international store in London, England during the first quarter of 2005.

One
of the goals of the retail initiative is to bring new customers to the Company and expand its installed base through sales to both first time personal computer buyers and those switching to the
Macintosh platform from competing operating system platforms. By operating its own stores and building them in desirable high traffic locations, the Company is able to better control the customer
retail experience and attract new Apple customers. The stores are designed to simplify and enhance the presentation and marketing of personal computing products. To that end, retail store
configurations have evolved into various sizes in order to accommodate market demands. The stores employ experienced and knowledgeable personnel who provide product advice and certain hardware support
services. The stores offer a wide selection of third-party hardware and software products selected to complement the Company's own products. Additionally, the stores provide a forum in which the
Company is able to present entire computing solutions to users in areas such as digital photography, digital video, music, children's software, and home and small business computing. Apple retail
stores host customer events and free

2

classes,
including the popular "Getting Started" class, and have brought back the concept of customer service with innovations like the Genius Bar.