MSFT’s Retail Plans: Smart or Just the Opposite?

Picture 10Before they were opened people scoffed at the potential of the Apple Store, saying that Gateway Computer had failed in retail and that Dell was the model for the computer industry — online, virtual stores, etc. Of course those dour prognosticators turned out to be wrong, didn’t they.

Apple’s stores are very successful and a central part of the resurgence Apple has enjoyed over the past few years. In fact I bought my latest laptop (a Macbook) specifically because of the stores rather than wait for a Dell or Lenovo to ship to me:

Honestly, had there been local stores where I could have purchased the Lenovo or Dell models I identified I probably would have bought one of them. But there weren’t so once again I’m a Mac user.

Now, as you know, Microsoft is going to open lots of stores — near Apple Stores — to showcase its products. Gadget blog Gizmodo seems to have obtained a PPT deck that shows the concept and some of the details of how the stores will be set up, complete with “Answer bar.”

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Images: Gizmodo

John C. Dvorak (often curmudgeonly) believes this is a mistake for Microsoft. I would say, rather than outright mistake, it’s certainly a risk. Stores don’t automatically equal success; Sony Style stores are largely a failure for example. So opening stores doesn’t mean people will buy more of your stuff, although you get to control the context and environment in which it’s presented.

I once made a recommendation (several years ago) that Google open a “Google Store” (partly for the brand and partly to demo AdWords to local businesses). Nobody there took me up on it obviously.

What do you think? Do you think this new retail effort by Microsoft will pay off as it has for Apple or will it turn out to be a costly exercise in futility?


11 Responses to “MSFT’s Retail Plans: Smart or Just the Opposite?”

  1. jsk Says:

    The real question here is how is MS going to measure “success.” Increased market share? Well, they already have 90%. Increased retail presence? They already dominate every retail store electronics in existence from Mom and Pop white box stores, to drug stores, to the big box stores (including significant presence in Apple’s stores).

    Just what is MS trying to gain here?

  2. Greg Sterling Says:

    Excellent points.

  3. SteveP Says:

    What I don’t understand is… What is Microsoft going to sell in the store?

    It really gets me that Microsoft is left with having to try and sell computers because Dell, HP, and others can’t seem to make a compelling case by themselves. At least Apple actually MAKES the computers, which is why the comparison to Microsoft stores is weird. So, having a store to promote Windows, Office and other software, but who will make the computers they try to sell? And does it make sense for Microsoft to be the one with the name over the door?

    I guess if nothing else it may have the net-positive effect of solidifying it for those who don’t get it: It doesn’t matter that much who makes the low-end junk hardware you buy, Dell, HP, etc., it all runs Microsoft’s OS and if you have problems you won’t solve them by buying a different brand of the same ilk. I always laugh when someone is “fed up” with their brand and then goes out to buy another manufacturer’s Windows system, as if it will fix the software problems.

    I hope they offer some higher end systems, though, and don’t just try to go cheap. Wait, if all they sell is cheap junk, it will really tank ’em. 🙂

  4. Tim Cohn Says:

    Have personal computer shipments peaked?

  5. Constable Odo Says:

    Stupid for Microsoft. They already have huge majority market share of desktop OS, but they’re gunning for 100%. If that isn’t greed, then I don’t know what is. All they would have had to do was care about their customers when designing an operating system. Instead they tried to fool everyone and give them some junk thinking they could make a quick buck and now it’s costing MS billions of dollars.

    In a way, Vista could have helped the computer industry as a whole since Vista required a computer with lots of processing power and memory, but it just so happened the economy turned bad and people really didn’t want to spend money on the latest big iron computers. They tried to keep running their old iron with Vista and their old iron puked.

    Retail stores are not going to help Microsoft because all they’re going to do is add unnecessary overhead for tiny benefits of being able to showcase a few new products unless Microsoft rents out space for Windows PC companies. The one who pays the most money, gets the best spot in the store. Hah.

  6. David Sabel Says:

    Actually, having a retail presence could humanize MS. provided they are staffed by customer service, not sales, oriented MS employees.

    If they really focus on ‘productivity’, ‘community’ and ‘entertainment’ like the diagram suggests, their brand could become more likable, which seems to be happening a bit as a result of the “I’m a PC” ads.

    It will all come down to the execution.

    If it is all sell sell sell (keyboards, mice, webcams, Xboxes, Zunes, etc.) people won’t hang out long.

  7. John Dingler Says:

    In the highly biased Microsoft-funded commercial, Microsoft bribes Lauren to shop for a new computer by giving her a limited amount of cash. She evaluated Macintoshes and PCs. She decided to purchase a Windows PC.

    On the first day of any Apple opening, each store employs enthusiastic greeters, real Apple employees, who even cheer the many customers as they enter to willingly shop with their own money.

    If the MS store were to be true to the Lauren commercial, as it should be, then a MS store employee should be prepared to meet a handful of window shoppers curiously waiting outside, hoping that they too can be handed a decent amt. of cash as a bribe to enter the MS store and then be allowed the choice to buy a Mac or Windows PC right inside the store.

    Should the store not offer Mac products, it should not be afraid to offer vouchers to go to the Apple Store next door to shop for a Mac.

    Regarding the raison d’etre of the MS Store, it seems that it will be a combination display/repair center that is well-lit and with side chapels in the four shallow apses.

  8. Malcolm Lewis Says:

    MSFT seems to spend money on just about everything but delivering products that please users. Get the product right and the rest is easy. Get the product wrong, and no amount of branding, marketing, retailing, etc. will help.

  9. Mike Blumenthal Says:

    The idea that one might be able to actually get Windows tech support should keep the stores full!

  10. James R Arthur Says:

    Microsoft’s challenges and opportunities in opening stores are quite different than Apples. Apple stores were initially intended to showcase Apple design – the thing that they do best, and remember that this was pre-iPod. The genius bar and hosted workshops were designed to educate consumers on how easily tasks could be accomplished in the Mac environment. The stores were beautiful to compliment their hardware design and differentiate the store experience from a big-box electronic warehouse store. Stores were initially placed where concentrations of existing customers existed for the purpose of attracting additional sales from this target audience and to gain market share from like-minded consumers who had not experienced Apple design.

    Apple stores have obviously done very well and I believe exceeded even Apple’s initial expectations. The addition of iPods and third party accessories have helped shoot Apple stores sales per square foot to the extreme high-end of specialty retail stores.

    Microsoft has a different challenge. Removing the design element of hardware (or at least control over it in many platform cases) and likely taking the true tech support piece out of the equation is going to diminish the effectiveness of the experience. Sure Microsoft can chase Apple around and place stores nearby… mall owners would be very happy to have them… and sure Microsoft can demonstrate some cool capabilities in their carefully configured environment… but there are risks. (Full disclosure here – I was a Mac user long ago but migrated to the win-tel world when the financial apps I had to run or access remotely would only work in a Microsoft environment. And today I am frequently amused that accomplishing certain tasks on an iPhone requires a special app when my Windows Mobile 6 HTC phone can do the same natively or with a free third party browser!)

    Microsoft retail will likely be more along the lines of Sony Style to showcase capabilities than a real retail environment. To me this is smart and will add a coolness factor that often gets overlooked when success is measured by the number of shrink wrapped software boxes or licenses that were moved in a quarter. But you’d never see Sony or Nokia or any of the other brands used for competitive benchmarking in as many locations as Microsoft is contemplating. Stores for brand building and retail stores geared for product sales are different – they serve wildly different purposes and tend to be located differently.

    Microsoft looks to be planning hybrid concept – and with that comes risks. Risks exists that users will be reminded of all the frustrations that most of us experience with hardware obsolescence, driver issues with upgrade, poor hardware and/or software performance, etc, etc. A user goes into the store, sees something really cool, then slowly comes to realize that they can’t quite achieve the same results at home or a interested buyer is walked through the steps necessary to make something work and concludes its too complicated.

    While Microsoft and many of its hardware partners still have a substantial price advantage over Apple this often comes with a user experience trade-off. With these stores, Microsoft is making an ‘in your face’ boast that they can make our lives cool yet simplified with their technology… but will this ring true?

  11. John Dingler Says:

    Hi James R Arthur,
    MS opening a store for non-corporate citizens would be like Apple opening a store for corporate bureaucrats.

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