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Summary:

Taking charge of your own retail distribution is a questionable move even in the best of times, but it looks like Microsoft is bent on opening up another battleground between themselves and Apple, and that’s where they want to do it. It’s a gutsy move on […]

msshoptogether

Taking charge of your own retail distribution is a questionable move even in the best of times, but it looks like Microsoft is bent on opening up another battleground between themselves and Apple, and that’s where they want to do it.

It’s a gutsy move on Microsoft’s part, and it’s hard not to offer up some begrudging respect for a company willing to lay it all on the line like this, considering the economic conditions. There’s no timeline for the actual opening of these stores, so they may just be preparing well in advance, and waiting to weather the storm.

The news of the plan to open retail stores comes via an announcement of Microsoft’s decision to hire 7-year retail vet David Porter as Corporate Vice President of Retail Stores, a move which pretty bluntly suggests that they’re planning on having some for him to oversee. And, in case there was still any question about it, they actually mention said plans in their official press release on the subject.

The big question from Apple’s perspective is: Does Microsoft retail pose a threat? I believe the answer is no, for a number of reasons. First, I think that any market share grab that occurs as a result of the new stores won’t come from Apple’s customer base, but rather from their own existing customers who would otherwise buy at Best Buy or some other large, multibrand electronic retailer.

Second, Microsoft still depends on third-party hardware manufacturers, at least in regards to their primary PC products. Apple sells third-party gear, but its own computers and software are the focus of the store. That means that Microsoft stores won’t carry as strong or cohesive a brand image as their rival, which has been a big part of Apple’s success over the years. Microsoft does have the advantage of having the Xbox to sell, and Microsoft-branded peripherals, but with a hodgepodge of PCs, style and reliability come into question.

Finally, Apple has the advantage of experience on their side. They’ve been in the retail game for eight years, and they seem to be fairly good at what they do. They won’t take Microsoft nosing in on their territory lightly, and you can bet they’re already formulating a response strategy as we speak. Yes, Redmond is bringing on experienced staff, but that doesn’t beat the experience of an entire company.

All of this isn’t to say that Microsoft can’t be successful in their own right. They have the advantage of being able to stock and sell netbooks, for example, which is huge, growing market that Apple doesn’t have a presence in. But if they think they’re going to deliver a knock-out blow to their competitors, they’re sorely mistaken.

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  1. I’m interested to see what they’re planning on doing. I just don’t see people going to a retail store to buy a copy of Windows 7 Large Suburban Home Edition™ and a Microsoft Mouse. Without a cohesive or compelling hardware lineup, this seems like a strange move.

  2. I find it interesting that their “experienced man” in charge of opening these retail stores is a former Walmart VP and general merchandise manager of entertainment. I don’t know about you, but the Walmart shopping experience is not something I’d be attempting to emulate. We’ve got the big TVs on the back wall… couple rows of music, couple of DVDs, slap some games on the far side… there’s nothing that differentiates that experience from others in the industry. I don’t know, I just don’t see where they’re coming from here…

  3. @Joey: While Walmart may not be an innovative experience (anymore), it is fantastically successful, so I’d imagine that if they’re able to replicate that success in any way, that would be a good thing for them.

    The last line of this post seems odd: won’t be a knock-out blow to their competition? The tone of the article has Microsoft as the upstart to Apple’s market dominance, but the usage stats say something different, don’t they?

    Microsoft opening their own stores makes sense if they’re trying (as they seem to be) to change the public perception of their brand. Why rely on a Best Buy employee who might not realize that problems that existed briefly in Vista have been fixed long ago, when they can have their own employees who know about their products, and who can speak authoritatively on the best combination of hardware and software to make their new Windows experience the best it can be?

    Does Apple now have a monopoly on wanting customers to see them as a nice company who sells good products?

    I mean, I love Apple, I’m typing on a MacBook Pro and listening to a podcast on my iPhone, but just because the market leader makes an obvious move, one which the upstart themselves did, doesn’t mean that the move is bad; if it was, why would Apple do it?

  4. They could put a McDonald’s inside to attract customers!

  5. That’s a pretty dumb move. What advantage does a Microsoft store have to offer the customer? Nothing. Their crap can be bought at Staples, Best Buy, and the like. And it’s not like the people in the Microsoft store are going to be any more educated than the $5 an hour teenagers working at Best Buy. Microsoft, quit while you’re ahead and don’t bother us with the stores.

  6. @ryemac3 Why would you assume that they wouldn’t train their employees better than a Best Buy?

  7. Brian Hogg is correct. They will have to train their staff well so they can deal with all those nasty viruses and registry problem their customers come in with.

  8. Weekly App Store Roundup: Feb, 14th. 2009 – TheAppleBlog Saturday, February 14, 2009

    [...] up, Microsoft is joining the high street retail fray. Fresh from Wal Mart, David Porter is now onboard as Microsoft’s Corporate Vice President of [...]

  9. Brian is right. And Apple should be very concerned that the undisputed heavyweight in personal computing is taking an interest in retail outlets, while Apple as has moved some of their sales to Best Buy outlets. They are both experimenting outside their long-standing distribution channels.

    Microsoft might be looking to control their brand better through a corporate retail chain. I’d expect the third party hardware selection to be tightly controlled and top of the line, which can be pretty impressive. Microsoft has a serious brand problem on their hands, and a controlled environment could be just what they need.

    Don’t count them out. Microsoft is a huge company with enormous resources. Inside there are definitely some talented and forward thinking individuals just waiting to make it happen. If they get their act together Microsoft could be quite successful.

  10. Best Buy! Indeed. I was wandering through the computer area of our local BB a few days ago and overheard an older couple ask the sales guy why all those laptops had so many stickers on the keyboards (you know, the MS sticker, the Intel sticker, the Windows sticker, the Symantec sticker, the whatever sticker). the sales guy said, without missing a beat, that they were there for the customer’s protection to provide confidence that the parts and software were “genuine,” as if there were bogus operating systems around. The lady asked why those nice white laptops across the aisle (the Apple area) didn’t have them – were the inferior or something? The sales guy said they were Macintoshes and they didn’t put labels on their computers. The lady asked for a demo of the Mac because it looked so clean.

    The lesson for MS (and the PC vendors) is to clean up the keyboards and get rid of the branding labels!

  11. @ Brian Hogg

    I think Microsoft has the potential to be successful with a small retail strategy but Microsoft is taking a leap to assume that a Walmart executive while being successful would know anything about the small retail chain stores. Walmart’s model relies on a Big Box retail environment by offering large quantities of items at discount rates to the detriment of customer service. This is a fine model to follow if you need to sell 100 count Ramen noodles and $10 DVD players but is not exactly a good way to sell high end computers and fight back against Apple’s renewed success. If they were to try to follow Apple’s lead in the small retail sector they would need to garner knowledge from a source familiar with small retail outlets such as the Gap. They could surprise me but executives usually don’t translate well between different industries unless they can bring something new to them and we already had a Circuit City which was probably the best proxy for the retail environment of a Walmart in the electronics field. How did that turn out again? Hmm… Maybe they can stretch it to more of a Best Buy. Ugh! I think I will stick to the Apple store for now.

  12. I love it that everyone is already writing off the Microsoft retail store and proclaiming it doomed to fail, when no one really has a clue what the retail store will be like.

    Any pros and cons that we can think of right now has probably already been thought of by the Microsoft brain trust. I really think they have something up their sleeves that haven’t been done before.

  13. @ Kendall

    Don’t forget that Porter’s background is actually in entertainment, but his experience at Walmart will serve Microsoft well. Walmart knows how to move product. They are the experts at retail.

    The information that Walmart uses is more adjusted towards their guests than a situation where guests are adjusted to how Walmart does things. Their stores are setup to accommodate low-price shoppers that want a large selection. Their customers aren’t interested in high-end and the stores reflect that.

    The experience he gained at Walmart is useful in any retail situation. Product placement, merchandising, supply chain, etc. Its all applicable. That can be, and probably will be, combined with an effort to enhance the brand. That means control, not as much as Apple, but tight vendor relations and surely the top of the line stuff. Porter is new talent and you bring in new talent when you’re looking for something different.

    Executives know this. I guarantee Porter will not implement a Walmart style at Microsoft.

  14. I truly believe that this stores aim will be to push the ideas in the pay as you go patent Microsoft has filed.

    Imagine, a MS shop like a mobile phone store, where you get a heavily discounted PC on the basis of signing up to a contract for paying for usage. Im not saying this will be the original direction of the store, but I would put money on that being its ultimate purpose.

    I have very little experience with Apple products (although my wife swears that her MAC is 1000 times better than the Vista machine she had) but what I will say is that Apple is great for showing to a mainstream audience that an alternative to Microsoft is not only viable, but is just as, if not more functional than an MS offering.

    Innovation comes from competition, and whilst I am a Linux user, I think the Apple competition to Microsoft can do nothing but good for the most important person in this “battle” – the end-user.

    Goblin
    http://www.openbytes.wordpress.com

  15. Jason Goldberg Saturday, March 14, 2009

    Jonathan Wrote (#11)”I love it that everyone is already writing off the Microsoft retail store and proclaiming it doomed to fail, when no one really has a clue what the retail store will be like.”

    I totally agree, in fact I blogged about it myself (http://retailgeek.com/2009/03/13/microsoft-returns-to-retail-blogosphere-already-assumes-it-will-fail/). There is so much room for improvement in ALL OF RETAIL, I don’t know why everyone just assumes that Microsoft will try and follow in Apples footsteps.

    Also, regarding David Porter’s Walmart experience translating to a new retail venture. Ron Johnson seemed to have been able to translate his Target experience to Apple fairly successfully. What people don’t realize, is that doing anything on the scale of a Walmart or Target is VERY difficult. Executives aren’t successful because they can follow a cookie cutter approach (if that were true Woolworths would have never lost it’s dominate position to Sears who would have never lost it to Walmart, etc…). These guys are successful because they are able to adapt and solve problems in real time. Add in Porters Pixar experience, and it would be foolish to think he can’t be successful at Microsoft.

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