Microsoft follows Apple into the retail business
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After years of brushing off the notion, Microsoft said on Thursday that it will open up its own line of retail stores.
Without detailing the plans, Microsoft said it has hired David Porter, a 25-year Wal-Mart veteran, to lead the effort. Sources say that Porter's mission will be to develop the company's retail plans and that the effort is likely to start small with just a few locations.
Porter, who will start next week, will report to Microsoft COO Kevin Turner, also a Wal-Mart veteran. Most recently, Porter was at DreamWorks Animation, heading that company's product distribution effort.
Although Microsoft has generally relied on others to sell its wares, it's not Microsoft's first foray into retail.
Back in the dot-com days, Microsoft had one retail outlet, at the San Francisco Metreon mall. However, it never expanded the effort and closed that location in November 2001.
Last fall, Microsoft built its own concept retail environment at its Redmond campus (seen in the video below). At the time, the company said the effort was aimed at showing retailers how they could better market Microsoft products and was not an indication that it was going into the retail business itself.
"We're not planning to open stores, but we need to learn more about stores," Microsoft general manager of worldwide retail services told the Seattle Post-Intelligencer. "We need to take more of a leadership role."
The company has also made a variety of moves to sell its products directly to customers over the Internet, including a recently opened online Microsoft Store. Starting last holiday season, it also started placing Microsoft workers as "gurus" inside other retail stores.
"There are tremendous opportunities ahead for Microsoft to create a world-class shopping experience for our customers," Porter said in a statement. "I am excited about helping consumers make more informed decisions about their PC and software purchases, and we'll share learnings from our stores with our existing retail and OEM partners that are critical to our success."
Rumors of Microsoft's interest in retail have cropped up at various times over the years, including in 2005, when the company was said to be interested in a Times Square location.
Apple began its retail push in 2001 and now has more than 200 locations in several countries. Microsoft's entry comes as Apple has started to slow its retail store expansion.
Update 5:30 p.m. PT:
NPD Group analyst Stephen Baker, a computer industry retail veteran, thinks Microsoft's decision to open up its own retail stores is a relatively safe bet, but not without challenges.
"The real issue it that it's not as easy to pull off as Apple. Apple has more of an owned ecosystem than Microsoft has," Baker said, referring to the fact that Apple makes the finished products it sells, while Microsoft's software--particularly Windows--typically comes on hardware from dozens of companies. And the PC industry already has its own well-honed distribution channels to bring those products to market.
The upside for PC makers is that Microsoft-branded stores could display products that are hard to fit into the big-box retail shopping experience, like high-end Alienware PCs or HP's Home Server, Baker said.
"It doesn't have to be about sales. They are going to want to sell stuff, but it's going to be equal parts sales and branding," Baker said. For example, Apple's retail experience is as much about exposing you to the Apple brand and Apple family of products as it is moving widgets into and out of inventory. The same could be said for Sony's retail stores.
At the moment, Microsoft and its partners don't really have a one-stop shopping experience that can put all the pieces together the way Apple can in its stores, Baker said.
Baker said to expect Microsoft to start scouting locations in either hip downtown spots or newer "lifestyle center"-type retail environments.
CNET News' Tom Krazit contributed to this report.
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
KieranMullen
http://360oregon.com
i wonder if they will sell computers. i think they should sell all/only the really good ones so ppl dont make bad choices.
@Vegaman_Dan: Microsoft has their own brand of mice and keyboards and so does Logitech. Are you saying the mice and keyboards with the Microsoft logo them are made by Logitech?
If Microsoft sells all there products in their retail stores like Apple, There would be Zunes and 360s everywhere. There probably should be a separate Xbox tech support area, just because.
Whether you love them or loathe them, there is no denying that Apple have had a hit with their retail stores because they have provided consumers with an interesting and engaging experience. They thought outside the square, looked at what consumers loved and hated about their shopping experience, and came up with something different and memorable.
It harks back to the days of the 1950's where giving good service and a good customer experience was as important or more so than getting the sale. It also generates return sales and referrals from happy customers. A lot of businesses are doing this now, and it's a good thing. There is no substitute for good old fashioned customer service and attention to detail, and with a little Apple flair and style thrown into the mix, they have shown the way. Like the ipod, they weren't first, but they had a different plan to everyone else's and customers understand and appreciate their efforts and attention to detail.
If Microsoft realise this, then who knows. But their challenge is perhaps a lot greater than Apple's. I just hope they don't copy the look and feel of an Apple Store. That would be foolish, as there are enough accusations of imitation out there already with Microsoft.
it's just these days
Everything MS seem to do to is copy Apple,google and everybody else
MS seems to have complex especially when it comes to Apple
2 yrs bck if n e body would have said Ms would be opening retail stores
it would have made a good joke
but now it's true and futher Proof that
"Meetoo"soft's dominance is slowly coming to a end
Either way, contrary to the preception of your fellow Mac users, Apple wasn't the leader at the concept of a store. People were visiting Sony and Gateway and other tech stores long before Apple ever thought of having one. But, in the end, when it comes to business and sales does the world actually care who does what first?... Nope. That proof is in the numbers.
? The store will have six different entrances: Starter, Basic, Premium, Professional, Enterprise, and Ultimate. While all six doors will lead into the same store, the Ultimate door requires a fee of $100 for no apparent reason.
? Instead of a "Genius Bar" (as Apple provides) Microsoft will offer an Excuse Bar. It will be staffed by Microsofties trained in the art of evading questions, directing you to complicated and obscure fixes, and explaining it's a problem with the hardware -- not a software bug.
? Store hours are undetermined. At any given time the store mysteriously shuts down instantaneously for no apparent reason. (No word yet on what happens to customers inside).
I wish them luck and all, but... wow. I don't see it happening.
Apple is successful at it because they have actual, tangible, decent-margin hardware goods to sell.
Microsoft has... what? Boxes software, mice, keyboards, maybe some home networking gear? Even on the boxed software front, the majority of their software sales come from OEM preloads and MS licensee site downloads. I doubt that even 1/20th of their income comes from boxed software sales.
I can see one bit of thing they might have seen as a plus: OEMs will be fighting to get floor space in one. OTOH, Best Buy, Wal-Mart, Staples, Fry's etc etc will be screaming bloody murder at the same time. Best Buy and such enjoy having Apple products because Apple's stores are huge customer magnets. Microsoft is trying to approach the concept from the other end... which doesn't seem very smart.
Finally, MSFT doesn't have near enough of a comfortable margin (and neither do the OEMs) to afford to keep something like this going for very long. Apple has mountains of margin, more than enough to front for the overhead costs of a store. Not so sure MSFT has that...
dunno - I'm thinking that either MSFT is throwing a ton of BS out in order to keep the buzz going for their name, or they're desperately casting about for some sort of long-term survival strategy that doesn't involve building a better product. :/
/P
Fry's had Apple as a primary core OEM at their stores. Year after year, that has shrunk. The iPods alone used to be a complete two row area at the Renton, WA location, but is now reduced to a single small sealed wired cage on an end cap. They have moved out most of hte Apple products in favor of USB thumbdrives and overhead projector units. Make of that what you will.
What does MSFT have to offer? A heck of a lot. Ford uses their products in their own line of vehicles. Most GPS units on the market run Windows as the core OS. Enterprise customers depend upon it. Then there's the whole gamining industry based around xBox, Windows PC, etc. Heck, the new LIve services alone are a big deal.
There was an article this week here on CNET talkng about how Apple was going to reduce the space in their retail stores dedicated to hardware / computers to promote their online software and services instead. Your comments would suggest that this is a mistake for Microsoft, and yet Apple is doing the same. Would that make this a msitake for Apple as well?
I realize you have the reputation of spending your every waking moment coming up with new ways to fuel your bigoted hatred against all things Microsoft, but I really would advise you to consider approaching things with an open mind once in a while.
...so which points do you require evidence on, exactly? Are you asserting that Apple has the same or lower margins than Microsoft on their products overall? Are you asserting that OEMs would not want to sell their wares at a Microsoft store? C'mon Dan... let's see what you want evidence for.
You also take an edge case (Fry's of all things), and try to claim it as the example which somehow proves the whole. Doesn't work like that. ;)
"Ford uses their products in their own line of vehicles. Most GPS units on the market run Windows as the core OS."
So you're saying that Microsoft will be selling cars and GPS nav units in their stores now?
Hold on dude - I need to go laugh for a bit...
/P
Can Microsoft pull off something like this? I'm skeptical. I'll eat crow if it work though.
Nowhere.
And CNet likes to raise a fuss with poorly titled articles.
Par.
Oh wait, it was a down economy when Apple opened its first stores in 2001, too. What, MS even has to copy Apple's TIMING?
A perfect example is the iPhone. Apple came into the phone market late in the game, and they didn't just make another phone, or copy the success of the market leaders; they tried something completely different. They did the same with the Apple TV and the Cube and other failed products, but they take risks and it pays off.
Microsoft looks at markets that seem like they could do well and already have a lot of players and does nothing new. The Zune, the desktop OS, and everything else. I wish they would use all that money to make something really amazing. I guess they've done a few things with the Surface and some other things, but none of them have really broken out. It's like they're scared. I read somewhere that Microsoft is so afraid of fail and there are too many board members who never let them do anything really risky.
I too wonder what they will sell. Microsoft, unlike Apple, is a software company. Their hardware is just branded, not even designed by them, unless I'm wrong.
The same could be said about retail. Comp USA and Circuit City are closed now. Would you really want to rely on Best Buy and the occasional Fry's electronics? I doubt they really want to open retail stores. They probably just feel like they have to take matters into their own hands.
The other side of the coin is the market and economy... if this DOES come to fruition it'll be interesting to see the approach... can't wait.
If the MSFT store starts featuring xboxes, what will the stores that normally sell xboxes think? (you know, places like Wal-Mart, Target, and etc...) I don't see much love going on from Microsoft's existing retail base...
OEMs like Dell and HP, who have no real retail presence of their own, sure... but retailers at large will likely loathe MSFT's move enough to stop featuring MSFT products so much in their own efforts, instead touting the competition (e.g. Nintendo, Logitech, Sony, maybe even Apple...) - especially in an economy where retailers are scrambling for every last sale. They may even start taking it out on OEMs.
Apple had an advantage in 2001 of not having a massive number of retailers selling their stuff, and were pretty much going it alone anyway. MSFT has no such advantage.
So long as Microsoft is not selling an Xbox 360 at a lower price than Walmart or Target, then the comparatively few Microsoft retail locations will not pose significant competition for the major retailers. The Microsoft stores are likely as much about carrying the brand and message directly to the customer as they are about actually making sales.
I can imagine someone in MS telling Walmart and Target that the Microsoft stores will improve the public image of Microsoft products and that is a positive thing for their respective retail sales. Whether or not that succeeds will be interesting to see.
The a big difference, now, though, is that Microsoft would be able to sell Xboxes and Zunes as well, which didn't exist when their store in the Metreon was open. Still, why not go to a dedicated game store or BestBuy for those? It's not like they NEED their own presence to get the word out about those things.
If there is any person left alive who does not believe Microsoft has Apple envy and incapable of an original idea of its own, this retail plan should dispel all doubts. I look forward to a nationwide chain of stores selling Zunes, mice and keyboards. And then, 2 years from now, after burning through billions of dollars, the press release announcing the closing of the retail division.
The first thing that they should do is offer a free service for you to bring your Windows PC into their store and they'll remove all of the junk that the PC vendors install so that they can make a couple of bucks selling the box. (it would cost them less to allow the PC vendors to make a buck on the hardware so that they didn't have to do this, but I digress) I'd venture to guess that huge percentages of the issues with Windows are those crapped-up configurations. In all of the days that I used a Windows Box, I had so many fewer problems on the systems that were installed from a Microsoft-generated Windows disk than the one that came from the vendor.
That said, I made the switch to Mac three years ago and never looked back. I do have XP and Vista installed in a VM on the Mac, but use it infrequently. the out-of-box experience of my Mac's has been wonderful (I now have 4 of them) and substantially better than any Windows box that I have ever purchased. I've had great experience walking into an Apple stores either when I needed something or when I had a question.
Looks like the folks at Apple should pat themselves on the back for being light years ahead of M$ again.
- by JCPayne February 12, 2009 5:36 PM PST
- Hey Microsoft you should throw way more money behind the HD-DVD standard next.
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