MISSION VIEJO, Calif.--On my way to last month's Professional Developers Conference in Los Angeles, I took a small detour to Orange County to check out the recently opened Microsoft Store there.
Although I had heard plenty about Microsoft's nascent retail effort, I wanted to get a firsthand look.
At a glance, it's easy to understand why the store draws so many comparisons to Apple's stores. The outside of the store features an expansive glass window with a stylized Microsoft logo at the top. Inside, products are sorted into themed sections, with a help desk and theater in the rear, and all around are T-shirted enthusiasts ready to answer any and all questions.
From that standpoint, it's nearly a carbon copy. But even as it mimics much of the Apple approach, Microsoft finds ways to customize its message to its different role in the world. When it comes to laptops, for example, Microsoft is eager to lay out dozens of choices to highlight the variety of prices, sizes, and options available to those buying Windows.
The company is starting small--opening just two stores so far, this one and another in Scottsdale, Ariz. The goal, Microsoft said, is to better understand what customers want at retail and, ideally, persuade larger retail chains such as Best Buy and Office Depot to adapt some of the more successful techniques to their stores.
Apple, by contrast, has become its own most significant channel with its online and retail stores, even though its computers and iPods can also be found at places like Best Buy. From a dollars perspective, Apple's retail stores alone accounted for $1.87 billion of the company's $9.87 billion in total revenue during the most recent quarter. Next year alone the company plans to open 40 to 50 stores, with more than half of them overseas.
But if its scale is different than Apple's, its goal is largely the same: to offer the best possible experience when buying its flavor of PCs and accessories, as well as to be, well, cool.
To that end, Microsoft has pulled out every tool in its arsenal, from PCs to phones to the Xbox 360, as well as a huge "video wall" made up of dozens of 42-inch flat screens connected to form a single, though constantly changing, image or video display.
But by far the biggest draw is a product that isn't even for sale--the Surface tabletop computer.
During the several hours I spent at the store, it was that device, more than the laptops, that drew people in and captured their attention.
Josh Griffin stopped in at the store with his three kids, with all four quickly heading to the Surface.
"This is cool," said Griffin, who came into the store to check out Windows 7 among other things. "I've read about Surface before, but never been able to see it. It's actually a little cooler than I thought it would be."
The three kids began carving virtual pumpkins on the Surface while we chatted, but eventually Griffin turned his attention back to the tabletop computer.
"Can I do one?" Griffin asked his kids, trying only somewhat successfully to elbow his way in.
Surface, though, isn't the only thing worth pointing out.
Microsoft has taken an interesting approach to selling PC software--the category it is best known for. Although Microsoft stocks dozens of software products on its back shelves, hundreds more titles are available on-demand. Customers can browse on a touch screen through the various options and once they select a product, it can be burned to disc in the back of the store, complete with a professional-looking disc label, DVD case, and manual.
"We're like legal pirates," said Steven Precious, COO of Tribeka, the company whose system Microsoft uses in its stores. Precious just happened to be checking in on the Mission Viejo store while I was there.
The software maker also uses its position as retailer to influence what software is loaded onto the PCs it sells. While Microsoft the operating-system vendor is required by antitrust decrees to allow computer makers to install whatever software they wish, Microsoft the retailer is allowed far more say.
As a result, PCs sold at the Microsoft Store come with what Microsoft calls its "signature" software collection--a bundle that includes Windows Live products, Zune jukebox, Bing search engine and Microsoft Security Essentials antivirus software.
Having its own stores also allows Microsoft to try to match other areas in which Apple benefits from its direct contact with consumers, such as offering in-store support. Where as Apple has its "genius bar," Microsoft has an "answers desk." Both Apple and Microsoft offer a theater in the back for various trainings.
Microsoft is also trying to match Apple's passionate workforce. The retail store employees are made up of Windows enthusiasts, some of whom moved across the country to work at a Microsoft store. As evidenced by a recent YouTube video, the staff can be accused of many things, but a lack of passion is not one of them.
One of the key questions in my mind, though, is whether business will be brisk enough to allow Microsoft to profitably operate. The software maker has said it intends to run its stores as a business, meaning that to expand well beyond its current two locations, it will need to show an ability to not just look pretty, but also make money.
Correction: An earlier version of this story incorrectly reported the amount of revenue Apple gets from its retail and online stores. Apple got $1.87 billion in revenue last quarter from its retail stores alone; the company does not break out sales from its online Apple store.
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The "Microsoft Signature" PCs that are being sold at Microsoft's retail and online stores contain a bunch of extra Windows Live software, but also feature something rarely found on a PC--a clean desktop.
(Credit: Microsoft)Although Microsoft isn't making its own PCs, the software maker is taking an active role in customizing just what goes on the computers it sells through its online and retail stores.
In its new role as PC retailer, Microsoft is loading computers with what it's calling its Microsoft Signature experience--a collection of Microsoft products, including the complete Windows Live suite, Security Essentials antivirus product, Zune jukebox, and Bing 3D Maps software, as well as Adobe's Flash and Acrobat Reader products. Internet Explorer 8 is the browser, with Bing as its default search provider.
(Credit:
Graphic by Ina Fried/CNET News)
The computers are being sold at Microsoft's two retail stores--the Scottsdale, Ariz., store that opened last week and the Mission Viejo, Calif., outlet that is opening later on Thursday. The software giant is also selling PCs throughout the U.S. via its online Microsoft Store.
The goal of the Signature effort is to give customers what Microsoft feels is the best software experience they can have on a PC.
"Signature gives them a PC that is ready to run," Microsoft retail unit chief technology strategist Kevin Eagan said in an interview. "We think we're really unlocking the potential of Windows 7."
Microsoft isn't completely deciding what goes on the system. Computer makers can also add software that takes advantage of particular hardware features, but it's not allowing any trialware or "crapware."
"Much like other retailers would define (what goes on their PCs), we do the same working closely with our (computer maker) partners," Eagan said.
As part of the in-store experience, Microsoft staffers will also help customers install other software they might want--even competitor's products, such as Apple's iTunes. They can also change their browser or default search provider before they leave the store, Eagan said.
"We want to give customers what they are asking for, so they leave store 100 percent satisfied," Eagan said.
Eagan said Microsoft is just taking advantage of the customization options that other retailers also have available to them and said the company doesn't anticipate any regulatory concerns.
"We're absolutely confident that what we've done is added another choice for customers," he said. "We think expanded choice is good for customers."
Those who already have a PC, but live near one of Microsoft's stores, can bring in their PC and have the Microsoft Security Essentials software added at no charge.
Microsoft plans to open two of its first retail locations in Scottsdale, Ariz., and Mission Viejo, Calif., CNET News has learned.
The software maker confirmed on Tuesday that it has signed leases in both spots as part of an effort to launch its first retail outlets this fall.
"Over a billion people use our products every day yet we don't always have a way to directly connect with them," said Microsoft spokeswoman Kim Stocks. "We see the physical stores, as well as a consistent online experience, helping that."
The Orange County, Calif., store is in a mall that already houses an Apple retail store. Microsoft Chief Operating Officer Kevin Turner said at this month's Worldwide Partner Conference that some of the locations would be right near Apple stores.
The first stores' fall opening comes at an opportune time for Microsoft, which is launching Windows 7 on October 22.
"We're all very excited at Microsoft that we have a huge wave of innovation on the horizon," Stocks said. "The stores are an opportunity absolutely to share with customers those technologies."
Stocks said that Microsoft heard from customers that they wanted a simpler way to buy PCs.
"Our customers have told us three things--they want a more simplified buying option for PCs and devices, great technology, and competitive prices and a knowledgeable staff."
Over time, Microsoft plans to open stores outside the U.S., but the company hasn't said when that will occur. "The goal is to go global," Stocks said. "We are not sharing specific locations beyond the two we are announcing today."
As for products, Stocks said there will be products "in the areas of laptops, mobility gaming, and software." That will include Microsoft software and hardware, of course, as well as brand-name PCs and software from other companies.
On Friday, some of Microsoft's early store plans were leaked onto the Web. In February, Microsoft confirmed it had hired Wal-Mart veteran David Porter to lead up an effort to open up Microsoft-branded retail stores.
Microsoft declined to confirm the details of what will be in the stores--including a rumored "answer bar"--although Stocks did say that the stores would have both sales and support staff.
Microsoft confirmed late on Friday that store plans posted on Gizmodo are genuine, but represent the company's early thinking and that no final decisions have been made on how the company's retail stores will look when the first ones open this fall.
The designs, which include a giant video wall, Surface computers, and an "answer bar" were leaked to the gadget site, which wrote about them earlier Friday.
"As a part of our process in briefing creative agencies, we shared some early prototypes and concepts of our retail store plans," a Microsoft representative said in a statement to CNET News. "No final decisions have been made. As we previously announced, we are on track to open retail stores this fall.
As I noted last week, Microsoft plans to start with just a few stores this year with more to open in 2010. At least some of those locations will be in close proximity to Apple stores.
Microsoft first announced its plan to enter the retail arena in February, when it hired David Porter, a Wal-Mart veteran.
At last week's Worldwide Partner Conference in New Orleans, Microsoft Chief Operating Officer Kevin Turner (also a Wal-Mart veteran) said to "stay tuned" for more news on the retail front.
"We're going to have some retail stores opened up that are opened up right next door to Apple stores this fall," he said. "Stay tuned, just stay tuned."
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