Microsoft Storefront, What’s the plan?
At the Worldwide Partner Conference this week, Microsoft’s chief operating officer, Kevin Turner, announced that they would be opening retail stores in the fall. This isn’t a surprise, as it follows their actions in February when they hired David Porter, who previously led worldwide product distribution at DreamWorks Animation SKG, and has spent 25 years at Wal-Mart. Rumors have actually been around since April 2008 of Microsoft opening up stores.
There may be some positive reasons for Microsoft going this direction, however with Turner’s statements indicating that they would be opening up “right next to Apple Stores”, it is hard to perceive this as anything but an attempt to reproduce the market that Apple has a firm grasp on. Regardless of their intentions, I find it hard to understand how Microsoft expects this to work.
Source: appleinsider.com
Microsoft doesn’t make all of the hardware that their systems run on, where as Apple does. While this causes a complication for the sale of hardware, it causes a larger complication when you think about the service of Microsoft based systems. The value of the Apple store is that I can bring my failing machine in, knowing that Apple is responsible for everything I am handing them. Start mixing hardware vendors with a combination of installation examples and you create a model that can not be supported by a team of Microsoft Geniuses.
So now Microsoft can sell all of their software on the shelf. That is fine, but the retail cost of software from Microsoft has always been high. Nobody buys a piece of Microsoft software at MSRP, so you now have a model where you are paying more at the Microsoft store than you normally would online. Microsoft can’t lower the cost, because every reseller out there would be put out of business.
In the product lineup, we forget that Microsoft does have some hardware platforms to push. You have the Zune, which will never catch where Apple has placed the iPod, no matter what cost scheme you try to attack with. You have the Xbox gaming platform, but unless you want the store full of kids all day who don’t buy anything, you will have to just sell the equipment without demo stations setup.
I do believe there may be a small opportunity to make these stores profit, but it is far from the actual product sales. I think Microsoft could gain some revenue by bringing a training program to the storefront. With a new operating system coming, and with many companies still behind in the current generations of Office suites, having a place for formalized one on one or even group training could be the added value they would need. Perhaps they could add the layers of certification training and act as centralized hubs for their Partners in the areas, but alas that is not what a retail storefront is meant for.
Microsoft, I look forward to seeing your storefront, but I have yet to understand how you expect it to be successful. It will take too long to build up the internal structure of the stores for them operate smoothly. Knowing you will be met with harsh criticism from the day it opens, you have a hard road ahead of you. You have also placed yourself next to the model to catch up to and I hope you have more conceptualized than I do at this point.
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During the dot com boom of 1999 Microsoft had a retail store at the Metreon in San Francisco called “microsoftSF”.
