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February 16, 2009

Microsoft Stores, What A Concept

Microsoft has decided to open retail stores to compete with Apple and to better position its products. I can't for the life of me imagine what they expect to accomplish beyond extending their media advertising campaign to physical locations. Apple is a hardware and software company with both tied extremely close to each other. Apple also has a habit of designing computers and media players in a form factor that most people consider "cool" if not merely overpriced. Microsoft has, what, mice, keyboards, the Xbox and the Zune. The Xbox is probably the single piece of discretionary hardware manufactured by Microsoft that the public has embraced. The rest are utilitarian devices or stuff that simply hasn't caught on. The Windows mobile market is developing, but these have traditionally moved through the distribution chain run by the handset manufacturers.

Other notable store endeavors include Sony, which reduced the number of stores it maintains in favor of those in outlet malls selling refurbished items. Gateway tried the same strategy and failed, though Gateway had the built in limitation of using their stores merely as a showroom. Customers had to order online and wait for their computers. By the time the company changed the policy and placed standard configuration items in the store, it was too late.

Perhaps Microsoft has a different strategy in mind, using the stores as a place to hold conferences or product roll-outs. Price per product is also an issue. Apple is notorious for not discounting its products (see over priced again), Microsoft has its hardware and software in any number of competing distribution channels. Inexpensive versions of Microsoft products are in stores such as Costco, Office Max/Depot, Best Buy, and others. The educational market is covered by various plans that offer deep discounts to faculty and students. Assuming Microsoft sells products in their stores, they need to be prepared to compete with themselves.

Given Microsoft's typical lack of imagination in product design, it will be interesting to see if they pull off the store concept. I'm skeptical pending further details.  [MG]

February 16, 2009 | Permalink


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