Microsoft Retail Strategy Doomed to Fail

[Ron Miller]

You have to give Microsoft credit. They keep trying, even if what they are trying is copying Apple. This time they have announced they are going to open retail stores. Sound familiar?

It should because it's what Apple has done so successfully with its Apple Store strategy. The problem Microsoft faces with this approach is that they lack a portfolio of good consumer products to sell and it will take gobs of money to set up these stores.

Step Right Up for a Microsoft Genius

Seems they want to set up something akin to Genius Bars at Apple Stores. Not only is it not original, it's much more difficult to pull off. Apple has people who understand its products and hardware because Apple makes its own computers. Microsoft has always faced the challenge of making Windows work on a dizzying array of hardware and software.

They have very little control over how Windows is implemented and configured and they can't possibly know every single hardware and software issue that crops up. No matter how smart the techs are that work at their stores, it's going to be difficult to assess and resolve problems successfully (as anyone who has ever tried to troubleshoot a Windows machine knows).

What Are They Going to Sell?

The real question is what will they sell beyond the service side of the store? Apple sells computers and peripherals with the Apple name on it. These products draw people into the store. Of course, they also sell accessories and software without the Apple brand, but the primary focus of the Apple store is Apple products and it has served the company well. Apple has created an aura around these stores. People want to go to them and play with the products.

Microsoft doesn't really have those type of products. Sure, they have the XBox 360, a tremendously popular game system and they have the less popular Zune, but I'm left wondering what else they will sell. They can't really start marketing Microsoft computers. Even if they wanted to get into the hardware business, and I doubt they do, they would be undercutting the system that has served them so well. It really wouldn't make sense.

Have You Looked at the Economy Lately?

In the middle of a huge recession doesn't seem like the ideal time to launch a retail strategy. What's more, in order to compete with Apple, Microsoft will have to invest millions of dollars to acquire property or to rent in very expensive malls and business districts, then try to come up with an experience so dazzling that people want to go. I just don't see them selling enough hardware, software or services to make a venture like this profitable and that's why I think it's doomed to failure before it gets off the ground. I won't be surprised in 6 months or so if we hear they have decided to abandon this approach.

[jamescolin]

Its having lot of informations. Great

[elo8]

I could see retail stores as a good strategy for Microsoft, but I think it will be challenging to execute it well. They're not a hardware (and software) company like Apple. They're a software company. The problem, is (well, one of them) that, especially with Apple stores (and Apple's simple line of products), the good PCs out there that consumers might actually be interested in (and which would require Microsoft software) simply aren't getting the visibility they need just to have a Shot at selling.

If Microsoft doesn't cut close deals with a few PC manufacturers and require them to absorb some of the cost of the retail stores, though (from which they stand to benefit enormously), I think that the cost/benefit ratio for Microsoft--in the Best-case scenario--will be way off-base.

John Tantillo typically does weekly winner/loser posts on his marketing blog. Microsoft has been the 'loser' multiple times, but a week or two ago, with the announcement that Microsoft would be opening retail stores and that David Portner would be heading up the effort, he named Microsoft the winner...for at least realizing that they need to make some changes...

The retail stores will also be a good place to showcase the new Windows Mobile phones (although if the product is unimpressive, which it sounds like it will be, then it just be a way of showcasing Microsoft's ineptitudes and allowing them to fail more dramatically.

[elo8]

I could see retail stores as a good strategy for Microsoft, but I think it will be challenging to execute it well. They're not a hardware (and software) company like Apple. They're a software company. The problem, is (well, one of them) that, especially with Apple stores (and Apple's simple line of products), the good PCs out there that consumers might actually be interested in (and which would require Microsoft software) simply aren't getting the visibility they need just to have a Shot at selling.

If Microsoft doesn't cut close deals with a few PC manufacturers and require them to absorb some of the cost of the retail stores, though (from which they stand to benefit enormously), I think that the cost/benefit ratio for Microsoft--in the Best-case scenario--will be way off-base.

John Tantillo typically does weekly winner/loser posts on his marketing blog. Microsoft has been the 'loser' multiple times, but a week or two ago, with the announcement that Microsoft would be opening retail stores and that David Portner would be heading up the effort, he named Microsoft the winner...for at least realizing that they need to make some changes... http://blog.marketingdoctor.tv/2009/...anut-corp.aspx

The retail stores will also be a good place to showcase the new Windows Mobile phones (although if the product is unimpressive, which it sounds like it will be, then it just be a way of showcasing Microsoft's ineptitudes and allowing them to fail more dramatically.

[Techwriter10]

Hi Elo8:
Always like to see your thoughtful comments. Thanks. If they could cut some deals with high end hardware manufacturers and sell them in the store, it could have some legs, but I still have lots of doubts. As you say, it's much easier for Apple, which has actual consumer products to sell. This means MSFT has to make the deals and have enough left over to make a profit, no easy task, especially when you consider the real estate they will have to buy or rent to make this viable. I see it as quite a slog, and I'm not convinced that it can succeed, but thanks for providing your perspective.

Regards,
Ron