What's Next? A Google Store?

Techwriter10 0 385 Views

When Microsoft first announced their retail strategy back in February I wrote a post called Microsoft Retail Strategy Doomed to Fail and I haven't changed my view. Today, that in the face of all common sense they are continuing to push forward with this wrong-headed idea.

Remember, Microsoft sells mostly software except for the Zunes (which haven't been exactly flying off the shelves) and XBox 360s. The strategy with software around Azure and for the web appears to be headed for the Cloud. So why would they need to sell cloud software out of a brick and mortar store front?

What's next? A Google Store? This is beginning to sound a lot like a Saturday Night Live skit.

Competing With Apple

Of all the bone-headed ideas this company has come up with to compete with Apple, this seriously the lamest one yet. The ads haven't worked, so now they are going to put Microsoft stores in the proximity (sometimes next to) Apple Stores. I can tell you right now that going head to head against Apple is a bad idea. Will they sell Microsoft branded PCs? I doubt it. I'm trying to figure out what they will do, other than make monumental fools of themselves.

Destroying Momentum and Opening Themselves to Ridicule

Microsoft has managed to get some positive publicity in the last 30 days or so, mostly around the launch of their new search engine, Bing and the Office 2010 beta. While I wasn't impressed with what I saw from the Office 2010 launch videos the other day (as I wrote in Office 2010 Looks Like More Bloat to Me), others have reported more favorably. They can put Vista behind them with launch of Windows 7 in the Fall, so why mess with that by launching a retail strategy and trying to compete directly with Apple?

Microsoft needs to understand (as I've written here before), they don't compete with Apple. Apple makes hardware. Microsoft doesn't. Microsoft sells software and an operating system and as such they are hardware neutral. Yes, Apple has made a lot of us laugh with their very amusing Get a Mac ads, but Microsoft can't run a company because they are pissed off that Apple made fun of them. It's just not a smart way to run a business.

It's Going to Be an Experience

I'll give their store designers the benefit of the doubt and assume it's going to be more fun than a trip to Six Flags, but so what? It doesn't address a core need of Microsoft. As company that sells mostly software, trying to sell out of an expensive piece of real estate in a mall or downtown area is just not a sensible approach. I have to wonder how many retail packs of Windows and Office the would need to sell just to pay the rent, never mind the employee salaries and other overhead associated with a venture like this.

Most people I know don't go to the store to buy their software. If they want an XBox, they go to Best Buy or other channel partner. There is really no sound business reason I can think of for opening a Microsoft-branded retail store, one that would compete directly with their carefully developed channel partners. Yet they push on anyway in the face of common sense and in the face of business sense. When this strategy crumbles don't say I didn't tell you so.

Dani AI

Generated

As suggested in 2009, Microsoft’s retail move looked odd next to its software-heavy business model — the company did go ahead, opened its first consumer stores in October 2009, and ran the experiment for a decade. (tidbits.com)

Those stores grew into a mix of full-size flagships and smaller specialty footprints, but the model never matched Apple’s hardware-centric retail pull. In June 2020 Microsoft announced it would stop operating the vast majority of those physical locations, convert a handful into “experience” sites, and shift the retail effort online — the change included a multi‑hundred‑million‑dollar charge as the company moved to a digital‑first approach. (techcrunch.com)

A practical reason the bet looked risky: Microsoft began building its own hardware line (Surface launched in 2012) and used stores to showcase those devices, but long lead times, high mall rents, channel conflict with retail partners, and a pivot toward cloud and digital sales made the economics hard to justify — the pandemic accelerated that decision. (en.wikipedia.org)

Counterpoint to the “never a retail company” instinct: other platform players later tested physical retail too — Google opened a permanent Google Store in New York in 2021 as an experiential showroom rather than a mass‑sales channel. Microsoft’s footprint has continued to be pared back since 2020, with some flagship experience locations changing use or closing. (forbes.com)

Takeaway (brief): a software-first company can benefit from in‑person demos, but a full retail chain is expensive and risky unless the product mix and long‑term strategy justify the ongoing operating cost and channel tradeoffs.

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