The Microsoft Death Watch: A Microsoft Store?
July 28th, 2009Folks, give me a break! How can anyone believe for a second that Microsoft has any valid business reason for opening retail outlets other than for the childish purpose of imitating Apple?
Consider, for example, that the vast majority of Microsoft’s sales team is focused on business-to-business direct sales. They sell OEM licenses to PC manufacturers, and software subscriptions to the enterprise. Yes, there is a consumer department that markets Windows and Office to retail stores, and even an entertainment division struggling to earn profits, without success, from the Xbox and the Zune music player.
Put all that together, then, and what is it that Microsoft intends to do with a retail chain? Where is the marketing plan, and how can they benefit from putting their storefronts near Apple’s, assuming the spaces are even available?
What’s even more troubling is that several versions of Microsoft’s store strategy have altered filtered out. Microsoft, you see, has great difficulty keeping secrets, or is that the marketing plan? Are they just hoping that media analysts will find a concept that seems to convey magic, and go for that?
They seem to forget the lessons of history. One of the reasons for the extreme skepticism of Apple’s original retail strategy was the poor experience of other PC company stores. Perhaps the most telling failure was that of Gateway. It’s not as if Gateway didn’t have decent retail products to sell, but you actually couldn’t buy most of those products at their stores. Instead, you would only receive demonstrations and place orders. Perhaps Gateway was in its poorly-conceived way trying to emulate the original Sears catalog stores.
Do you remember those huge Sears catalogs, and how you could place your orders by mail or phone, or better, go to the local store and order direct from the catalog. In a few days or weeks, you could pick up your merchandise at the store, or have the larger items, such as major appliances, shipped to your home.
That was so 1950s in its concept. It worked then, but Gateway somehow believed that same retail scheme would sustain itself in the 1990s and early 2000s before they accepted reality shut the stores down for good.
So what is it that Microsoft wants to imitate, which is their version of innovation? Obviously they can’t follow the design of the old-fashioned computer warehouse, such as CompUSA, since that chain failed. Well, yes, another company bought the name and has opened a few outlets, but that doesn’t demonstrate the idea can succeed on a large scale.
A smaller storefront, such as a Radio Shack, isn’t such a good idea either. That chain has had its problems in recent years, and I don’t know if you can bet on their long-term success. I mean, I’d like to see a Radio Shack in my neighborhood when I need an audio cable or some parts that aren’t generally available in a Best Buy or Wal-Mart. But the latter are rapidly making Radio Shack irrelevant.
Meanwhile, Microsoft is evidently going to open its first two stores this fall in Scottsdale, Ariz., and Mission Viejo, Calif.
If that’s true, I just cannot imagine people rushing to their stores to buy a $3,999 Exchange Server 2007 Enterprise package, or any of their costlier business-oriented products. You see, catering to the needs of the customer has never, ever, been a part of Microsoft’s DNA. All they could think about was selling a Windows OEM license for roughly $50 or selling it at retail for several times that price.
Did anyone think that Vista Ultimate was truly worth $399 list price, when Apple charges $129 for its standard Mac OS X user licenses? Talk about greed!
So aside from software, game players and music players, what does Microsoft expect to sell? Another company’s PC box? I hardly think they’d earn much of a profit from that, considering that margins are slim to none these days in the bottom-feeding personal computer industry.
In short, I think of all the dumb ideas Microsoft has had, emulating the Apple Store is way down at the bottom of the list. In fact, I am seriously wondering about the sanity of Microsoft’s senior executives, particularly the ones promoting this lame-brained idea. Just what are they thinking and how is a retail chain somehow going to save the company?
One thing you are seeing, and that is a more timid Microsoft struggling as their sales decline. They caved pretty quickly in agreeing to install a browser ballot box on new Windows installations in Europe, and as an update for those using previous versions. They are also apparently trying to work harder towards letting third parties build compatible products.
It’s unfortunate, in retrospect, that the U.S. government didn’t have the balls to force the proper concessions from Microsoft. That browser ballot box should be done worldwide, actually.
Then again, maybe the marketplace will ultimately decide that Windows was a sham from Day One, and it’s time to migrate to something that actually works. I certainly hope the Mac is a big part of that transition, but even Linux of any persuasion would be far better than anything Microsoft is able to offer.
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WWDC 2004’s tag line was “Redmond, Start Your Photocopiers.” A little dig at Microsoft’s upcoming Windows OS that would have the name Vista. What was to be a nice, pleasing view through the window turned out to be a brick wall. Reality bites, a bad copy is a bad copy.
Unfortunately, Microsoft has grabbed onto Apple’s coattails and does not want to let go.
Microsoft got a “get out of jail free” card from the Bush administration (an administration that wanted to be more like Reagan’s and ended next to Hoover’s).
I’m sure glad that Apple always look forward in their quest for making some of the best stuff that is easy to use. If Apple was to turn around, they would see Microsoft (with a a big smile) in their shadow.
I don’t get it. Apple is primarily a hardware mfr. So when you go into an Apple Store there’s plenty of stuff to look at and touch. In fact, it’s a bit of a playground (and acquires something of the dimension of a social meeting spot — if I have any criticism of the Apple Store it’s that this dimension can take over a bit too much, I’ve been in a couple where I almost wished they had bouncers). You can buy stuff and walk out the door carrying a physical thing in your hands. You can also, of course, bring the thing back if it needs repair or if you need any advice on how to use it. But MS is primarily a software developer. So what exactly can they put in their window and on their shelves other than shrink-wrapped boxes co? Well, there’s the XBox, the Zune, and a handful of keyboards and mice. That, as far as I know, is about it. Not enough to give a visitor a very full and rewarding experience or leave them wanting to come back. So my question is, what exactly is supposed to happen in a Microsoft Store? They need to dream up a good compelling gimmick, and I doubt they will be able to do it. Unless, of course, out of desperation they start filling the store with other people’s products. But then it won’t really be a Microsoft Store, will it? And that would make them look worse than if they had no store at all.
Maybe they’ll sell Macs alongside Parallels and VMWare? 😉
I believe Vista “Ultimate” is more comparable to Mac OS X Server than Mac OS X client. Of course the number of licenses is limited on Vista, wheras for a little more you can have unlimited Mac OS X Server licenses.
Too bad Microsoft can’t decline too soon. Wish Apple could make CrossOver as compatible with Windows applications as Windows on Boot Camp, Parallels, or Virtaulbox.
Then Apple could pitch its machines to companies that wish to get rid of Windows, but still keep their applications, and then Microsoft would no longer be a necessary evil.
@ gopher: Absolutely not. Mac OS X Server is strictly an OS for server products, as is Windows Server. Vista Ultimate is just the full-featured version of Windows client.
Peace,
Gene
Why, I can’t WAIT until they open a Microsoft store! I mean, up till now it’s been impossible for me to find a copy of Vista to buy at my local store.
Of course my local store is the Apple store.
Come to think of it, they probably have Vista for sale there, too. I guess I’ve just never looked.
@DaveD, Microsoft has always been a forward-looking company. Because Apple has always been in front of them.
@MichaelT So, are you happy now? (LOL just kidding.)
Microsoft’s major success, Windows, is the reason why they can’t compete in any markets other than selling OS licenses to PC hardware OEMs and selling Office to businesses. That success is distorting their view of the world. They want to put Windows on everything else, now that they’ve locked in most of the world to their desktop OS.
And, as we’ve seen, that approach totally failed. Windows CE (and all the re-named variants of it) is officially dead. Windows Phone 7 (with “Windows” and “7” in its name despite having no correlation to WIndows 7 itself) is, so far, vaporware. No phones running Windows Phone 7 will be released until the end of 2010 or early 2011, at the earliest. By then, Apple will have sold 5 million to 10 million iPhone 4th gens, 5 million to 10 million iPads, and Google will have followed right along, with Android phones and tablets.
Microsoft isn’t in the software business, or even in the consumer electronics business. They’re in the Windows business. Their other cash cow, Office, is built for Windows. Businesses buy WIndows so their employees can run Office.
So how do smartphones and tablets fit into that Window / Office gravy train? They don’t. But to make Microsoft seem relevant in the 21st century, Ballmer is forced to do something, anything, in the smartphone space. So Microsoft is entering the smartphone market, starting over from scratch, 3.5 years after Apple showed the way. (And don’t even think for a second that Kin will do any better than Zune. You DO remember Zune, don’t you?)
Microsoft used to be able to control the market with FUD. Trash-talk the new competitors and make consumers think twice. Now, instead of spewing FUD, Ballmer spews vaporware. Why? To placate angry investors. He has to do something, anything (there’s that phrase again) to help prop up Microsoft’s stock. Keep the denial going. Pay no attention to the man behind the curtain. We are the Great and Powerful Oz.
Good luck with that strategy, Ballmer.
@ MichaelT: Vista at an Apple Store? No, but you can probably get Parallels and VMWare. Some third-party dealers are actually offering Windows, though.
Peace,
Gene
Of course, why would I REALLY want to buy Vista anyway? But the sarcasm of my first line was not apparent—the point I SHOULD have tried to make was that if you want Vista, it’s sold at a million stores around the country. Why does Microsoft feel it needs to open its own?
Before the Apple store, I had to go to my CompUSA. (And before that, I even looked at Sears for a grape iMac!) A pretty pathetic way of showing off the products, really. And nobody knew what made an Apple product different from a Dell.
Microsoft doesn’t need to introduce people to its product. In fact, it is TOO familiar with many, who have to spend countless hours getting it to do what they want it to!
Oh well. Microsoft has the advantage of having billions of dollars to waste on whatever they want to waste it on for now. Only thing is, if they keep investing the way they have been, that advantage will disappear. Along with their billions.
You’re missing the true intent of Microsoft’s new store concept — the iMic all-in-one computer, the iSoft notebook computer line (the clamshell is soft to the touch and so warm and fuzzy, just like Macs, only literally), and the Zune Master, guaranteed to be as good as the 2008 iPod. Microsoft is going to follow Apple all the way to computer design.
Oh boy.
My guess is that they will sell a few different computers of each price class and type, from participating OEMs who pay for the privilege. If those OEMs are also involved in support, perhaps the stores will be designated as authorized service centers, then it would be easy to provide something similar to the genius bar, with the OEM paying for hardware warranty work, and Microsoft covering the cost of software training.
Just as Apple doesn’t own the Apple section of a Best Buy, but rather it is a partnership, so too could the Dell, HP or Lenovo presence be at a Microsoft store.
Does that mean that this will work? No. But there are plenty of possibilities for how Microsoft and partners could display physical products that customers can walk out with, and provide genius bar-like support.
Where such a store would really do well is in a Pro-Care type service. Many small businesses use Microsoft client and server software as well as productivity applications, but don’t have the budget for an IT staff. Just as I gladly pay $100 per year for Pro-Care to support the 6 Macs in my business and household, I would do the same at a Microsoft store for help with my Windows server and the two PCs.
Well, Gene, if you can’t figure out why Microsoft would try opening retail outlets, you haven’t been paying attention. It does make sense for many of the same reasons that it made sense for Apple.
Let’s set the wayback machine to 2001. Apple had an image problem and they didn’t have a good way to get their message out into the world. Sure there was advertising showing how easy it was to set up and use a Mac, but there wasn’t a place where customers could actually sit down and use one, except maybe at the back of a CompUSA. Asking a salesperson at a CompUSA about a Mac would usually end up with a salesperson directing them to a PC. Apple did not control the message.
The solution was to open Apple Stores, where people could actually come in and use a Mac. The Macs would have internet access, so that you could actually see that the ‘i’ in iMac stood for Internet. People would see that there was software available for Macs because the store would carry a plethora of third-party apps. Basically, Apple could dispell all of the various Macintosh myths (eg, Macs can’t use the Internet, Macs have no software) by creating a store that people would want to come into and check out these cool-looking computers. At the time, the belief was that even if the stores just broke even, it was a positive for Apple because they would be out where people could see them.
As Apple expanded it’s product offerings, the Apple Stores were a great place to go check them out.
Now, let’s jump back to present day and take a look at Microsoft.
Microsoft’s business model, as you point out, is different from Apple’s. While Apple sells both the hardware and operating system, Microsoft sells only the OS. Of course, you can upgrade your computer to a new OS without having to buy a new computer. Most people don’t do that. Why don’t they? Because if something goes wrong, you’re pretty much hosed. Now imagine if there was, say, a store where you could buy a Windows 7 upgrade and feel secure that, if something went wrong, you could bring in the computer and receive assistance. That might make users feel more comfortable about upgrading their existing computers–which is pure cash in Microsoft’s pocket.
Of course, Microsoft has to convince customers to upgrade to Windows 7. Remember Microsoft’s “Mojave Experiment”? They took a bunch of people and showed them what Microsoft was working on and people were really impressed. Then they said, “Hey, this is Vista! You can get this now!” And everyone was surprised! They’d heard such bad things about Vista.
(Now, in those people’s defense, I’m sure Microsoft was showing Vista SP2 which cured some of the really bad Vista problems.)
Microsoft has usually depended on the press to tell everybody to upgrade to the latest and greatest version of Microsoft’s products. But the PC press can’t be trusted to sing the praises of Microsoft products anymore. So Microsoft needs to get out there and show people how great Windows 7 is.
But where would they do that?
Maybe if Microsoft had some kind of store where people could come and see computers running Windows 7, could maybe talk to someone and have an idea whether Windoows 7 would run well on their 4 year old Dell, could find out whether they should buy Windows 7 Ultimate or Windows 7 Home, etc., etc.
So they idea behind the Microsoft store would be to show people Microsoft’s products–just like the idea behind the Apple Store is to show people Apple’s products. If I go to an Apple Store and check out the latest MacBook Pro and then go buy it at MacConnection, Apple still made money. So the store makes me want Windows 7. Ideally, Microsoft wants me to upgrade my old computer (because they make more money). But if I, instead, go buy a new PC, Microsoft still makes money.
Why does this seem so hard to understand?
@ Peter: The problem here is that only a fraction of Microsoft’s business involves selling to consumers. So will they sell PCs? If so, which ones? Who would be “favored” with this approach? More to the point, a PC sales infrastructure has been in place for decades. While there were Apple dealers, far too many messed up the very special Apple experience, thus forcing Apple to do it themselves.
Microsoft and Apple aren’t really even in the same business, and thus can’t sell product by the same rules.
Peace,
Gene
I am really glad Microsoft is adding the Guru Bar. At last, a one-stop destination that I can route every single person I know with Windows problems, to visit. I hope they can handle the volume.
@ Costanza: Yes, that’s the ticket. 🙂
Peace,
Gene
@ Peter,
Windows 7 working on a 4 year old Dell. Pure comedy gold. Win 7 chugging away on a P4 space heater. The roar of the fan, the smell of the burning dust bunnies, as Win 7 streaks along at half the speed of XP Pro SP3.
Seriously, there are dozens of places in every city where you can try out Vista and in a couple of months Win 7. Same goes for Zune and X Box. Many of those places also carry Wii, PS3, iPods and Macs running Leopard and in a month or so Snow Leopard so you can make a more informed purchasing decision buy steering clear of the MS Store.
Which returns us to the ‘Question’, what the hell is Microsoft going to sell that Best Buy et al doesn’t carry? The Big Ass Table?
That’s it! The Microsoft Big Ass Table Emporium!
Sorry, didn’t mean to spoil the surprise.
@ Al: Those “Bag Ass” tables will change the world. Didn’t you know? 🙂
Peace,
Gene
Gene, consumer sales are actually a growing part of the market. So Microsoft wants to be there. How does Microsoft get there? By going where the consumers are–the mall!
So, basically, you can’t understand why Microsoft might be trying to improve it’s position and perception in a growing market by being where it’s customers are.
As for Al, well, go easy on the kool-aid.
Windows 7 working on a 4 year-old Dell probably won’t be very good, you’re right. If you have any doubts, a trip to the Microsoft Store will probably set you right. Mac OS X 10.6 isn’t going to work very well on my iBook G4, either. But if I had any doubts, I’m sure a trip to the Apple Store would set me straight also. So it seems like having somebody around to answer a question like that would be a good thing, huh?
I’ve actually found very few stores where I can “try out” Vista the same way I can in an Apple Store. Can you tell me one place I can actually “try out” a Zune? I’ve seen them in stores, sure. But I can’t usually “try them out”–you know, listen to music, watch videos, etc. Most PCs that I’ve seen in stores are locked down, requiring a password in order to use them, and they don’t have Internet access. This is one place where Apple Stores really shine. Is it any wonder that Microsoft wants to copy them?
As for the question about what is Microsoft going to sell that Best Buy et al don’t carry? That’s not the point!
In a 20 mile radius from where I live, I have two Apple Stores, two Best Buys, a Fry’s Electronics, and a MicroCenter. What the hell is Apple selling at their store that I can’t buy at Fry’s or MicroCenter? Not much. I can buy a Mac at any of the above. Third-party hardware (eg, video cards)? Fry’s. Third-party software? MicroCenter has a much bigger selection than the Apple Store. I can buy iPods at Fry’s or Target (which is also within the 20 mile radius). I can buy an iPhone at one of two AT&T stores that are within a 2 mile radius of where I live.
As for the Big Ass Table, I’d actually love to see a demo of one. This does seem like a pretty good place to show it off.
@ DaveD:
I am with you on this one. Microsoft is showing serious sign of menopause and is loosing its bearing fast. I have been wondering what kind of PCs will be showcased in the store. The cheap ones that has been heavily advertised recently will certainly look out of step next to the Window 7 Ultimate edition selling for $300 plus. This whole thing is looking weirder and weirder and I am absolutely stomped with it.
@ Peter: Short answer: Microsoft’s market is NOT growing. The Microsoft Store sounds like a desperate effort to get a buzz, something that’s eluded them for a long, long time.
Peace,
Gene
Microsoft’s retail strategy is high risk/high reward. If Microsoft is able to go toe to toe with Apple and beat them at their game, which is perhaps the best overall customer experience in all of major-chain retailing, they’ll be reaping the rewards, and the accolades and case studies will be written, and well-deserved. If they’re not able to beat Apple, the Microsoft brand will have taken a major hit at retail, and the postmortems and case studies will be written about that. There aren’t many observers who are betting on Microsoft to succeed.