Microsoft's retail effort: Here's some unsolicited advice

Microsoft's retail effort: Here's some unsolicited advice

Summary: Microsoft has launched an effort to open retail stores to "create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy." It even hired a Wal-Mart alum to head the effort.


Microsoft has launched an effort to open retail stores to "create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy." It even hired a Wal-Mart alum to head the effort. Not surprisingly, Microsoft's idea spurred a good bit of head scratching. But maybe we all should be a little more constructive. 

OK stop laughing. I know the history of technology companies trying retail stores has been a disaster. Gateway flopped. Dell's kiosk plan didn't quite work out so well. Apple worked, but I didn't think it would. In fact, if Apple ever loses its design mojo those retail stores--housed in the most expensive real estate--still could crush margins. 

But this story isn't about Apple. It's about Microsoft. The company hired David Porter, who joined DreamWorks Animation in 2007 as head of product distribution. Before that he spent 25 years at Wal-Mart--a little outfit that knows a smidge about retailing. Neither Porter nor Microsoft is stupid. 

The big question here is this consumer focus at the stores. As Sam Diaz noted Microsoft doesn't do cool and trendy well. It does do innovative labs stuff, productive and SMB well. The stores should reflect that. Here are a few thoughts about what these stores need to do:

  • Think beyond entertainment. Microsoft said Porter's role "will work in close partnership with leaders of existing retail programs in Microsoft’s Entertainment & Devices Division." This store has to be more about Xbox, Zune and Windows 7 entertainment features if it's going to be successful. 
  • Don't go crazy with the sales pitch/PR. The worst thing Microsoft can do is try to be Apple-cool. It'll never work. Sure, Microsoft will have a Zune here and there, but it doesn't necessarily have to be front and center. The key here is to get people trying the Zune so maybe the perception changes a bit. Ditto for every other product.
  • Listen and observe. In many respects, Microsoft's retail stores could be a big test lab. Consumer walks in. Consumer plays with Windows 7. Consumer finds a glitch. The retail store could be a big beta project. Of course, Microsoft will sell you Windows 7 after the beta, but the real opportunity may be showing off stuff that's in the pipeline. You learn things when people like Ed Bott and Adrian Kingsley-Hughes offer beta feedback. You learn something else when a consumer off the street tries software in progress. These consumer observations should be dumped into a database every night. Think retail store as market intelligence and product development tool.
  • Think mobile. Expanding on that market intelligence and product development concept could help Microsoft better design Windows Mobile.
  • Show off the innovation. Microsoft has a big research arm that creates some really cool things: Big surface PCs, immersion experiences where you document your life and other cool gadgets should have a section. Call it a test lab if you will. 
  • Don't forget the businesses. While Microsoft's retail focus seems to be on the consumer but don't forget the customer that keeps Microsoft humming--the business customer. If a small business has a problem with Office or a mid-sized company wants to inquire about CRM there should be a resource at the Microsoft store for those folks. 

The glaring problem here is obvious: These store suggestions are too scattered. Where's the simplicity? Where's the vibe? What exactly will people buy at a Microsoft store? In reality, Microsoft is already all things to all people. You see Microsoft at work, at home and places in between. Perhaps Microsoft stores should reflect that reality somehow and carve out a concept that goes beyond Apple envy.

Topics: Operating Systems, CXO, Enterprise Software, Microsoft, Software, Windows

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  • Proof MS doesn't get it.

    People don't view MS as cool.

    People don't want MS products anymore (as evidenced by their marketshare slowly going down)

    If they do Genius-style service, expect a cluster.

    Sorry, MS - your arrogance is showing and this is a poor idea.
    • They definitely don't get it...

      Hey Microsoft, if you are trying to emulate Apple, take the money you are going to [i]WASTE[/i] on retail stores and use it to sell Ultimate for the price of your most crippled version of Windows! That's what Apple does.

      Who the hell is running Microsoft these days? A clown college graduate?
  • It Could Be a Nightmare

    The staff at the store will have to be Tech Wizards with thick skin. A lot of people will go to the store with their Blue Screen PC and laptop in tow expecting a fix. My wife worked as an Instructor in a Gateway store and quit because of disgruntled people who blamed her for the Gateway hardware problems. No matter what Microsoft sets as the guidelines for the store, a lot of folks will expect instant gratification for any PC problem running a Microsoft OS. I will bet the farm a DOS question about a game or application will be asked!
    • Agreed re tech wizards

      Those poor people are going to get harrassed bigtime. Perhaps Apple Geniuses do too, but just given the market share figures there will be a lot more PC folks with problems.
      Larry Dignan
    • Business opportunity

      ... have a repair store right next door then!
  • I think your suggestions are right on.

    But my brain just won't accept the idea of Microsoft making a success in retail. Like you mentioned, everybody interested in a given class of device has already seen and most likely researched Microsoft's offerings.

    The only chance I see they have is if they introduce a new (really new, not just rehashed) class of (consumer) device with the opening of their stores.

    Having said all that, I still think any success they achieve will be marginal. Nothing, that doesn't involve a "White Light", will alter Microsoft's slow descent from omnipotence.
  • The stores themselves do not need to run at a profit

    Sure, they'll sell some stuff, but that's not the point, that's just to cover some of the costs. The point is to generate interest in MS's products. If people go to this store then wind up buying a Dell with Windows 7, the store still did its job. It's a marketing expense, not a sales expense.
    Michael Kelly
    • I doubt this is in the marketing budget

      if so it's the most inefficient use of capital ever.
      Larry Dignan
      • I would not be so sure. If MS can gain even 1% of market share, or keep

        from losing 1% market share, that is worth billions. So, they really do not have to make money here, just reinforce the MS brand. That said, they still do have to do it right. They could end up looking like dorks and lose market share.
        • That's just it though

          Some of their more recent marketing efforts have gone over like a turd in a punch bowl, and a well tuned Windows machine is hard to come by without real talent. So they can't just hire some Best Buy salesman and expect them to sell their product. They need people who know what they are doing (and I mean REALLY know what they are doing) and who have a bit of charisma.
          Michael Kelly
          • I agree with you! MS is perfectly capable of shooting themselves in the

            foot here. Creating stores that will really improve the "cool" of MS products will NOT be easy and may be impossible. But, in any case, MS does not have to make a profit from the stores themselves. The idea must be to increase the "cool" of MS products. They can also use it to help partners and promote MS products at the same time. They might, for instance, sell Windows Mobile phones made by partners.
    • What accounting system ever invented ...

      ... would allow for the massive cash outlay needed to operate a retail chain without a direct way to derive revenue from it? What marketing budget in existence could hold up to the strain?

      It would make more economic sense to burn billions of 30-day trial DVDs with nerfed versions of Windows 7 and mail one to everyone in the world.
  • Another Original Idea

    How about some innovation, like a touch table.
  • Never mind

    They're going to be about as innovative as a Zune: obvious, crude imitations of Apple.

    Ballmer see, Ballmer do.
    Yagotta B. Kidding
    • So it is Jobs see, Jobs do

      also? I believe other tech companies had retail outlets...

      Oh, no, when Apple copies others it is 'innovative'.
      Does this much shilling require going to a class or something?
      • more like this

        Jobs see, Jobs refine, Jobs make work better. Ballmer see what Jobs do,
        Ballmer copy without refinement, Ballmer get to market after Jobs have
        already rolled out better version.
    • Off topic. Re: Yagotta B. Kidding

      Looks like someones been using your name:

      I've seen him/her post here(ZDNet) for awhile now.
      Arm A. Geddon
  • If Microsoft gains a sales advantage...

    ... it won't be for products like Windows, which sells mostly with new computers, or from software requiring elaborate justification and installation.

    But an XBox-only sales location has the advantage of not having games for other devices in the vicinity. And showing off Office may cause people to believe the upgrade/replacement expense is worth it. And smoothly-operating Vista installs may confirm for people that the anti-Vista canards are groundless.

    The emphasis on Microsoft products can be useful, then, but the question of why people should walk through the door remains. What did Microsoft learn putting people with others' product displays that persuaded them this might be an appropriate use of the company's money?
    Anton Philidor
    • If you put a couple of

      Surface machines in the middle for folks to play with, getting people through the door won't be a problem.
      Getting them to look around at other stuff? Not so sure about that.
  • RE: Microsoft

    The author of this story needs to do more research than throwing out his opinions. Dell kiosks actually did pretty well for Dell. The only reason they closed is because they had computers available in other retail stores such as best buy, walmart, and staples, thus they didn't need the kiosks anymore. The plan actually did work; it allowed Dell to grow into the retail life...Get your facts straight.