Borrowing a page from Apple's playbook, Microsoft plans to open Microsoft-branded retail stores. Although details were limited, Microsoft said the stores' purpose will be to "create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy."
To head the initiative, David Porter was hired as vice president of retail stores. He spent 25 years at Wal-Mart Stores before joining DreamWorks Animation SKG in 2007 as head of worldwide product distribution. His last role at Wal-Mart was vice president and general merchandise manager of entertainment.
Microsoft said the first priority of Mr. Porter would be to define where to place the Microsoft stores and when to open them. The stores could feature a range of products from personal computers running its Windows operating system to cell phones running the company's Windows Mobile operating system to its Xbox videogame console.
"This is an exciting time with our strong lineup of upcoming product releases including Windows 7 and new releases of Windows Live and Windows Mobile," said Microsoft chief operating officer Kevin Turner. "We're also working hard to transform the PC and Microsoft buying experience at retail by improving the articulation and demonstration of the Microsoft innovation and value proposition so that it's clear, simple and straightforward for consumers everywhere."
But many questioned the timing of the launch during a recession, as well as the potential to alienate retail distributors. OEM partners might become rankled at how their wares are showcased in the stores. The failure of Gateway's retail venture as well as Microsoft's own attempt to open a store in 1999 was also widely cited.
A lot of the criticism focused on the challenges of competing against Apple's stores and their hip design, helpful staff and "genius bars."
In a research note, Allan B. Krans with Technology Business Research said the introduction of Apple stores was helped by the launch of the iPod but Microsoft doesn't have a similar traffic driver.
"Microsoft is putting the cart before the horse," wrote Mr. Krans. "Stores do not draw consumers to products; innovative products bring consumers into stores."
But writing on Silicon Alley Insider, Dan Frommer saw potential benefits in showcasing all of Microsoft's products in one place. He wrote, "At very least, they could do a better job than Best Buy at showing off PCs."
Discussion Questions: What do you think of Microsoft's move into retailing? What would be the key to Microsoft's success in retail?