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  • The Microsoft Death Watch: A Microsoft Store?

    July 28th, 2009

    Folks, 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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