Ballmer’s Right: Five Reasons Why Microsoft Should Open More Stores

By  |  Thursday, April 7, 2011 at 1:49 pm

As Harry noted earlier, the Business Insider’s Matt Rosoff has the news of an internal debate with Microsoft on the future of its retail stores. The gist is this: CEO Steve Ballmer and COO Kevin Turner are itching to push full steam ahead and take on Apple by vastly expanding Microsoft’s retail network. However others in the company have convinced them to hold back, citing the expense.

Thus, we’re left with a small network of nine stores (with another on the way), all but three of which are on the west coast. There’s a good chance a majority of consumers don’t even know Microsoft even has a retail strategy.

Microsoft is in somewhat of a quandary though when it comes to retail. Unlike Apple, the products sold in the Redmond company stores are readily available through many other stores. This gives consumers little reason to purchase something from the Microsoft Store above any other.

That shouldn’t hold the company back, though. Yes, these retail locations are expensive to build — Apple’s were too — but those retail stores are probably the single biggest driver to Apple’s overall success. Here’s why.

1.) The store is a showroom. Nowhere else can people experience the products Apple has to offer like an Apple Store. Add this to the fact that there are salespeople on the floor directly knowledgable about the products there, and it adds up to a net positive even if the product isn’t sold that day. Microsoft could benefit from this exposure: the company wants to get its products out in front of consumers, so why not ensure the best experience by doing it in a controlled environment such as this?

2.) You can’t beat personalized customer service. Apple skeptics love to talk about the Apple Tax. Up until the Apple Stores opened, I would have agreed. I look at it differently now though, and that’s because of the customer service you get when you walk through the door. Have a question on how to do something on your Mac? Sign up for a free class. Computer on the fritz? The Genius Bar can probably help. There’s a bit of solace in the fact the company you buy from will be there after the sale.

Why can’t Microsoft do something similar? Yes it may hurt the mom-and-pop repair shops as well as those “learn-Excel-in-a-weekend” establishments, but again no one can provide better service than the company that builds the product. That’s why every Microsoft Store has an “Answer Desk.” This is one retail idea that Microsoft was very smart to copy Apple on.

3.) A store network will make the retail idea more relevant. Right now the Microsoft Store is a niche idea. There isn’t enough reason to go to these locations over somewhere else, like Best Buy. With a network of stores this could change. Redmond could launch exclusives, say the newest Final Fantasy Xbox title, at its stores first. This gives the consumer a reason to come — and buy — from Microsoft.

4.) It’s all about image control. Microsoft’s always suffered from an image problem,. It’s seen as a big bad company, always a step behind, or responsible for that latest security flaw. With a network of stores, the company would have a direct connection to its consumers and would be able to use this to convey the public image it wants, rather than one driven by the headlines.

It could be argued that the single biggest reason why Windows Phone 7 hasn’t caught fire is due to Microsoft’s reputation, notwithstanding the fact that WP7 is actually a fairly good mobile OS.

5.)  It’s the economy, stupid. This may seem irrelevant to the subject but it’s not. Having experience in municipal government, and being in the midst of a revitalization project in my municipality, I can tell you the time to build is now. Contractors and property owners are hungry for business, and great deals are to be had out there. If Microsoft is going to make a move, now is the time. While it’s still going to be expensive, it’ll be much cheaper than it will be in a few years.

Microsoft could miss a golden opportunity to solidify its retail strategy by waiting too long. The rest of the company should listen to Mr. Ballmer. He’s right.

What say you? Let us know in the comments, and we may use your thoughts in a future followup to this story.

(Note: Here’s an opposing viewpoint in the form of “Save Your Money, Steve: Five Reasons Why We Don’t Need  More Microsoft Stores.”)

 
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27 Comments For This Post

  1. Jpb Says:

    No, msft should not build more stores. Copying Apple yet again is not the answer here, and their product strategy doesn't lend itself to branded retail.

  2. Jim Ankrum Says:

    I still stand by what I said in the previous article http://technologizer.com/2011/04/07/microsoft-sto

    I'd like to add a couple other things though. My experience at the Microsoft store in Denver was that while the employees were very enthusiastic, they really weren't any more knowledgeable than your average Best Buy employee. I had a few questions about an xbox game, a laptop computer, and some other things. In all the cases, the Microsoft store employee proceeded to read the box to give me an answer. Plus everything in the store was priced MSRP. The enthusiasm was really the only thing that set the Microsoft store apart from Best Buy.

    Apple stuff, you pay the same price whether you buy at Walmart, Best Buy, or direct from Apple. So the level of service you get from Apple really does set them apart from retail stores. Really, if I'm going to buy an iDevice I'll just buy it direct from Apple, and avoid the whole "which company do I need to go through to get my iDevice fixed" thing.

    I'm just not seeing any of these advantages, although I do agree that Microsoft needs to work on their image. I think a lot of normal people are starting to understand the "Microsoft's best release is the NEXT one" phrase which is not a good place to be for Microsoft.

  3. @Jeffington Says:

    It would be a ballsy move. Sure, places like Best Buy already sell MS products, but I don't think the big box stores are doing MS any favors in terms of education and good customer experience. Many of Microsoft's products are misunderstood or unknown to the public. By having their own stores, along with decent marketing, they could right the ship.

  4. John Baxter Says:

    The machines found in the Microsoft stores aren't (or mostly aren't) quite what are found in the Best Buys of the world. I believe they are mostly Microsoft's "Signature" machines. The process of creating one of those was well described in the TWiT Windows Weekly podcast, episode 194, found at http://twit.tv/ww194 so I won't go into it here.

    These machines have a better out-of-box experience than the HP, Dell, etc machine they start out as before Microsoft "improves" them. (They are also sold at Microsoft's almost completely unknown online store.)

  5. GadgetGav Says:

    I don’t see how they can make it work… Let me address your 5 points;
    1) What products do they show in the Microsoft Store? Apart from the Zune and XBox, MS makes mostly software doesn’t it? Who’s hardware do they choose to run it on? Isn’t it going to end up more a display of partner’s wares..?
    2) This is worth it, but it’s a loss leader. I don’t know if MS would make it the core of the reason to build more stores. (And what’s with the “this is one retail idea that Microsoft was very smart to copy Apple on”? They copied the entire retail store concept from Apple.
    3) More stores might make them more popular, but that’s a heck of a double-down…
    4) Image control is certainly a good reason to have the stores, but to my mind it goes back to point 1. Unless they’re in control of the entire experience, they don’t have full control of their image, even in their own stores.
    5) Now would be a good time to get space and contractors. In my local mall they could take over the space that the Sony Store just boarded up… But if Sony can’t make a go of retail with their stores full of their own hardware, software and movies, then what hope for Microsoft?

  6. James Says:

    Actually there product strategy does lend itself to branded retail. MS is building a very solid well integrated brand across multiple platforms. It makes perfect since to open a store where people can experience the MS world come together the way it is supposed to. Google and Apple only cant compete with the total MS strategy. They only play in certain circles that MS is involved in.

  7. Perry Says:

    Let's not forget that the Apple hardware provides a lot of eye candy in those retail stores. If you think people are buying apple products just because of the software on them you would be wrong. Really nice hardware, and devices that play so nicely with each other. MS isn't doing that right now.

    It is one of the reasons I am runing W7 on my macbook pro. You didn't think I was going to buy a HP did you?

  8. Francois Demers Says:

    Windows Mobile + Nokia = retail showcases needed. Arguably, Kinect and other hot hardware could belong there but for mobile phones, controlled retail outlets are not a debate.

  9. Riz Says:

    Agree Perry…

    I just bought a Macbook Pro to run Windows on it… And it runs Awesome!

  10. David Says:

    Riz, I have Mac Pro also, but use Parallels software to run Windows, Linux and Chromium in VM's.

    Works really well (or does now after adding much needed memory). Have had zero issues with hardware or OS (including drivers).

    Microsoft needs to find one solid machine partner to build polished Windows machines and not install vendor software the always seems to slow down the machines or prompt for constant updates. Most people will think these are for Windows, when in fact their vendor updates.

  11. Marcus Says:

    If they are looking for a hardware vendor to partner with and supply good quality machines the obvious choice would appear to be Apple given the comments above LOL

  12. Safado Says:

    why do Microsoft relay on partner's wares? they could make they're own hardware beautiful to the eye. It would be like ms software in apple devices. and sell thees devices in the Microsoft store. It should not be a big problem for ms to go that way, and it would give the public more reason to choose Microsoft over apple. some people here say they run win 7 on a mac-book, ms could sell that by making they're own "mac-book".
    PS: this would of course be in addition to the marked they already have.

  13. markfig Says:

    To address point #1:

    A showroom is not going to help Microsoft. In all seriousness, the more people are exposed to most of Microsoft's work, the LESS they like it. That's the difference between them and Apple.

  14. Kevin Says:

    Microsoft actually has a very strong hardware group and a retail store would be a great place to showcase their work: Xbox + Kinect, Microsoft Surface, Microsoft Roundtable (now Polycom CX5000), Microsoft mouse, Microsoft keyboard, Windows Phone 7.

    A few Microsoft Surface units in the store (see http://www.microsoft.com/surface/) would be very interesting to most consumers.

  15. David Says:

    This has the potential to cause real problems with Microsoft's customers, and possibly the Department of Justice.

    Microsoft's customers for Windows aren't you or me, or even our companies. They're the computer manufacturers who pay for an OEM license for each Windows computer they make. If Microsoft starts selling significant amounts of Windows computers, it's competing with its own customers, and that's an ugly business situation to be in.

    Microsoft's customers may not have much bargaining power, but they can always push for anti-trust investigations. As the manufacturer of a monopoly item, there's considerable limits in how much they're allowed to use their monopoly to push into other areas, both in the US and the EU.

  16. cnoevil Says:

    I think it'd be a wiser business move for Microsoft to strike a partnership deal with a retailer like BestBuy and maintain a Microsoft Kiosk inside that provides specialty help to Ms product users, guide purchase decisions, and create product buzz with shows, displays and product releases.

    It would be a win/win situation for both parties. Microsoft would benefit from the foot traffic of a major retailer and BestBuy would be able to advertise themselves as THE Microsoft product retail experts and custom craft individual support packages that make sense to retail users and gives them a contact point and a face to put with their product support needs.

  17. John Says:

    Cant wait for more MS stores. Especially one in Miami FL

  18. Hamranhansenhansen Says:

    People are not buying Apple devices because of the hardware or the software. They are buying Apple devices because of what the devices enable them to do. Many Apple customers cannot even define terms like "hardware," "software," "firmware," "malware," "operating system," or even "Web browser." But they still need to read the Web, do email, watch and edit video, organize and share their photos, and so on.

  19. Hamranhansenhansen Says:

    More stores for Microsoft is great, but they shouldn't have copied Apple Stores. That is the recipe for Windows Vista, where they copied Mac OS X, a high-end PC OS, and then tried to sell it for $399 to users who had low-end $500 PC's that couldn't run it right. Disaster.

    Microsoft should have bought the Blockbuster chain of 1200 stores for $320 million and just put all the low-end gear from their existing handful of stores in there. Don't even redecorate. Maybe even keep the Blockbuster brand. Rent Xboxes cheap as movie rental boxes. Take Blockbuster members digital.

    Instead, Apple envy as usual.

  20. Hamranhansenhansen Says:

    People are not buying Apple devices because of the hardware or the software. They are buying Apple devices because of what the devices enable them to do. Many Apple customers cannot even define terms like "hardware," "software," "firmware," "malware," "operating system," or even "Web browser." But they still need to read the Web, do email, watch and edit video, organize and share their photos. Apple enables them to do all that without having to take CS/IT courses.

  21. Hamranhansenhansen Says:

    That would require them to take more responsibility, because then Windows would be a first-party software, covered under the PC warranty, not 3rd party software that the user is responsible for. It would also reduce their profit margins, because hardware has lower profitability than software. Right now, they have a parasitical relationship with PC makers that is hard for them to give up.

    But at least you can see the world you dream of on TV. For example, in shows like "Bones" and "Psych" they use Windows-branded PC's and phones, and they seem to work just like the Macs and iPhones that TV writers are familiar with.

  22. Hamranhansenhansen Says:

    Nailed it.

  23. Hamranhansenhansen Says:

    They already have that. Outside of Apple gear, all the computers at Best Buy are Microsoft computers.

  24. pandora Says:

    You're claiming that MS actually has a total strategy? Bwa-ha-ha-ha!

  25. Swift Says:

    1. All of the computers they carry are PC's, and no matter where a PC is sold, they all run windows. A huge part of apples business is 3rd party accessory availability for their products, so Microsoft having third party hardware is completley different?

    2. Microsoft Stores copied Apple. Walmart and Target. Applebees and Chiles. Sams Club and Costco. Great Clips and Cost Cutters. Holiday and Super America gas stations. Mcdonalds and Burger King. Pizza Hut and Dominos. Dennys and Perkins. Tell me some different way Microsoft Stores could sell computers, hardware, software, and customer service in some whole different way so as to not resemble Apple.

  26. Swift Says:

    3. More stores might make them more popular? Microsoft, windows, is being used on 90 percent of every computer in the entire world. Popularity?

    4. There is image control and then there is beyond image control. Apple to this day doesn't have a facebook page because comments can't be regulated. Image control is valuable only to the point of being unethical and exclusive with customers.

    5. If anything, that Sony store that closed down in your mall resembled Apple Stores more then a Microsoft store does. Their hardware, their products, no competition, with company employees. Yeah that sounds like Apple Stores. Apple stores, to their credit, didn't fail. That's just a poor comparison.

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