Microsoft’s Retail Ruckus

Microsoft Corp. is on track to open retail stores this fall in Mission Viejo, Calif., and Scottsdale, Ariz.. It’s a new strategy for the software giant, which in recent days has suffered from a lack of clarity around its consumer and business value propositions thanks to the breadth of its portfolio.

To meet the immediate goal of remaining competitive in a contracting market, according to Microsoft itself, is to find a way to become a trusted adviser with a consultative sale that can offer end users a ROI and TCO model, point them in the right direction in terms of products to meet specific business needs, and showcase the efficiency and productivity gains it can bring to the table. It’s a mission statement that is usually the mantra of channel partners rather than large, unwieldy vendors.

Microsoft’s COO Kevin Turner, speaking at the company’s financial analyst meeting, noted that the House that Gates Built needed to think strategically about distribution and serving various market segments the way they want to be served, speaking the language each understands. For consumers, especially those purchasing the wireless products with which Microsoft so desperately needs to increase market share, that increasingly means hands-on, in-store experiences.

And of course, it’s about volume. Turner said Microsoft plans to get aggressive to remain a high-value, low-cost, high-volume software provider. Microsoft needs the feet on the street after reducing sales and marketing expenditures and head count. “We actually made some very hard decisions this past year to really drive some efficiency and effectiveness in the company and right-size our organization during this once-in-a-generation (we hope) macroeconomic environment,” said Turner. Retail is a part of that picture, offering more exposure for less. “We're going to have a lot of fun competing in that particular space,” he noted.

But will it be “fun”? Can Microsoft’s gambit really take off and be a boon to its image, just as the Apple Store is a reflection of Apple Inc. geek-chic value proposition?

“Retail’s a crapshoot no matter what,” Stephen Baker, retail analyst at the NPD Group told VON. “For Microsoft it’s a strategic opportunity to gain control over the brand and highlight the value proposition and ecosystem that Windows offers. We don’t know exactly what the stores are going to sell but I think it will be limited to the Microsoft-branded products.”

Microsoft said it’s going to take these initial store openings – both in malls – to “really learn and find ways to illuminate our innovation story and completely bring the software to the front across the PC, the phone and the television, and really share all those learnings that we get, having that first-hand customer experience back with our retail channel partners to make the PC-buying experience so much better, because everyone that we've heard from, from a customer standpoint, has told us they want more choice, they want more value, and they want a better service as it relates to buying a PC and buying Microsoft software,” said Turner.

But learn it must. Microsoft’s only other foray into retail was back in 1999, when it opened the "microsoftSF," in San Francisco's Metreon shopping center. It featured 12 lifestyle areas for educating customers on work and life applications. It was located by the Moscone Center, home to giant technology trade shows. It launched smack in the middle of the dot-com era. But nonetheless, the store shuttered two years after opening.