Microsoft Hires Rapper, Things Go Terribly Wrong. Hiring an animal act is always fraught with peril.
When I first saw the announcement that Microsoft had hired Wal-Mart veteran David Porter to open a chain of Microsoft retail stores, I was fairly perplexed because Microsoft hardly needs better retail distribution and so many of their cash cow products are sold via partners (e.g. HP, Dell) that have their own separate retail relationships. It could, of course, have been simple Apple envy, but that would be a very silly way to run a business since Apple’s stores were born out of a precipitous decline in Apple computer retail availability and profited from Apple’s proprietary offerings of combined software and hardware which Microsoft only matches in a few areas like the Zune.
I shouldn’t have worried, since Microsoft Entertainment and Devices Division head Robbie Bach apparently knows that lesson very well and reveals that the purpose of the Microsoft retail stores is not moving product:
“And I don’t think — I saw some of the commentary that this was designed to be the same as Apple or whatever. You should think about it, I think, quite differently.
“Apple’s approach was about distribution. People forget that when they entered their stores [in 2001], this was quite a while ago, they didn’t have distribution for Macintoshes, so they created their own distribution.
“We have plenty of distribution. These stores for us are about building our connection to customers, about building our brand presence and about reaching out and understanding what works and what improves the selling experience.
“So Apple you would think of as a volume distribution play. You should think of ours as much more of a brand and customer relationship investment more than anything else.”
I guess we won’t have to worry about tracking “same store sales” for the Microsoft retail stores since they are only for public relations value and that is largely intangible. Still, I wonder if this is really the best investment of Microsoft marketing dollars and perhaps a more subtle form of Apple envy.
Microsoft’s opened the US version of the new online Microsoft Store yesterday and given some of the effusive commentary which greeted the blogged announcement from Microsoft’s Trevin Chow, one would think that Microsoft did not already have an online store called Windows Marketplace which offers Microsoft and third party hardware and software including downloads of some software purchases. Paul Thurrott puts it rather crisply:
And the only big difference I can see between that site and the new Microsoft Store is that the latter only sells Microsoft software and hardware, while the former also offers third party products. So why all the hoo-hah over Microsoft’s new store? Because most of the people who write blogs and news articles in this industry have no understanding of the topic they’re covering. Yeah, I said it. Even Microsoft got it wrong: In a posting to the Windows Experience Blog announcing the store, a Microsoft employee described the new storefront as "the first online store where you can purchase Microsoft products straight from the source." Which is curious, because I purchased Microsoft AutoCollage from the Windows Marketplace about two weeks earlier.
I’ve been a Marketplace customer myself so I was also a bit puzzled by the hoopla and more so by Microsoft’s lack of explanation. That came later today via Dawn Kawamoto at CNET:
"With the launch of the Microsoft Store, Windows Marketplace will shut down as an e-commerce site. Marketplace will transition from an e-commerce and referral site to a Web page that will refer customers to sites such as Microsoft Store, Windows Vista Compatibility Center, and other appropriate destinations," a Microsoft spokesman stated.
So the big news is actually that Microsoft is ending its experiment in selling third party items in an online store in favor of a Microsoft only effort. Just don’t look for any bargains though, since the formal announcement says all items will be listed at the manufacturer’s suggested retail price (MSRP) which is hardly competitive in the online retail world.