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February 13, 2009

Microsoft plays with retail stores for PR value

Posted by David Hunter at 5:30 PM ET.

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.



Filed under Apple, Coopetition, David Porter, Executives, General Business, Microsoft, Public Relations, Retail Sales, Retail Stores

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