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Microsoft's retail stores could struggle to lure shoppers

February 13, 2009 | 11:05 am
Flanders_store
At least someone likes the Microsoft store idea. Credit: LuChOeDu via Flickr.

You have to hand it to Microsoft -- despite being mocked in Apple ads and losing market share to its Cupertino, Calif., competitor, the software giant isn't giving up the fight. Late Thursday, Microsoft seemed to take a page from the "if you can't beat 'em, join 'em" playbook, announcing it had hired a former Wal-Mart manager, David Porter, to open a chain of branded Microsoft stores.

The idea is to make it easier for customers to buy and check out Microsoft products, such as the XBox, Zune and new Windows operating systems.

But will the strategy work in a dismal retail climate, especially for a company that announced its first-ever big layoffs this year? And how do you compete with Apple stores, which seem to draw in passersby with the same magnetism of that tractor beam in the Death Star?

You don't, if you ask analyst Allan B. Krans with Technology Business Research. "In terms of demand generation, Microsoft is putting the cart before the horse," he wrote in a research note today. "Stores do not draw consumers to products; innovative products bring consumers into stores."

Apple's store coincided with the launch of the iPod, which drew people to stores. Microsoft's problem, he says, is that it doesn't have ...

... anything particularly exciting to show off. Microsoft's customers and core base are pretty different than Apple's, Krans says. Not many dedicated PC users are willing to sleep outside a Microsoft store for the newest Windows operating system, like Apple fans did for the iPhone.

"Microsoft cannot lay claim to being new, hip, or edgy," he writes. Sorry, Seinfeld.

Worse, Microsoft might alienate its distributors by trying to compete with them, he writes. And retail stores probably don't need any more competition in this economy. Other tech companies that have ventured into retail have failed, according to the Wall Street Journal, and even Microsoft's half-hearted attempt at opening a store in 1999 was short-lived.

If that isn't pessimistic enough, check out PC World's tongue-in-cheek vision of how the Microsoft store will differ from the Apple store. It includes a theme-park ride called Blue Screen of Death, an "Excuse Bar" rather than a Genius Bar and easy-to-enter emergency exits so that strangers can get in at any time.

-- Alana Semuels

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