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11.02.09

Readers’ Post: Microsoft’s Retail Efforts

Posted in Dell, Hardware, Microsoft at 3:19 am by Dr. Roy Schestowitz

Shirts market

Summary: Thoughts and analysis about Microsoft stores that have opened recently

MICROSOFT has opened some stores, which the press wrote quite a lot about. Microsoft enters deeper into the hardware business. Not everyone is entirely happy, for example:

Microsoft Retail Store PCs Will Be Crapware-Free, But I’m Still Unsatisfied

[...]

No one likes uninstalling bloatware, trialware, and craplets from their freshly unboxed PCs. Microsoft finally acknowledges this by skipping the unnecessary third-party software in Microsoft retail store PCs. That’s truly great, but they should do a little more than that.

When talking about “crapware-free” computers we typically think about PCs that do not come with Windows preinstalled (and obligatory “Microsoft tax”).

People may be able to recall that Dell too planned to make high street stores, so what Microsoft is doing here is likely to alienate OEM partners. We have discussed this quite thoroughly in IRC and now we find a former Microsoft senior saying that Microsoft lost touch with partners. Microsoft does the same thing in phones (with Pink) and the anti-virus business.

Sage Channel Chief: Microsoft Lost Touch With Partners

Tom Miller, Sage’s vice president of channel management, who oversees all channel programs, operations and channel marketing for the $2.55 billion applications software vendor, spoke Thursday with Channelweb.com’s Steven Burke and Rick Whiting about partner enablement, channel changes in the wake of the failure of Sage’s largest partner, MIS Group, and how the Sage partner philosophy compares with rival Microsoft.

One reader has mailed us his thoughts about Microsoft’s new stores — a move that he described as follows:

There was a flurry of stories about the new Microsoft retail stores over the last few weeks. They proclaimed crowds but pictures only came from a tween star appearance. Some mentioned Apple envy. More interesting they talked about “crap free” computers. I did not see any stories digging into the deeper implications of these stores, though a few of those ran months ago. The puff pieces gloss over real marketplace change and Microsoft failure.

Example puff pieces, praising Microsoft’s move into retail:

http://news.cnet.com/8301-1386…
http://www.slashgear.com/not-just…
http://www.bloggingstocks.com/2009/10/3…
http://www.crn.com/softwar…

The “crap free” PCs at Microsoft stores violate 25 years of operating principles and are a clear sign of Microsoft’s collapsing influence over computing. How dare they stab their retail partners in the back so blatantly? Previous Microsoft stores were set in places like casinos and designed more to create a perception of value than to sell computers. Ridiculously expensive computers languished on shelves. Now it looks like Microsoft is serious about selling computers itself and will use every advantage they have. They claimed back in July they would open one of these next to every Apple store.

As usual, the big boys are hurt the least. OEMs like Dell, HP and Lenovo have broken the boot rule with ARM based GNU/Linux in laptops and GNU/Linux netbook sales are an increasingly important source of revenue for them. Surviving retailers like Best Buy, Office Depot, Walmart and Target will be harmed to the degree they got channel stuffed with Windows 7 and suckered into supporting the same. Mom and pop stores, which make most of their money repairing broken Windows, might as well give up or move on to free software if Microsoft opens a store next door. Even the big boys can’t hide from the future and their tenetive revolt shows they know this.

Having squeezed the life out of all their partners Microsoft is forced to do all of the hard work of selling and supporting computers themselves. They can not do this as broadly or even as well as the fiercely competitive ecosystem they once ruled. They are forced to this by eroding margins and declining hardware prices. Retailers must chose between revolt, failure or simply exiting the market. If Vista ruined retailers like CompUSA and Circuit City did not drive the point home, Microsoft retail stores do. Most retailers will chose to exit but none can rely on PCs for big profits again. Microsoft will have to pick up where others leave and will face stiffer competition than their previous partners did.

Microsoft stores are too little too late. In the long run, nothing can save Microsoft from the day when retailers are selling $100 GNU/Linux machines that just work. The rise of iPhone and Droid, while not free software, show where the PC market is really going. It’s doubtful Microsoft stores will get out of the money losing phase before it is apparent that there’s no room in the computer market for software that costs hundreds of dollars.

Another reader of ours actually went to one of the stores yesterday and wrote about her experience thusly:

I did visit the new Microsoft store yesterday, even got a few pictures. I actually enjoyed the store and found the sales help to be an interesting mix of ages and personalities. The store is in a great place in the mall and gets a lot of traffic, it was pretty busy when we were there. The Sony Styles store was on a lower level and off the beaten path, so it was practically empty and quiet. Few customers there. I didn’t go to the Mac store, it was down the street a ways.

Anyway, I don’t like Microsoft any better than I did before visiting the store, but I did enjoy the visit. We even got a free gift as we entered…lol…it’s a “Bing” branded “stress-ball”. Quite appropriate for stressed-out Windows users.

Maybe this adds a little balance. To Microsoft, the stores are a matter of evolving to survive now that Windows sales are down almost by half.

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