Microsofts plans to do an ‘Apple’ with retail stores

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Apple’s retail strategy (outside India) is generally deemed a huge success. According to a 2007 report, Apple’s US stores generated an average of US $4032 worth of sales per square foot. The next highest was that for Tiffany’s with Best Buy topping the electronics retailers at $930.

Microsoft is now planning into venture into the retail business (they closed their only store in 2001) and have hired a Wal-Mart veteran to lead the effort. It is premature to write-off this venture, but let’s examine the reasons for Apple’s success in the retail business and see how Microsoft stacks up.

High margin, controlled hardware: Apple has consciously gone after the premium end of the market in desktops & laptops. They’ve even publicly said that they don’t know how to make $500 laptops. And the hardware design is controlled by Apple. In the same segment, hardware is a third-party product for Microsoft. Will they allow hardware from Dell, HP Acer etc. to be a part of this store? Also, Microsoft makes money from software licensing and not hardware. But they can’t depend solely on software being the main thrust of such stores.


Evangelists, not salesmen: by and large, those selling the Apple products at their Stores seem to be Apple fans. They are not just fans of the products but the company and the CEO too. That’s a lethal combination very few companies can hope for. Alex Frankel, author of Punching In: The Unauthorized Adventures of a Front-Line Employee, spent nearly two years as a ‘frontline employee’ of several brands, including Apple. Writing about the different approach Apple takes in hiring & training the store employees, he says: ‘I learned that Apple Stores, with their aura of cool, were in fact living up to their mission to “reinvent retail” and setting a high bar for other companies in the retail world’. Microsoft has their fans and believers too. But will they be as passionate about their software?

In India, while Apple doesn’t yet have own stores, my experience with their franchise stores has been mixed. Some of the employees aren’t as clued into Apple and it’s products as they should be. I guess it’s a function of growing up in a Windows world and not really wanting to be a Mac evangelist. The other reasons for ‘Apple Stores’ not igniting the market here is the relatively small size of the Mac market and a Goliath of a competition in Windows.

But if the approach is that of ‘see what you can do with all Windows products’ that sets up a huge opportunity for retail covering mobile phones, laptops, desktops, gaming and more.

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