Double Take: Mr. Softy Wants To Be As Cool As Apple

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So Microsoft (Nasdaq: MSFT  ) is tired of being the nerdy kid in class.

Apple (Nasdaq: AAPL  ) has been stealing the spotlight for years: growing its market share, making fun of Mr. Softy in TV commercials, and making passes at the rival's girlfriend … er, I mean, at its customers. And those spiffy, hyper-designed Apple retail stores have played a large part in that campaign of mischief.

What better way to strike back than to hire a top-notch retail manager and kick-start a store chain of Microsoft's own? Fellow Fool Tim Beyers thinks it's a really stupid idea, but I disagree with a passion.

First, let's cover the basics.

A man
Redmond just hired 25-year Wal-Mart (NYSE: WMT  ) veteran and recent DreamWorks Animation (NYSE: DWA  ) head distribution honcho David Porter. The new hire's first task is "defining the time frame, locations and specifics for planned Microsoft-branded retail stores," according to the hiring statement.

Mr. Porter's previous experience in leading merchandise and distribution operations for the world's largest retailer, plus a stint in a technology-laden corner of Hollywood, seems like the perfect preparation for this position. It'll take some heavy lifting to get it done.

A plan
The company wants to "create a better PC and Microsoft retail purchase experience for consumers worldwide" through these stores. In Tim's piece he argues that Microsoft's stores don't make sense; their focus on showing off Windows in a retail environment doesn't reach real end customers for the product. I disagree; I think the retail stores can have a powerful effect on changing perceptions of their products to all clients. To me, the stores are part marketing effort and part market research, as the lessons learned from consumer behaviors in the stores can give Microsoft a better understanding of what its customers actually want to buy. Had these stores been running a couple of years ago, Windows Vista might presumably have been sent back to the lab again for a few more rounds of bug-fixing and refinement.

A canal
Now, Porter is supposed to work closely with "leaders of existing retail programs," passing on the lessons learned to the likes of Wal-Mart and Best Buy (NYSE: BBY  ) , where consumers get their Microsoft fix today. It's unclear how much those current partners knew about Microsoft's plans before this announcement, and Mr. Softy might step on a few tender toes here.

But Apple's retail travails have shown us the branding power of a well-designed store experience. And Best Buy doesn't seem to mind the Apple stores as it sets up an Apple-branded "store-in-store" in nearly every big blue box. Although Tim discounts Microsoft's potential to market its entertainment products, I still think this could be a key focus. A well-designed experience where customers get to test the Zune might be the device's last gasp at returning to relevance in the digital music field.

And the worst-case scenario, if Tim's vision of empty stores in search of a market demographic plays out, is easy -- fire Porter and close the stores. With more than $20 billion of liquid assets on hand, Microsoft can afford to spend a few million to possibly grow the corporate equivalent of a super-cool goatee.

This is a gamble, to be sure, but the potential gains outweigh the low stakes for Microsoft.

Further Foolishness:

Wal-Mart Stores, Microsoft, and Best Buy are Motley Fool Inside Value selections. DreamWorks Animation SKG, Best Buy, and Apple are Motley Fool Stock Advisor selections. The Fool owns shares of Best Buy. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in ... um, none of the companies discussed here. You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors, and will meet you for coffee at the local Microsoft store in 2012.

Read/Post Comments (4) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 13, 2009, at 4:36 PM, asm610 wrote:


    If Microsoft really wanted to make a splash and add some well as give Apple some agita, they would be looking into the SIRIUS situation, and also working on a Zune that could receive Sirius as well as FM and their Zune store downloads.

  • Report this Comment On February 13, 2009, at 4:44 PM, asm610 wrote:


  • Report this Comment On February 13, 2009, at 4:52 PM, clokc wrote:

    Talk to the fine folks at Gateway about the joys of a windows-centric showroom. With a motley collection of hardware there will never be the same synergy and excitement that the combo of coherent hardware design, software design and religious zeal that surrounds the Apple brand. I agree with asm610. Sirius would be a better place to put their cash. They lost out on MP3 players but they could own satellite radio. Someone call Steve Ballmer!

  • Report this Comment On February 17, 2009, at 9:51 AM, chat2ian wrote:

    Good idea if they use it as a showcase for more consumer-oriented products like Xbox. bad idea if they want to try to be a MS version of the Apple Store.

    What is it with MS wanting to be Apple? It's like they are the nerdy kids who want to be cool - but they need to realize that if you try too hard to be cool, you just come off like a bigger nerd.

    Windows Vista would still have been crap even if tested in the stores as suggested. The huge resources that MS has available should produce a better product - it's as simple as that. In fact I'd argue that one of the main reasons that Windows is so crap, is that it's developed by a team that's too large.

    Let them launch the stores, launch the new Phones, and no doubt copy whatever else Apple does, because despite having a huge staff, they don't seem to have anyone with original ideas.

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