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.
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.
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.
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.