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The No. 1 Reason Microsoft's Tablet Strategy Will Work

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Now that Microsoft (Nasdaq: MSFT  ) has introduced the Surface tablet, we're talking about a "new" Mr. Softy that's converted to Apple's (Nasdaq: AAPL  ) vertical integration religion.

Maybe that's true. But even if it is, Microsoft was copying elements of Apple's iPad strategy years before anyone had heard of Surface. Don't believe me? Rewind to 2009, when Microsoft first announced plans to open a network of retail stores. Today, there are 26 stores across 15 states and Puerto Rico.

I'll be the first to admit that I wasn't a fan of the original idea, if only because it sounded like a tone-deaf attempt to show off Windows rather than engage consumers who might be interested in Microsoft's digital-entertainment products. As I said at the time:

 "So, Microsoft's retail stores will help show off ... Windows? That's a funny way of expressing Apple envy; the iEmpire's own stores are designed for playing with Macs, iPhones, and iPods."

Now think about where we are today. Microsoft, like Apple, has used stores to engage with consumers as it rolls out new phones, game consoles, and finally tablets. Surface isn't Microsoft's copycat play here; retail is. And it's brilliant.

By seeding big markets with stores, Microsoft has positioned itself to win just as Apple has. Consumers will show up and play with the tablet. Get enough to fall in love, and Google (Nasdaq: GOOG  ) -- which relies on not only Samsung and Asus but also Best Buy (NYSE: BBY  ) to generate enthusiasm for its Android products -- has a big problem.

I've had a losing underperform CAPScall on Microsoft since January. I'm ending that today and opening a new call, this time a three-year outperform based on Mr. Softy's expanding retail strategy. A broader footprint will not only promote the Surface -- to the detriment of Android tabs, I'm afraid -- but also help Nokia (NYSE: NOK  ) in its quest to boost Windows Phone sales while aiding consumers who need the occasional PC repair.

Think I'm right? Wrong? Either way, mobile devices such as the new Surface are changing how we think about connecting and commerce. Our top tech analysts call the shift "The Next Trillion-Dollar Revolution," and they've created a report that singles out the one stock they believe will benefit most. Their research is yours for the asking but only for a limited time. Get a copy of the report -- it's totally free.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple and Google at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Apple, Google, Microsoft, and Best Buy. Motley Fool newsletter services have recommended buying shares of Microsoft, Apple, and Google and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (6) | Recommend This Article (3)

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 June 24, 2012, at 10:40 AM, FreeRange1 wrote:

    Brilliant???? What absolute BS! MSFT stores are a joke, just like their strategy for W8 and tablets.

  • Report this Comment On June 24, 2012, at 11:02 AM, dwilh51183 wrote:

    Nobody wants msft's tablet. AAPL has the best one

    And I will remain loyal to AAPL products forever because they are quality and they don't break down and they don't get infected with viruses and they all connect together. If you drive a BMW , or Lexus, or Acura ... And it's performed well w no problems for all these years , you are not going to jump ship and buy a Chrysler or Buick /Ford now.

    Same thing with AAPL

  • Report this Comment On June 24, 2012, at 12:18 PM, fhump1 wrote:

    I'm pretty sure that there's some people who want a Microsoft tablet considering they still retain 90% of the computer market. Apple does have the best tablet out right now, but that can change at any minute when a new and more capable product hits the market.

    Regarding the Microsoft stores, I also didn't really understand the point other than just copying what Apple had already done. When you look at the fact that the Apple stores are the most profitable per sq. ft. of retail space, it only makes sense that MS would give it a shot.

  • Report this Comment On June 24, 2012, at 12:29 PM, bbrriilliiaanntt wrote:

    Go to a Microsoft store and spend an hour, then go to an Apple store and spend an hour, Any time / any day. After doing so, come back and write an article documenting your findings...

  • Report this Comment On June 24, 2012, at 5:24 PM, neamakri wrote:

    Microsoft stores? Okay, here's an idea: Microsoft should make MS branded PC's and laptops (built by lenovo). Then they will actually have something to sell in the stores.

    Other makers like Dell or Hewlett-Packard will be furious. There is nothing they can do about it!

    Of course MS needs to also make servers. Then MS will be the defacto PC maker on the planet.

    Apple will always have their niche, and Microsoft will be absolute king.

  • Report this Comment On June 24, 2012, at 6:33 PM, demodave wrote:

    MS stores? 29 vs 550. Not on the same plane.

    People who *want* an MS-driven tablet? IT managers. Yes, they have pull. But if Apple were willing to drop margins a bit, their OS could generate huge consumer sales, and maybe even turn a few IT managers away from the dark side.

    We also haven't yet had enough time to see what the iPad can do. When Apple moves to a genuinely two-tiered tablet system as it has with MacBook Air vs MacBook Pro (well three tiers with Retina) or Mac Mini, iMac, and Mac Pro, we will more truly see how disruptive Apple can be. I do believe we will see that. High-end and low-end in desktops, laptops, and tablets.

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