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Microsoft Now Selling Stupid, Too

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Microsoft (Nasdaq: MSFT  ) has hired a former Wal-Mart (NYSE: WMT  ) executive, David Porter, to help it create a line of retail stores.

So that's what it's come to? Mr. Softy's Apple (Nasdaq: AAPL  ) envy is about to be made real as Everyday Cheap Software? Talk about the dumbest idea ever.

Microsoft, for its part, touted the move as a means to improve customer engagement on forthcoming products. "This is an exciting time with our strong lineup of upcoming product releases including Windows 7 and new releases of Windows Live and Windows Mobile," Chief Operating Officer Kevin Turner said in a company press release. Continuing:

We're also working hard to transform the PC and Microsoft buying experience at retail by improving the articulation and demonstration of the Microsoft innovation and value proposition so that it's clear, simple and straightforward for consumers everywhere. [Emphasis added.]

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.

Partnering with Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) could help to replicate this experience -- maybe -- but even then, I doubt it'd lead to anything more than an incremental sales improvement. There just isn't a pressing need for engagement when you control close to 90% of the market for computer operating systems.

Apple's brand was well-respected and well-known, but for most consumers, it was ephemeral before its retail stores arrived. Their playground format transformed gawkers used to glass-cased displays into hands-on testers and, ultimately, buyers.  

Retail was a perfect fit for Apple, in other words. Not so much for Microsoft, whose customers are:

  1. Developers. Some coders are mall rats, sure, but they go to the galleria for books, lattes, and hipster gear. They get their hacker tools online, as we do.
  2. PC manufacturers and corporations. Your average IT manager doesn't shop retail. More often, he'll employ the services of a systems integrator or consultant. But you knew that; it's why IBM (NYSE: IBM  ) and Infosys (Nasdaq: INFY  ) each have billion-dollar services businesses. Manufacturers, meanwhile, already do the job of catering to home consumers by installing Windows on their PCs.
  3. Gamers. If there's an audience hoping to see Microsoft at the mall, it's the Xbox and Zune enthusiasts -- the caffeinated crowd that buys from Mr. Softy's Entertainment and Devices Division, which accounted for 13% of revenue over the trailing 12 months.

But if Microsoft's press release is to be believed, these aren't the customers its retail stores will cater to. It wants more windows for Windows. Dumb move, Mr. Softy. You can do better. I'll be back Tuesday to describe how.

Now, I'd be remiss if I didn't mention that fellow Fool Anders Bylund has an opinion that is completely opposite to mine, as he believes Microsoft's doing something really smart here. What do you think? Email me here, or use the comments box below. Or, if you're feeling especially bold, log into Motley Fool CAPS and rate Microsoft now. It's 100% free to participate.

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Apple is a Stock Advisor recommendation. Dell, Microsoft, and Wal-Mart are Inside Value picks. Try either of these Foolish services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers had stock and options positions in Apple and a stock position in IBM at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy prefers to shop wholesale.

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

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 4:57 PM, jjw120 wrote:

    I agree completely that this is a stupid and somewhat desperate move by Microsoft. Apple Stores do double duty for Apple, they sell Apple products, but more importantly they add visibility to Apple. Also, what will Microsoft be selling that isn't available elsewhere?


  • Report this Comment On February 13, 2009, at 5:38 PM, hsurfer wrote:

    The quote "Microsoft innovation" sounds like an oxymoron to me. They have copied just about everything Apple has done from its operating system to the Zune and now MyPhone (Apple's Mobile Me) and the App Store. There's even talk of a Microsoft phone and rest assured that their Windows mobile 6.5 will have lots of touch interface elements. Their retail store, which by the way they already tried once until they closed it, will be the icing on the cake!

  • Report this Comment On February 13, 2009, at 9:54 PM, yetanothersteve wrote:

    You exactly what is wrong with MS. They take their own customers for granted and focus on Apple's, Sony's and Nintendo's instead. Best evidence: the uptake of Vista in large organizations (which are the core of MS's hegenomy.)

    Apple has thrived by having the clarity to see that its natural customers were NOT MS's core customers.

    Before worrying about being cool, Microsoft needs to worry about being reliable.

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