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paidContent.org - Microsoft Going Into Owned Retail Stores; Hoping For Apple Magic

Rafat Ali
paidContent.org
Friday, February 13, 2009 10:07 AM

Hoping for some Apple-like magic, Microsoft (NSDQ: MSFT) has announced plans to open its own chain of branded stores as it looks to catch up to its rivals. No word on which of its products?which include retail-friendly gaming console XBox and the Zune music player?would be on sale in these stores; also, no word on how many stores it is looking to open, or a timeline for opening them.

To lead the retail charge, the software giant has hired David Porter, most recently the head of world-wide product distribution at DreamWorks Animation, as its new corporate VP of retail stores; Porter also spent 25 years at of Wal-Mart (NYSE: WMT) in store ops, merchandising and IT. One of the key decisions he has to make: whether to use the stores mainly as a showcase for MSFT products, or to actually sell hardware (which would mean selling PCs from other companies) and software. Any decision that favored some PC makers and left others off store shelves could anger some hardware partners, as WSJ points out.

As for MSFT's reasoning behind opening these stores, in its own words: "The purpose of opening these stores is to create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy." The company recently kicked off a big and rather-quirky consumer ad campaign featuring founder Bill Gates and comedian Jerry Seinfeld, which wasn't received that well, at least by the consumers it wanted to reach. Some more details in the release here.

The move comes as other retail (especially electronic) stores have been under pressure. Circuit City recently filed for bankruptcy and is in the process of closing down all of its stores, and rival CompUSA closed most of its retail stores last year. Meanwhile, Apple has about 200 stores worldwide now. These flashy stores have played a key role in the company's turnaround, resurgence and attracting new customers to its products including iPods, iPhones and its Macbook series, though average revenue per store in Q408 had fallen to $7 million, compared with $8.5 million in the year-earlier quarter.

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