February 13th, 2009

Microsoft's retail effort: Here's some unsolicited advice

Posted by Larry Dignan @ 4:24 am

Categories: General, Microsoft

Tags: Retail Company, Microsoft Corp., Product Development, Retail, Product Marketing, Microsoft Windows, Strategy, Research & Development, Business Operations, Marketing

Microsoft has launched an effort to open retail stores to “create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy.” It even hired a Wal-Mart alum to head the effort. Not surprisingly, Microsoft’s idea spurred a good bit of head scratching. But maybe we all should be a little more constructive. 

OK stop laughing. I know the history of technology companies trying retail stores has been a disaster. Gateway flopped. Dell’s kiosk plan didn’t quite work out so well. Apple worked, but I didn’t think it would. In fact, if Apple ever loses its design mojo those retail stores–housed in the most expensive real estate–still could crush margins. 

But this story isn’t about Apple. It’s about Microsoft. The company hired David Porter, who joined DreamWorks Animation in 2007 as head of product distribution. Before that he spent 25 years at Wal-Mart–a little outfit that knows a smidge about retailing. Neither Porter nor Microsoft is stupid. 

The big question here is this consumer focus at the stores. As Sam Diaz noted Microsoft doesn’t do cool and trendy well. It does do innovative labs stuff, productive and SMB well. The stores should reflect that. Here are a few thoughts about what these stores need to do:

• Think beyond entertainment. Microsoft said Porter’s role “will work in close partnership with leaders of existing retail programs in Microsoft’s Entertainment & Devices Division.” This store has to be more about Xbox, Zune and Windows 7 entertainment features if it’s going to be successful. 
• Don’t go crazy with the sales pitch/PR. The worst thing Microsoft can do is try to be Apple-cool. It’ll never work. Sure, Microsoft will have a Zune here and there, but it doesn’t necessarily have to be front and center. The key here is to get people trying the Zune so maybe the perception changes a bit. Ditto for every other product.
• Listen and observe. In many respects, Microsoft’s retail stores could be a big test lab. Consumer walks in. Consumer plays with Windows 7. Consumer finds a glitch. The retail store could be a big beta project. Of course, Microsoft will sell you Windows 7 after the beta, but the real opportunity may be showing off stuff that’s in the pipeline. You learn things when people like Ed Bott and Adrian Kingsley-Hughes offer beta feedback. You learn something else when a consumer off the street tries software in progress. These consumer observations should be dumped into a database every night. Think retail store as market intelligence and product development tool.
• Think mobile. Expanding on that market intelligence and product development concept could help Microsoft better design Windows Mobile.
• Show off the innovation. Microsoft has a big research arm that creates some really cool things: Big surface PCs, immersion experiences where you document your life and other cool gadgets should have a section. Call it a test lab if you will. 
• Don’t forget the businesses. While Microsoft’s retail focus seems to be on the consumer but don’t forget the customer that keeps Microsoft humming–the business customer. If a small business has a problem with Office or a mid-sized company wants to inquire about CRM there should be a resource at the Microsoft store for those folks. 

The glaring problem here is obvious: These store suggestions are too scattered. Where’s the simplicity? Where’s the vibe? What exactly will people buy at a Microsoft store? In reality, Microsoft is already all things to all people. You see Microsoft at work, at home and places in between. Perhaps Microsoft stores should reflect that reality somehow and carve out a concept that goes beyond Apple envy.