Microsoft retail stores a risky proposition

19.02.2009
Microsoft's decision to open retail stores is a calculated risk that will likely prove a more challenging endeavor than Apple's move into retail eight years ago.

Microsoft said quietly last week it would open a chain of retail stores, framing the news in an announcement that it hired former Dreamworks executive David Porter to take on a new role as corporate vice president of a new Retail Stores division at the company.

The company offered little about its specific plan for the stores or where it would open its first one, saying only that it wanted to "transform the PC and Microsoft buying experience," according to a press statement.

Though Microsoft makes much of its revenue from selling software to businesses, the company has been increasing its portfolio of direct-to-consumer offerings with products like the Xbox 360 and the Zune digital media player.

However, its most popular consumer product, the Windows client OS, is sold mainly through OEMs and not directly off the shelf to consumers. The same also is true for its Windows Mobile OS, which powers smartphones that are sold in either consumer electronics stores or wireless carriers' retail outlets.

This presents a challenge for Microsoft because unlike Apple, it can't fill a store with all of its own products and will have to offer partner products as well, said Matt Rosoff, an analyst with Directions on Microsoft.