Microsoft retail stores a risky proposition

19.02.2009

Microsoft's move into retail isn't surprising, as it has dipped a toe into this pond before. Microsoft opened a store featuring Windows-based mobile devices and shrinkwrapped software at the Sony Metreon entertainment and shopping complex in San Francisco in 1999. However, that store closed in 2001, and Sony said this week it is closing its Playstation and Style stores in that very same complex, which has struggled financially.

These closures point to another challenge for Microsoft: the global economic recession, which is a difficult environment for new businesses. However, Rosoff said Microsoft probably won't open its first store for at least another two years or so, and by then conditions may have improved.

Moreover, though Microsoft is having some financial troubles of its own -- the company missed its revenue expectations for its fiscal 2009 second quarter -- it still "has tons of cash and is still very profitable," he said. "If you're doing very well and you have the ability, you want to try to expand in a downtime."

Still, because Microsoft's business has always revolved around partners -- including retailers -- distributing many of its products, consumers may not be as inclined to visit a Microsoft store as they are to go to an Apple store.

"I wouldn't go out of my way to get to [a Microsoft store]," said Alex Carabelli, a Windows Vista user and deputy director of New York-based nonprofit Grassroots Initiative. He said Apple stores are the only place you can get most Apple products, so it makes sense to go to those stores if you want to buy an iPhone or a Mac computer.