Must Microsoft Store copy Apple Store to succeed?

Over the last 10 days, Microsoft has opened two retail stores, in Arizona and California, and a café in France. Bloggers and journalists largely dismissed the retail outlets as Apple Store knock-offs, which is surprising considering reports of 1,000 or more people lined up for the second opening in Mission Viejo, Calif. That said, the numbers aren't confirmed and a free music concert likely bolstered them.

Over the weekend, ifoAppleStore chronicled the Mission Viejo-store opening -- albeit with some pro-Apple, anti-Microsoft commentary -- and large gallery of photos. From the text and pics, Microsoft Store similarities to Apple Store are obvious.

But striking physical similarities to Apple Store is no reason to dismiss Microsoft's retail efforts. Microsoft is getting into the retail business for pretty much the same reasons Apple did in May 2001. To succeed, Microsoft will need to make at least the same kind of commitment Apple did early days. Microsoft must open many stores quickly and be prepared to take losses -- even large ones -- to reap greater marketing benefits.

Microsoft must also advance its retail strategy for the right reasons, and none of them is about competing with Apple. My prediction: Microsoft's retail strategy will fail, if the only -- even primary -- objective is competing with Apple Store.

Shared Apple and Microsoft Problems

Common problems Microsoft in 2009 shares with Apple circa 2001:

1. Distribution: In 2001, Apple depended on major computer retailers and Mac dealers to sell its goods. But Windows PCs dwarfed Macs in most stores to near invisibility. In 2009, Microsoft relies on fewer chains, like Best Buy or Walmart; major computer retail partners -- Circuit City and CompUSA, among them -- are gone. TVs and consumer electronics dwarf Windows PCs in most stores.

2. Retail experience: In 2001, the Mac buying experience usually ended with a computer store employee recommending a Windows PC. Most employees either weren't trained to sell Macs or pushed what they knew -- Windows. In 2009, many electronics store employees don't know how to sell Windows in context of capabilities tied to TVs and other devices.

3. Digital lifestyle: In 2001, Apple wanted to position the Mac as a digital hub for photos, music, movies, the Web and other digital activities. Apple Store presented a place to showcase the Mac's capabilities -- something not happening in regular retail. In 2009, Microsoft wants to advance Windows as hub for three screens -- the phone, the PC and TV -- but retailers aren't effectively selling it.

4. Brand building: In 2001, Apple had a marginally resurgent brand. There was yet no iPod, and Mac market share was but a few percent. Apple Store created permanent presence where people could see Apple's brand and experience the Mac lifestyle. In 2009, Microsoft's brand is tarnished for many reasons. Among them: Ineffective retail experience, Window Vista debacle and security perceptions. Microsoft Store establishes a permanent presence exposing masses of people to the brand and Microsoft lifestyle.

5. Customer service: In 2001, Mac dealers and PC retailers determined the extent of Apple customer service. The Apple Store Genius Bar reclaimed the customer experience, by providing a place where Mac customers could get free technical support and even product replacement. Satisfaction endears customers. In 2009, Microsoft has little to no control over customer satisfaction, as retailers or hardware manufacturers provide most support services. By providing in-store training and technical support, Microsoft Store increases customer satisfaction by solving problems and, perhaps more importantly, by helping people get the most value from their products.

Commitment is the Only Way to Success

Microsoft probably should have opened retail stores three years ago. Perhaps negative Windows Vista perceptions would have been less. Timing is OK, with Windows 7 launching to more positive reception. But timing would be much, much better if concurrent with Windows Mobile 6.5 and Windows 7 launches Microsoft opened a dozen retail stores in the United States and one each in another dozen countries: Australia, Brazil, Canada, China, France, Germany, India, Japan, Russia, South Africa, South Korea and United Kingdom.

International stores risk more problems with existing dealers and retailers (what Microsoft calls "channel conflict") but they're necessary for revitalizing the company's brand, fighting piracy and offering localized shopping experiences. I've long advocated Microsoft retail stores as one of the most effective tools for combating software piracy, particularly in BRIC -- Brazil, Russia, India, China -- countries.

But Microsoft can only be effective enough, achieve the needed retail reach, by jumping in the lake rather than sticking in a couple of toes. Two stores is a losing tip-toe-in-the-water strategy. Microsoft must make the big splash, with the willingness to loose tens of millions of dollars. If the stores are viewed as marketing investment, top executives can justify early retail losses.

Microsoft launched Xbox knowing the console would lose money for years before achieving sustainable profits or gaining market share against Sony PlayStation. More recently, Microsoft has invested billions of dollars building out datacenter infrastructure or building up Web search. Microsoft's retail strategy needs this kind of commitment, otherwise it will fail.

Apple Store Double Vision

Is imitating Apple Store Microsoft's best strategy? The ifoAppleStore photos certainly show many striking similarities in terms of layout and design but not materials or colors. The browns and dark wood colors are particularly unsettling, unless Microsoft is trying to achieve some kind of collegiate feeling. It turns out that the Mission Viejo Microsoft Store is only 70 miles north of San Diego. I'll drive up there this week, take some photos and write up a real first impression blog post.

But, for today, based on the ifoAppleStore photos, I must express misgivings about where the California store appears to be too much a bad imitation of Apple Store layout and design.

Four years ago, for Betanews, I wrote commentary," iPod Shuffle: Apple Understated." I explained how Apple used understated design to emphasize product features and benefits. The approach applies to Apple Store. I wrote:

Apple retail stores are remarkably understated. The only bright colors are found on marketing material placed throughout the store. Otherwise, the tasteful stores are quite stark, so that the shoppers' eyes are drawn either to the colorful marketing posters and signs or to the products on sale.

By comparison, many retail stores are overly cluttered, with Walmart being one of the obvious examples. Shoppers' eyes are wildly drawn here, there and everywhere. There is confusion, which can leave shoppers feeling unsettled.

Apple Store is inviting for the good feeling its understated design generates. This essence is more than just layout, but in the quality of materials, too. Then, there are those low tables, which give shoppers a clear view of the whole store, draw their eyes downward to products and create a cheery feeling of breadth and openness.

Can Microsoft do as well or better with its retail stores? My initial reaction is alarm, after reviewing the ifoAppleStore photos. Perhaps I will feel better after spending time in Microsoft Store. But I will say that a bad Appe Store imitation is better than nothing. Microsoft should have opened retail stores years ago. The branding and marketing benefits outweigh risks of channel conflict.

By waiting, there is some advantage in timing. In the United States, the commercial real estate market is in early stages collapse, like the homeowner market in late 2007 and early 2008. Commercial foreclosures and otherwise higher-than-normal store closings will give hard negotiator Microsoft chance to get good locations under favorable leasing terms. I say, "Go for it, Microsoft." Do you agree or perhaps have opinion about Microsoft Store similarities to Apple Store? Comments await you.

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