Windows 7 isn’t the only Microsoft kid celebrating its first birthday this week: a year ago today, the company opened its first retail store in Scottsdale, Arizona.
Today, it’s got a grand total of four stores, with three more set to open in time for the Kinect launch on November 3rd. That’s pathetic.
Apple launched its first retail store in May 2001. A year later, it had 29 stores open with another 18 planned. That was in the heart of the last recession, so Microsoft can’t fairly blame the economy.
The real problem, I think, is lack of commitment. Apple sells high-priced, high-margin hardware through its stores. Microsoft sells a little bit of hardware on which it barely makes money (the Xbox), some packaged software with decent margins, and a bunch of products from partners (PCs, mainly) where the partner takes the lion’s share. That means it’ll take Microsoft a lot longer to turn its retail stores into profit centres. The newly empowered bean-counters at Microsoft can point to the early results and say “see, retail doesn’t pay.”
This is a potentially fatal error. If Microsoft wants its new phone platform, Windows Phone 7, to have a serious chance of success, it should be opening stores as fast as possible.
Here’s a personal anecdote to explain why.
A couple of weeks ago I dropped my two-year-old iPhone 3G. I’ve dropped it dozens of times before, but this time it landed face down on concrete and the glass shattered. At that moment, I was in the middle of a string of texts from my real-estate agent about an open house, while simultaneously looking at work e-mails and tracking news. As the texts kept popping up on my shattered screen, I had a moment of panic. HOW AM I SUPPOSED TO LIVE WITHOUT MY PHONE?
Fortunately, there was an Apple store about five minutes away. (In major U.S. cities, this is often true.) I walked in and showed them my smashed screen. Within 20 minutes, I walked out with a new iPhone 4, fully activated, with all my contacts transferred via cable from my old phone. That’s a $300 sale, plus another two-year contract with AT&T, in less than 20 minutes. All because of an accident. The experience was so great, I was actually thankful at spending money on a new phone I’d never planned on buying.
Imagine if the same thing had happened with a Windows Phone 7 device. Where would I have gone?
More to the point, I had visited the Apple store to try the iPhone at least half a dozen times before I finally took the plunge. While Windows Phone 7 is getting good reviews from a lot of tech sites (although not Walt Mossberg), where will average consumers who don’t know or care about Microsoft’s phone ambitions go to buy one? Will AT&T and T-Mobile really do a great job of selling Phone 7 devices when they’re lumped in alongside all the BlackBerrys and Android phones? Or will the salespeople try and push whatever phone offers them the highest commission?
If Microsoft wants to be a consumer company, it’s time to start acting like one. It’s time for a real retail push, not just lip service.
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