Microsoft Squares Off With Apple In Gadget Store Showdown
George Anderson / Forbes
Microsoft’s close proximity to the Apple store at the Mall of America may be like drafting behind Lance Armstrong, or eating his dust.
In a July RetailWire poll, 54% of respondents thought Microsoft’s move into operating its own retail stores was a “somewhat good” to “great move” for the company. Forty-one percent thought it was a “somewhat bad” to “very bad idea.”
How good or bad the idea is will soon be put to the test at the Mall of America as Microsoft opens a store directly across from Apple. One big distinction between the two stores will be size, with Microsoft operating in a space roughly twice that of the Apple location.
Jeff Green, president of Jeff Green Partners, said Microsoft’s plan is to grab foot traffic by setting up so close to Apple.
“It’s a great move that will generate cross-shopping,” Green told the Pioneer Press. “This is better for Microsoft than it is for Apple. Sometimes you want to be directly across from your competition.”
Green did have some reservations about the size of the store, however, referring to the Apple environment as being more intimate.
Microsoft is looking for products such as its Xbox 360 game console and its Kinect motion-sensor device, which allows play without a controller, to set itself apart.
Mika Krammer, general manager of merchandising, marketing and experiences for Microsoft’s retail venture, told the Pioneer Press that consumers entering the store will find “there is an energy and a look and feel that is definitely unique.”
Writing in a recent RetailWire online discussion, retail analyst Nikki Baird of Retail Systems Research offered first-hand observations from a Microsoft store visit in the Park Meadows Mall just south of Denver, which is located one floor above the Apple store.
“The MS store is at least twice as big, maybe three times, as the Apple store,” Baird commented. “Whether they get the same foot traffic or not (and I believe Apple still wins here) in the bigger store, the same number of people looks a lot sparser.
I honestly haven’t decided if they have the right product mix or not. There is a large portion of the floor devoted to XBox, which makes sense. In fact, I think they could devote even more space to XBox than they have. There’s a lot of floor space–the Apple-like tables–dedicated to selling other people’s PCs. There’s the Office and other software corner, and then there’s a couple Surface set-ups and a home theater set-up. I guess they’ll have to reorganize things to eventually accommodate a re-launched Windows phone market.”
“The bottom line: it’s just not as fun,” Baird concluded. “I don’t care if you’re an Apple fan boy or not, the energy is just completely different in a MS store than in an Apple Store. In some ways, maybe, stifled by all that complexity that Ray Ozzie talked about when he left.”
Anne Howe, founder of Anne Howe Associates, concurs that there’s no beating Apple at its own game.
“Being in an Apple store is like being at a cocktail party,” wrote Howe on RetailWire. “The space is crowded and that is a part of the plan for a successful party.
“Quick story. I was in an Apple store at 2:00 pm Monday getting a tech issue resolved. The store was PACKED with boomers doing one-to-one classes. The energy in that store was electric, and the cast of staff characters was as eclectic as a pre-Halloween party.
“I actually felt like I wanted to hang around after my five-minute Genius Bar visit! Experiences matter.”
Retail consultant Richard Seesel, also on the RetailWire BrainTrust panel, seems more confident in Microsoft’s long-term strategy and sees a worthwhile lesson in the MS/Apple showdown.
“The Microsoft store has become an interesting group project for the retailing class that I teach at UW-Milwaukee,” Seesel wrote on RetailWire.com. “Especially with very few stores open so far (and none close to Milwaukee until next month), the students have a ‘blank slate’ as far as concept development is concerned. Most of the class would agree–and so would I–that taking direct aim at Apple is the right location strategy, especially for a tech-heavy store that is not meant to be on the same scale as Best Buy.
“But beyond the location strategy lies a much bigger challenge: What does the Microsoft Store actually sell? The brand and company is built around ‘solutions’ rather than a focused assortment of items like Apple, and has not made a dent in the MP3 or smartphone markets so far. The other big question: Who is the target customer? Not enough to say ‘everyone.’ Microsoft will need to pick its targets carefully, between the gamer, home PC user, small-business customer for software, and so on. Clearly Microsoft is gaining enough confidence from its early tests to start a rollout strategy.”