With retail store, Microsoft continues quest for fan base
Hiawatha Bray/Boston Globe
Microsoft Corp. is throwing quite a party for the opening of its first Boston retail store, in the Shops at Prudential Center on Boylston Street. Boston Celtics player Paul Pierce will be on hand to greet shoppers Thursday evening, and musician Lenny Kravitz will play at a Saturday afternoon concert.
By contrast, when Apple Inc. opened its store on Boylston Street four years ago, the company did not trot out any sports heroes or rock stars. Yet people lined up days in advance, just for the chance to walk in and buy something.
That’s the kind of brand loyalty Microsoft can only dream of. But its slowly expanding retail chain is designed to change this, by giving the company a new image: sleek, stylish, and customer-friendly. It’s a bid to earn Apple-like affection from consumers, who sometimes regard Microsoft products with disdain.
The Microsoft store will open at Prudential Center in Boston.
“We’re using our stores to build relationships with customers, one customer at a time, putting a new public face on the company that I think for many years we didn’t have,” said Jonathan Adashek, Microsoft’s general manager for strategy and communications.
The new store, which opens for business Thursday, is the 23d since Microsoft launched a retail business in 2009. At 3,600 square feet, the Pru store is much smaller than the Apple store across Boylston. The color scheme runs to wood tones, in contrast with Apple’s cool white look. There’s no front door; instead, an 80-foot-long set of glass panels folds into the walls.
Microsoft plans a major push to increase sales of its operating system for smartphones, Windows Phone 7, which has sold poorly, despite glowing reviews from technology analysts. The store will run a promotion to prove that Windows Phone performs standard smartphone tasks faster than rival products such as Apple’s iPhone. Customers who take the challenge will get a $25 gift card; customers whose phones beat the Windows Phone get a $1,000 gift card.
Apple stores feature the company’s own computers, smartphones, and tablets, which all work in a familiar and consistent way. But the Microsoft store sells hardware made by a variety of companies, such as Dell Inc. and Hewlett-Packard Co.
Peter Harrington, a regional market manager, said the Pru store will have two employees who will do nothing but run training courses to keep colleagues up to date on the latest products.
So far, Microsoft’s retail experiment has delivered promising results: about $1,500 in annual revenue per square foot, about twice as much as the typical specialty retailer, said Jeff Green, president of Jeff Green Partners, a retail consulting firm in Phoenix. Compare that, though, to the typical Apple store: about $6,000 per square foot a year.
Apple’s retail success and Microsoft’s bid to catch up illustrate how the companies’ fortunes have shifted.
In Boston 15 years ago, Apple chief executive Steve Jobs announced a $150 million investment by Microsoft that saved Apple from bankruptcy. Today, Apple has the highest stock market valuation of any company on the planet. Just one product, the iPhone, netted Apple $22.7 billion in the first quarter of this year, compared to Microsoft’s total revenue of $17.4 billion.
Meanwhile, Microsoft has suffered through a series of fiascoes: its unpopular Windows Vista operating system, the failed Zune personal music player, and unsuccessful efforts in smartphones and tablet computing.
Its Windows and Office software products remain hugely profitable, but Microsoft’s stock value has been stagnant for the past decade. Its market value of $256 billion is less than half of Apple’s.
Microsoft has “lost brand identity,” said Green, who believes the tech giant could buff its battered image by putting its products in front of customers in attractive stores staffed by courteous, knowledgable workers.
Michael Oh, president and founder of Tech Superpowers, an independent Apple retailer in Boston, said the Microsoft stores are a good way for the company to unveil its most radical new product in years, a tablet computer called Surface that is designed to challenge Apple’s iPad. Due for release late this year, Surface will be the first personal computer that Microsoft has manufactured and sold under its own name.
“That is a groundbreaking tablet, not so much in the technology but because of the Microsoft label on it,” Oh said. “To me it makes sense for them to open this store, open it now, and get these products in front of consumers.”
Still, Oh noted that retail sales will never generate Apple-like profits for Microsoft. Most of the products sold in the stores will be made by other companies that will get much of the revenue.