Microsoft hires former Wal-Mart exec to launch retail business

Published: February 13th, 2009

Microsoft (NASDAQ: MSFT) plans to open its own retail stores to “transform the PC and Microsoft buying experience,” the company said as it hired an executive to run the retail operation.

The stores will help Microsoft engage more deeply with consumers and learn firsthand about what they want to buy and how, according to a Microsoft press release. Deciding where the stores will be located and what they’ll look like will be the first order of business for David Porter, who will report to work on Monday as corporate vice- president of retail stores.

Microsoft Canada has yet to confirm what the announcement will mean for Canada, or whether the new Microsoft retail strategy will include a Canadian retail presence or not.

Microsoft has long been perceived as lagging behind rival Apple (NASDAQ: AAPL) in appealing directly to consumers, and Apple has has a head start of several years in running a chain of stores. While Microsoft makes its own Xbox game terminals, Zune media players and some other devices, it doesn’t have a branded PC product of its own like Apple’s Macintosh.

Porter has been head of worldwide product distribution for Dreamworks Animation SKG since 2007, but before that, he spent 25 years at Wal-Mart Stores. His last position there was vice-president and general merchandise manager of entertainment.

With the retail strategy, Microsoft said it hopes to articulate and demonstrate its innovation and value proposition. It will pass on lessons it learns from the stores to its retail and OEM (original equipment manufacturer) partners.

The move comes as the company gears up for the release of the Windows 7 PC operating system as well as new releases of Windows Mobile and of the Windows Live online portal. It follows changes Microsoft has made to its marketing efforts as the Windows Vista operating system took on a negative image.

Carmi Levy, a London, Ont.-based independent technology analyst, said it makes sense for Microsoft to build-out some kind of retail presence as a way of solidifying a brand that has taken a beating over the last few years as the influence of is Windows and Office brands has waned.

“Microsoft, for better or for worse, will be compared to Apple as its foray into retail is picked apart,” said Levy. “The key difference is Microsoft has a relatively limited line of products on which to build.”

Microsoft is still primarily a software company, noted Levy. It does have a track record with branded peripherals such as keyboards and mice, the Xbox gaming console and Zune media player, but it lacks the iconic line of hardware devices to put on the shelves.

“This could portend a shift by Microsoft away from its roots as a vendor of boxed software, and an attempt to break with its past by launching a different marketing model,” said Levy.

At a minimum, said Levy, a retail arm is an opportunity for Microsoft to start having the kinds of conversations with consumers that Apple has been having for years. For Microsoft and Apple, a retail presence needs to be evaluated not just on sales or the bottom line, said Levy, but as part of the marketing mix of the company.

“Apple’s stores provide it a valuable opportunity to connect with consumers in a way that no TV commercial or Web campaign ever could,” said Levy. “You can ask questions of a Mac Genius before you ever buy a product, and meet with other interested consumers. It spreads the cult of Apple.

For the channel, Levy said Microsoft’s VAR and reseller partners needn’t worry about the move into retail. He said he sees it as mainly a consumer play that will complement the efforts of Microsoft’s channel on the SMB and enterprise side.

“It will cause the average enterprise buyer to be more aware of the Microsoft brand if and when they do call a reseller. It contributes to any marketing efforts the channel is making while not cannibalizing their efforts,” said Levy. “A rising tide raises all boats on both the consumer and enterprise sides.”

— With files from IDG News Service

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