Microsoft Moves Into Best Buy

By Stephanie Blanchard, Digital Editor — June 16, 2013

Windows 8 didn’t ignite much enthusiasm, nor did Microsoft’s few dozen retail stores, so the company is taking a different approach: retail dominance in an existing chain, or at the very least, just getting the consumer’s attention. Last week, Microsoft announced it has teamed up with Best Buy, to offer a store-within-a-store at 500 locations in the U.S., and another 100 locations planned for Canada.

Wait, didn’t the retail giant recently tie the knot with Samsung? And before that, Apple? There’s always room for more, apparently. While the “Samsung Experience” is designed for 460-square feet of prime retail space, and Apple’s mini-stores are 205 square feet or less, Microsoft is going big: 1,500 to 2,200 square feet.

“The Windows Store offers a large-scale, hands-on experience that will show customers how Windows and Microsoft devices and services can make it easier for them to work and play,” said Tami Reller, Chief Marketing Officer and Chief Financial Officer, Windows Division, Microsoft, in a company press release.

Indeed, users will be able to try out a full range of devices from the Windows Phone to Windows tablets and ultrabooks, along with the Xbox and Microsoft Office. But not only will they be able to test the products, trained sales associates will offer advice and answer questions. One thing is for sure, with that kind of retail space, it will be hard to not walk past a Windows product.

Stephen Baker, Vice President for Industry Analysis, NPD Group, does not believe the size of the mini-store actually means much. In an interview with Mobile Enterprise, he explained that Best Buy is reconfiguring and reenergizing the existing retail floor, not allocating more space just to overwhelm Apple or Samsung. “Microsoft already has all that space, it’s the PC department.”

Specific Knowledge
According to Best Buy, the retailer currently has “Microsoft specialists” in various locations. With the new mini-stores coming on line, an additional 1,200 “Microsoft-trained sales associates” will be added. Best Buy has confirmed to Mobile Enterprise that Microsoft will be taking part in training the new associates, as it had previously for the specialists. In addition, the 1,200 jobs “are incremental to our stores,” a representative said by email.

In a company statement, Jason Bonfig, Vice President of Computing, Best Buy, noted, “What our customers will see in these 600 stores is something totally new and fully in line with our determination to transform Best Buy.”

What are they trying to transform? For Microsoft at least, it’s upgrading the buying experience, by taking control over it, Baker said. For Best Buy, since specialists will be able to explain why specific products are better, and demonstrate how products work together, it will improve the customer experience overall.

Course Correction
Business Insider reported more than two years ago that Microsoft executives wanted to surpass Apple’s retail presence, which totals about 300 stores. Yet the company has been unable to produce anything more than a slow crawl towards its goal. Since launching a retail initiative in early 2009, just eight stores had opened by March 2011, and only 44 were expected to be up by end of fiscal year 2013. Best Buy is truly a better bet for Microsoft.

And with PCs on the decline, and tablets rising up fast, it’s unlikely Microsoft is looking for a surge in PC sales, even during fourth quarter holiday shopping. Instead, the mini-stores will be able to highlight the devices the company most wants to push: tablets, ultrabooks and smartphones.

It’s entirely possible that Microsoft can take additional market share by convincing people to switch platforms, or attract feature phone users looking to make an upgrade. Although Android and Apple still dominate smartphones, Windows phones took third place for the first time this year, beating out BlackBerry.

Let it Be Windows
Many IT departments want Windows to work in the mobile space since those PC applications along with Office products are prevalent in business, and would be easiest to integrate and expand. But with BYOD the norm these days, for that to happen, the consumer must be convinced as well. Perhaps this exposure with Best Buy will help bring the consumerization of Microsoft (mobile) to the enterprise.

Baker said that if consumers wander in simply to look around, become convinced by the sales pitch, or buy a gift to give to someone else, any of these things would make the Windows Store a success. “Retailers are looking for more foot traffic, if it brings more tire kickers in, that’s great, because eventually the store gets buyers out it. And if it expands the customer’s expectation regarding the Windows ecosystem, that’s a win for everyone.”

Here's more positive news for Microsoft: In an interview with Mobile Enterprise, Dan Shey, Practice Director – M2M, Enterprise and Verticals, ABI Research, said iOS accounted for almost 80% of business tablets. Within five years, however, that is going to change, with an equal distribution between not only Android and iOS but Windows, he said. While Samsung is deliberately going after verticals and targeting the enterprise, Microsoft is also, and finally, seeing more businesses requesting and adding Windows 8 tablets as the chosen platform.

“It’s the early beginnings,” Shey said, “but we’re seeing it more and more.” What initially held enterprise adoption back, he noted, was the lack of apps for Windows tablets. Vendors developed apps for Human Resources, Finance, Healthcare for iOS but not for Windows because businesses weren’t asking for that platform. A “chicken and egg scenario.”

Microsoft has recognized its problem, Shey said.

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