“This was the right time for Redmond to rip the band-aid off.” — Wedbush analyst Daniel Ives
From CNBC’s “Microsoft is permanently closing its retail stores” posted Friday:
Microsoft on Friday announced it will permanently close its Microsoft Store retail locations. It will instead focus on its online store at Microsoft.com, where customers can go for support, sales, training and more.
From a note to clients by Wedbush analyst Daniel Ives, who was first off the mark:
This is a tough, but smart strategic decision for Nadella & Co. to make at this point. The physical stores generated negligible retail revenue for MSFT and ultimately everything was moving more and more towards the digital channels over the last few years. The MSFT stores were essentially “showcase stores” and was a smart strategy at the time as more consumers can demo software, Xbox/gaming, and play around with new hardware components. That said, in this COVID-19 environment this was the right time for Redmond to rip the band-aid off and close the stores strategically speaking, with a one time charge being primarily overlooked by the Street.
My take: Tech writers back in the day had a lot of fun mocking the me-tooism of the Microsoft Store, myself included. Here’s an item I wrote for Fortune the day Steve Ballmer cut the ribbon in Bellevue:
How to pack a Microsoft store opening ($)
The air was scented with “bamboo sage.” The walls were lined with 100 monitors. The cheering staff was clad in primary colors, ready to break out in dance at a moment’s notice.
But it was not the tables full of Dells and Kinects, the community training space, the free Windows diagnostic tests, the video history of Bill Gates’ company or the ribbon-cutting speech by CEO Steve Ballmer that drew thousands to the grand opening of Microsoft’s new store in Bellevue, Wash., Thursday.
More likely it was the free performance by Dave Matthews and the lure of 2,000 free tickets for Saturday’s Miley Cyrus concert.
“I’m here because my son is in love with Miley Cyrus,” one mom who camped out overnight told the Seattle Times. “He said the only reason they’re not engaged is because she hasn’t met him yet.”
Three doors down, an Apple store, according to the paper, “felt just a little stodgy with its cutouts of the Beatles in the window.”
Below: A 3.5-minute video of the event. There’s a bit too much of the CEO, but it’s worth watching for the curtain drop and for Ballmer’s interaction with Miley’s fanbase.
UPDATE: One reader has complained that I didn’t mention the checks Microsoft hands out at each of its store openings. Thursday’s crop: $200,000 to Cleveland High School, $200,000 to the Bellevue School District, $500,000 to FIRST Robotics and $500,000 to the King County Library System.
Those stores were just such a blatant “me too” copy of the Apple store, without either the compelling product line or the actual ‘look and feel incentive’ to enter. Everyone knew about Microsoft products, they used them at work and at home (often unwillingly), so there was no reason to see them at a store.
It’s not clear MS Stores had a Genius Bar like help desk, but it’s unlikely that any IT department would let such a thing work on corporate machines anyway. Given the time to fix most common Windows problems (e.g. removing viruses, updating drivers and OS through -multiple reboots-, etc), can you see a Help Desk doing several hours per customer for free?
It is kinda funny to think about the cost to Microsoft if large number of people took their screwed PCs to a Microsoft Store. Just imagine the loss of productivity due to all those multiple reboots to install software updates. (Has Microsoft ever figured out how to do a “combo patch” with all the updates and only a single reboot?0
Last year, they got 2.3% of North America and .5% worldwide. That’s an OK business, but it takes revenue from their Android partners.
Eventually Apple’s silicon advantages will make Pixel an embarrassment.
Meanwhile Samsung has 4, count ’em, 4 physical US Samsung Experience stores – Los Angeles/Glendale, Palo Alto, Houston, and Long Island/NYC (which is closed due to the pandemic – wonder whether Samsung will follow Apple’s lead and close their Houston store?). And a bunch of mall pop-up stores and Best Buy Kiosks. Oh, and I think 2 repair centers which also deal with appliances and other consumer electronics – real specialization in repairing smartphones there. Yes, there are many more International Samsung retail stores but I don’t think their focus is solely on flagships but rather <$350 midrange and <$200 low price tiered products.