Microsoft’s Dance

You’ll find me among those who really really wishes Microsoft well in its new endeavors. It’s making all the right noises about transforming its products; trying to get Office more cloud-friendly, putting out Windows 7 to atone for Vista, even engaging in that ultimate exercise in branding, opening a retail store.

And yet… this all comes out at earnings time, when El Coloso de Redmond saw its profits fall 17 percent and revenues fall 14 percent. Contributing to that drop: Pushing back $1.5 billion in revenue on computers installed with Vista that will now be upgraded to Windows 7 before going out the door.

(As a side note, there was no mention of layoffs at the ‘Soft in this quarter’s earnings report. But there’s also been no notice of “we’re done with the layoffs” either, which has some insiders watching their back and wishing management would just say something and getting it out in the open. Another interesting tidbit there; Mini, the anonymous Microsoft employee who advocates for a smaller and more efficient company, is buying an iPhone because Windows Mobile 6.5 is so bad. He’s not happy about it.)

Yet Microsoft beat the earnings estimates of analysts, so the stock got a modest bump up. Nice to know the shareholders are happy, since that’s who really counts.

Which makes it a little bit odd for Microsoft to go the retail store route now. Yes, Microsoft has a branding problem that needs to be fixed. But its track record of late has been decidedly mixed, and you’d think there might have been more opportune times to open up a consumer-focused store. This from a company whose principal products are targeted at businesses. Maybe at the launch of the first Xbox game console, Christmas 2001. That would have the lines snaking out the door for weeks.

Instead it’s about Windows 7, which will be a good seller, but probably will do more sales pre-installed on new computers than as a box-set upgrade package for consumers running XP or (less fortunately) Vista. Yes, Windows 7 has been garnering good reviews, but the upgrade process looks like it might be rather clunky, and not worth the $120 price tag for the average user.

So to the retail store. The first store opened today in Scottsdale, Ariz. Another will soon open in California. They’re taking their time, it appears. But even Starbucks had to start small.

In the retail store you’ll be able to buy the Xbox360 and Zune — Now good solid consumer products, no matter the shortcomings of their initial versions. They’ll probably do well. You’ll be able to get the Office suite. It’ll probably do OK. It’ll sell computers and phones running Windows as well. Um… well, economies of scale would indicate that you would get better deals at some of the big box retailers. It might be tough for Microsoft to compete with relatively few stores.

There will be an “Answer Desk” too. Good idea. It’s the first time in a long time that Microsoft will actually meet face-to-face with its customers. Yes, the Answer Desk people will probably be the freshly-scrubbed youths that populate most mall stores, but their managers on site will be getting a crash course in dealing with the teeming masses. Let’s hope they learn a few things, such as, for example, that “Your application has committed a fatal exception” is not English.

Of course, it’s easy to be snarky about Microsoft’s retail store (insert joke here about the Microsoft store suddenly closing for no reason while processing a sale, or products mysteriously disappearing off shelves, only to appear later in a different location). This is especially in light of the fact that Apple has had several years of a head start in that market, and has designed its stores aesthetics to reflect that of its products. It’s too easy to say they’re following Apple (again). Microsoft has a brand problem, and this is one way of going about fixing that.

A better way would be more products like Windows 7 and fewer like Vista. Or Windows Mobile 6.5. Or Sidekick. Or any other abandoned, half-finished or just poorly designed product from the past decade. That problem can’t be cured by more retail stores.