Kara Swisher

Recent Posts by Kara Swisher

Department of Déjà Vu: Last Microsoft Retail Store Foray Was a Bust

Displaying BoomTown’s advanced age and elephantine cache of meaningless tech memories, after news yesterday that the software giant was plunging into the retail market, I was surprised to find little mention that Microsoft’s last store effort ended in failure in 2001.

That’s not to say it’s a particularly good or bad idea to hire a former Dreamworks and Wal-Mart (WMT) exec named David Porter (pictured here) as vice president of retail stores to create Microsoft-branded stores–or as the company announced yesterday, “to create a better PC and Microsoft retail purchase experience.”

While Microsoft (MSFT) sells most of its consumer products via big-box retail stores like Best Buy (BBY), and the retail market for just about everything is weak, Apple (AAPL) has definitively proven that a well-designed retail store can be a powerful marketing tool.

The visually stunning and infectiously fun Apple stores, in fact, have been an important part of its recent surge in mainstream consumer appeal, becoming hubs of activity and even social life in its mostly big-city locations.

In fact, that was just the idea behind microsoftSF, which was located in San Francisco’s Metreon Sony Entertainment Center.

The huge 8,500-square-foot store, with 160 Microsoft products and related software and hardware from 30 partners, was billed in a June 1999 press release as “an interactive, hands-on retail environment in which people of all ages, from all walks of life and at all levels of technological expertise can explore the benefits technology can bring them. Far more than just another computer store, microsoftSF is a showcase for the latest technology from Microsoft and the hardware and software companies with which it collaborates.”

The microsoftSF store, which I visited several times (but bought nothing, although I was mostly a PC user at the time), was very attractive and the only such store in the world, with a “Road Warrior” arena, a lounge, a gaming area and more.

Said the press release: “To make all this possible, microsoftSF deploys Microsoft Windows and more than 100,000 feet of copper cable, 60 Sony PCs, 18 laptop docking stations, four dual-processor servers powered by Hewlett-Packard Net Servers, a Cisco Systems network, and an array of hidden audio speakers that create 16 individually controlled sound zones.”

And Microsoft CEO (then President) Steve Ballmer weighed in enthusiastically:

“We are delighted to be able to showcase in this one-of-a-kind retail environment the entire range of Microsoft software and hardware, as well as the technology of other companies who share the vision of how the PC and the Internet can empower people any time, anywhere. San Francisco and the Silicon Valley are home to the world’s largest and one of the most sophisticated high-tech audiences, so this was the natural place to create this site–dedicated to showing, in an interactive environment, the way technology can enhance our working, learning, living and playing.”

Not so much, as it turned out. The store closed in 2001.

But that does not necessarily mean that the new and much expanded efforts will have the same experience. The Metreon, which was sold off by Sony, was an odd mall then and still is, although its movie theater is successful.

And, in this effort, Microsoft will have control of the whole enchilada.

Plus, if well done, it is not such a bad idea to have a place–perhaps only in highly-trafficked locations in big cities–to show off its consumer wares, especially its popular Xbox 360 and other products (please, not the Zune!).

More importantly, given the disaster that has been the Windows Vista experience, it is probably a good idea to have a place to get people interested in Windows 7, especially its touch capabilities, when it rolls out this year.

Also, I still like the Surface interactive table, even if it is mocked in a popular video as a “big-ass table.”

Of course, only Apple stores have done well so far in this genre, as everyone, from Gateway (GTW), Sony (SNE), Nokia (NOK), Helio and Palm (PALM), has had rough retail experiences.

So, Porter certainly has his work cut out for him, at least judging from the press release from Microsoft yesterday:

“Defining the time frame, locations and specifics for planned Microsoft-branded retail stores will be Porter’s first order of business. The purpose of opening these stores is to create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy.”

Said Porter: “There are tremendous opportunities ahead for Microsoft to create a world-class shopping experience for our customers. I am excited about helping consumers make more informed decisions about their PC and software purchases, and we’ll share learnings from our stores with our existing retail and OEM partners that are critical to our success.”

He’ll have to wait to see if the second time is a charm.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work