Microsoft Stores are a Big Missed Opportunity

The latest Microsoft earnings results were a stark reminder that the consumer market makes only a marginal contribution to the overall revenue. Many believe consumers are not a priority for Microsoft and struggle therefore to understand the role of the Microsoft stores. Microsoft should admit they were an experiment. An experiment that failed and that it’s time to close them.

I believe it would be a mistake.

I also believe Microsoft does care about consumers; it just struggles to show it, especially when it comes to apps and services.

Microsoft is the exact opposite of Apple in the balance between enterprise and consumer. Apple goes out of its way not to come across as an enterprise company while Microsoft goes out of its way to always put enterprises first. In reality, both companies care about both markets and, more importantly, both companies need both markets!

When it comes to their retail presence, the two companies share similar goals. While it is not something Microsoft would admit to, creating an Apple store experience was the goal when they first opened their stores. Any tech company looking to have a retail presence should have Apple as a benchmark.

Aside from the short period when John Browett ran Apple’s retail business, Apple’s stores have always been about using great customer care to enhance brand loyalty. Apple stores are without a doubt one of Apple’s strong marketing assets aside from a solid revenue generator. People go into the stores to experience new devices, seek help with the ones they own and learn how to get the most out of them. Exchanges that I have often witnessed in stores, both in the US and in the UK where I lived, have been of customers met with knowledgeable and invested employees who made each customer feel they cared.

Microsoft has failed thus far to create an in store experience that is helping its brand. Calling it quit now, however, would be the wrong thing to do. Microsoft has never had this much to offer to consumers from an end to end experience. This need to experience – not try before you buy but truly experience – will grow with ambient computing, making a store presence even more valuable.

A Showcase for the Surface Portfolio and Microsoft Apps

Microsoft now has a full portfolio of Surface products that can be experienced in store. On display are not just the products but the vision that Microsoft has of modern computing. From Surface Pro to Surface Book, to Surface Laptop and the more aspirational Surface Studio and Surface Hub all help to tell that story. I was in a store with my daughter recently for a coding camp and seeing how the kids were drawn to the Hub made me wonder why there were not more people in the store doing just that. I am sure there are differences in locations as far as how busy the stores are, but more of a push around devices and experiences could certainly create more buzz.

Back in 2015, Microsoft CEO Satya Nadella said: “we want people to love Windows 10 not just use it.” The same should be said about all Microsoft products including the stores.

Activities in stores have been growing. I have seen more emphasis around STEM as part of the recent education push including Minecraft coding. Yet, more could be done around new apps like Story Remix, or People, or Paint 3D. Stores should have classes to learn how to use these apps, have people in stores using them as customers come in and have them try. This kind of activities will help create a different atmosphere in the store and educate potential customers. It would also help consumers to think more broadly about Microsoft.

Discoverability of new Windows 10 features remains an issue, especially for those consumers who upgraded to it on their old computers. Seeing what is possible might generate an upgrade opportunity and one that will benefit Surface. Surface Pro sales have been growing steadily in the enterprise market but not as much as they could in the consumer one. While many point to cost as an inhibitor, the real issue is the lack of visibility. Many other PC manufacturers have devices at similar price points, and of course Apple does too, so, clearly, there is a consumer market for Surface as well if mass market consumers knew more about it.

A Look to the Future to build Love for the Brand Today

Microsoft is no longer limited to Windows on PCs, and while Cloud and Office365 might be the biggest revenue generators, there are other products that will define the future of computing.

HoloLens stands out.

Enterprises are very interested in HoloLens as there are many applications that can save cost, increase productivity and enrich experiences. Yet, HoloLens has many consumers applications too which could generate reinvigorate the in-store experience. Think about Holographic Minecraft or a walk on Mars. I realize this is still a device that has limited availability and Microsoft might have concerns about dumbing down the experience making it feel like a VR park. Yet, there are opportunities to offer targeted events, limited in numbers that consumers could sign up to.

Microsoft effort to democratize 3D could be another area of focus with classes targeted on developing an object with Paint 3D and then printing it. Again, I realize the delicate balance between creating a buzz and creating a circus, but right now stores have very little buzz.

The big point about Apple stores is that they are first and foremost great experience centers. Microsoft stores feel more like a cross between an IT support center and a Best Buy where I go to buy as a last resort. I go in and get out as quickly as I can. My experience is that Microsoft stores staff is there to sell not to guide me and facilitate my discovery of what Microsoft has to offer.

Creativity is the new productivity is a great slogan for Windows and Microsoft should really look at becoming more creative when it comes to the stores.

Microsoft must deliver a consistent experience across stores focused on a shift from serving customers in a transactional exchange to facilitating customers’ experiences. This might require a change in how stores are evaluated and rewarded. Revenue should not be the short term focus but rather brand awareness and advocacy which in turn will bring increased revenues over time.

Published by

Carolina Milanesi

Carolina is a Principal Analyst at Creative Strategies, Inc, a market intelligence and strategy consulting firm based in Silicon Valley and recognized as one of the premier sources of quantitative and qualitative research and insights in tech. At Creative Strategies, Carolina focuses on consumer tech across the board. From hardware to services, she analyzes today to help predict and shape tomorrow. In her prior role as Chief of Research at Kantar Worldpanel ComTech, she drove thought leadership research by marrying her deep understanding of global market dynamics with the wealth of data coming from ComTech’s longitudinal studies on smartphones and tablets. Prior to her ComTech role, Carolina spent 14 years at Gartner, most recently as their Consumer Devices Research VP and Agenda Manager. In this role, she led the forecast and market share teams on smartphones, tablets, and PCs. She spent most of her time advising clients from VC firms, to technology providers, to traditional enterprise clients. Carolina is often quoted as an industry expert and commentator in publications such as The Financial Times, Bloomberg, The New York Times and The Wall Street Journal. She regularly appears on BBC, Bloomberg TV, Fox, NBC News and other networks. Her Twitter account was recently listed in the “101 accounts to follow to make Twitter more interesting” by Wired Italy.

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