Microsoft's Plan for Retail Stores Should Avoid Copying the Apple Model, Says Wharton Professor

The headline in today's Wall Street Journal, "Microsoft to Open Stores, Hires Retail Hand" was probably more to Microsoft's liking than the first sentence: "Microsoft Corp. said it hired a former Wal-Mart Stores Inc. executive to help the company open its own retail stores, a strategy shift that borrows from the playbook of rival Apple Inc." The last thing Microsoft should do as it moves forward with a plan to open its own stores is compare them to the Apple Stores, which have significantly boosted Apple's image and sales with their hip appeal, says Wharton marketing professor Peter S. Fader.

"They've been magic," Fader says of the Apple stores, with their modern minimalist design, well-trained sales staff and "genius bars" where customers can get technical advice. "But Apple is unique in its products and the way it markets them. It's not a good idea [for the Microsoft stores] to compare themselves to Apple. That would be the kiss of death."

It's not that Fader is opposed to Microsoft's strategy. "I'm amazed that they haven't done this sooner," he says. But the companies are "different beasts" and their stores should be, too. "They fulfill needs in different ways and with different products and approaches. You don’t want to see a Zune [Microsoft's MP3 player] front and center when you walk in. You don't want to send any signals that this is a 'me too,' Apple-like environment."

One of the biggest differences between the two tech giants is that Microsoft has no computers of its own to sell. Fader says it will be interesting to see how Microsoft decides which of the many hardware makers that run its software will appear in the stores.

A tougher challenge for Microsoft, he adds, is how the stores are viewed by its retail partners, especially the big box electronics stores such as Best Buy and CompUSA. Those stores have been struggling in the hobbled economy, and might not look kindly at new competition from one of their key suppliers. "It's one thing for Microsoft to open the stores and be mediocre," Fader says. "People will say, 'Hey, they tried.' But upsetting retail partners runs a deeper risk. There are ways they can manage that, but it is a risk."