Microsoft Announces Retail Store Initiative

February 13, 2009

Microsoft Corp. has appointed a 27-year Wal-Mart veteran to lead the company’s second entré into retail stores. David Porter will become corporate vice president of Retail Stores, the company said in a press release, and will begin work on February 16th. Microsoft did not provide specific details of its retail initiative, but said it’s intended to, “create a better PC and Microsoft retail purchase experience for consumers worldwide.” Porter most recently worked at DreamWorks Animation SKG, where he led the movie and interactive entertainment company’s worldwide product distribution for seven years. Before that, Porter spent 25 years at Wal-Mart, most recently as general merchandise manager, with a particular focus on snagging favorable contracts for DVDs from the major movie and music studios. Microsoft’s move comes eight years after it closed its only retail store after a two-year stint in 8,500 square-feet at the Metreon entertainment center in downtown San Francisco.

Microsoft’s move to retail comes as the nation’s economy is at a record low, and shoppers have cut back their spending dramatically. Hundreds of retailers have closed locations, while electronics retailer Circuit City declared bankruptcy and shut down completely. Even in earlier times, retail computer stores have had a tough time. Gateway Inc. operated a chain of 188 retail stores, but closed them all in 2004 because of poor performance.

On the other hand, the company may be able to find low-priced retail space at major malls, and use the stores to bolster its current advertising campaign, intended to deflect Apple’s “I’m a Mac” campaign. The stores might also provide a personal point of contact for service and support for the company’s products.

Microsoft opened a Retail Experience Center at its Redmond (Wash.) headquarters earlier this year, a 20,000 square-foot space intended to serve as “a center of innovation for how Microsoft and the retail industry can address rising consumer expectations and competitive pressures during today’s challenging economic conditions.” [press kit]

Microsoft did not provide details about the initiative, including in what cities, the size of the stores, their locations–mall or street, and what products would be promoted. A company spokesman said only a “small number” of stores will be opened.

The company said that defining the time frame, locations and specifics for the new stores would 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,” the press release noted.

Microsoft’s COO Kevin Turner said the company is working on the “exciting” release of Windows 7 and new releases of Windows Live and Windows Mobile. “We’re also working hard to transform the PC and Microsoft buying experience at retail by improving the articulation and demonstration of the Microsoft innovation and value proposition so that it’s clear, simple and straightforward for consumers everywhere.” He said that Porter’s “unique and diverse” background, and his “deep retail roots and distribution understanding,” would be invaluable for the project.

In a press release, Porter said, “There are tremendous opportunities ahead for Microsoft to create a world-class shopping experience for our customers.” He added, “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.”

Porter started from the bottom at Wal-Mart, working as part of the cleaning crew in 1981 at the Broken Bow (Okla.) branch during high school, eventually becoming a clerk/cashier. He later worked in the information technology division.

Interestingly, it was Porter who was responsible for Wal-Mart’s bat swinging in 2006, playing hardball with movie studios so the company could retain its position as the largest retailer of DVDs in the U.S.–a 40 percent share. Porter tried to convince the studios to cut prices and provide marketing help, hoping to better compete with the then-nascent iTunes Music Store (iTMS). Ultimately, the studios’ reluctance to distribute digitally dissapated, and they agreed to distribute through ITMS, and didn’t agree to Wal-Mart’s price cut demands.

Porter continued to to be Wal-Mart’s principal deal-maker with the studios, working to cut prices that would give Wal-Mart a competitive edge, until he left for DreamWorks in 2007. At DreamWorks, Porter was in charge of worldwide product distribution.

In a January 2006 Los Angeles Times story, Porter summed up his Wal-Mart responsibilities, saying, “I wake up and put my head on a pillow every night looking for opportunity in the music and movie worlds. We are interested in growing sales; these are important areas to our stores, and we are a growth company.”

Porter’s retail credentials appear to be completely different from Apple senior VP Retail Ron Johnson, who directs the company’s retail operations. Porter seems to be a deal-maker with a focus on his big-time Hollywood connections.

Johnson came from the mid-west and a Target stint, and has been focused inwardly on interior design, customer service and “the experience,” the hallmarks of Apple’s retail stores. Under Johnson, Apple’s retail chain became the fastest growing retailer in history, surpassing $1 billion in sales within three years. 

Head-to-head, here’s how the two retail chiefs compare:

 
David Porter, 43 Ron Johnson, 50
  • Executive, DreamWorks Animation – August 2007 to Present
  • Vice-President/Director, Wal-Mart Stores, Inc. – 1987 to 2007
  • Senior vice president Retail, Apple Inc. – January 2000 to Present
  • Vice president, merchandising, Target Stores – 1984 to January 2000
East Central University B.A – Stanford University, M.B.A. – Harvard University
stores: 7,000 world-wide stores: 251 world-wide
sales: $375 billion (2008) sales: $6.31 billion (2008)
employees: 1.2 million employees: 15,600
employee turn-over: 44% employee turn-over: 20%

Update: At a later public meeting, Microsoft Entertainment and Devices president told three local reporters more about the company’s initiative. “You should think about…it quite differently. Apple is all about distribution.” He added, “We have plenty of distribution. These stores for us are about building our connection to customers, about building our brand presence and about reaching out and understanding what works and what improves the selling experience.”

Read blogger Robert Scoble’s take on retailing by both Microsoft and Apple.

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{ 10 comments… read them below or add one }

Jeff February 13, 2009 at 0759

Yeah, and whose computers are going to be in the store – HP, Dell, Sony, Toshiba, Lenovo, Apple (just kidding on that last one)…

I can’t see a store with a bunch of boxes of software and no machines enticing anyone. And if they put machines in the stores, someone is going to be unhappy about the space they get, wouldn’t you think?

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MattF February 13, 2009 at 1148

Well, a Microsoft Store could sell Xboxes and, uh, optical mice…

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Guido February 14, 2009 at 0421

Ok, This could actually work ? the Geek bar would have to occupy 90% of the floor spacing and the rest would be xbox’s and mice and keyboards. or not?

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Mark February 14, 2009 at 0758

Ok so my Regional Director at Apple Michael Forest ups and leaves Apple in January. This guy was Amazing! Very knowledgeable, personable and charismatic. Everyone loved this guy and was very shocked about his sudden departure. Then I see that Microsoft is opening stores. Coincidence???? It would not surprise me if they offered this guy a crap load of money to join Microsoft to help them open stores.

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Mike Kaufmann February 14, 2009 at 1838

The Metreon in San Francisco is a kind of retail joke, locally! Sony hawked it’s products, but there was little retail oomph between the Walkman and the Play Station. Most of the other retailers have left and it’s just Sony and the Movie Theaters, now! A couple of good restaurants, too! Microsoft was a pretty uninteresting retailer! Microsoft will have to really work hard to try to catch up to Apple’s lead in retailing!

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smokeonit February 15, 2009 at 2312

a M$ store would probably sell 3rd party PeeCee’s and software, as well as M$ products…and a geek bar at a M$ store likely will be packed with spyware/malware/virus victims.

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Chris Maxcer February 16, 2009 at 1354

There’s two three things why I like Microsoft building retail stores:

1. Some of Microsoft’s products aren’t that bad — but they are almost always poorly explained and/or are difficult to set up. A physical retail store at least gives MS the opportunity to fix some of this. (And if they learn that they can’t show customers their products in a timely fashion without needing to feed them power bars and Red Bull, then maybe they’ll create easier to use products.)

2. As smokeonit noted, an MS store might really bring home the spyware/malware/virus issues, leading to better security, if not more educated consumers.

3. It might not hurt Apple to have a bit more competition — seriously — where’s a new Mac mini? Where’s a decent home theatre application? Front Row? Apple has neglected it in favor of the Apple TV, which is in turn a bit hobbled. There’s massive room for improvement here — and I’m a big fan of the Apple TV and the Mac mini.

And a last related question: has anyone seen a display of a Mac mini connected to an HDTV in an Apple Store?

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The Truth June 2, 2009 at 2001

Hey Marky,

You can stop brown-nosing now, MF no longer works for Apple. Sheesh, you were laying it on a bit thick there. News Flash: Forrest or “Forest” as you wrote (you must have really admired Michael since you couldn’t even be bothered with learning how to spell his name) was far from well liked or appreciated by the core retail troops. He was sorely lacking in technology know-how (after all his previous gig was something like Nordstrom – great preparation for Apple). Although he did conspicuously sport a Kindle in an apparent attempt to show everyone that he reads gizmodo. He was flighty, disengaged, and flippant. Around Mac Geniii – he seemed concerned only with proving that he was hip/cool. Pressed for guidance or advice or to make a tough decision, he almost always resorted to one of his 3 staple cliches. I think he picked one at random each time. (e.g. If you are not parts of the solution then you’re part of the problem!) Let’s face it he is a job-hopping merc who was in the right place at the right time to land his undeserved Apple post. He conned his way in and when the walls were closing in – he jumped ship just like a rat – this tine to M$. But unlike at Apple, he will quickly be identified as a fraud and I predict he will be dealt with harshly. Then he will go back to selling men’s suites. He is like so many managers still at Apple – riding a winner, taking credit for other’s work, looking great on paper because of the combination of phenomenal chain-wide sales plus the amazing efforts of the singularly focused, internally-motivated, world-class, dedicated to the point of self-sacrificing – Service Group (Mac-Genii).
Apparently, THESE folks are too busy actually doing the work and protecting the brand to meet with Microsoft recruiters.

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craig October 8, 2010 at 1310

most people that read this have know idea how right you are

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The Real Truth June 26, 2009 at 2247

YoThe Truth!
I worked with Forrest and he was a good guy. Maybe not as knowledgeable as MG but way more tech savvy than any of my managers. I learned a lot from him. I also learned that most MG’s walk around thinking they are better than everyone else just because they have the name genius in their tittle. Most MG’s (not all) think they are above selling anything. News flash! its the mac specialist that sell the goods that pay your salary. Also, Forrest is the only Regional Director i ever saw throw on a T-shirt and sell on the floor with the other mac specialist. So sorry he didn’t have time to feed your ego.

The Real Truth

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