Microsoft Plans Slow and Steady Retail Store Pace

Apple's retail stores won't have a challenger from Microsoft, at least in the short term.

That was one of the nuggets pulled from an Aug. 10 talk at the Oppenheimer Annual Technology, Media & Telecommunications Conference by Bill Koefoed, Microsoft's general manager of investor relations. Near the end of that event, an analyst in the audience asked a question about Microsoft's retail stores, which have been opening over the past year in cities such as Denver and San Diego.

"I think we have six open today, or we've announced six," Koefoed told the audience, according to a transcript released by Microsoft. "We think stores are important. We think they're important to give the end customer the experience of our products in an environment that we think we can optimize."

That being said, Koefoed added, "We've got to get the model right, and I think [Microsoft CEO Steve Ballmer's] been pretty clear that the stores need to make money." To that end, "We're continuing to grow at a prudent pace, one that we're learning from, and one that we're going to continue to learn from [to] make sure that we're making the right investments in the right places."

After months of Microsoft executives trumpeting that they were preparing to challenge Apple's retail experience head-on (and hiring George Blankenship, the former Gap executive who helped launch Apple's retail arm in 2001, to assist in the effort), the company opened stores in Scottsdale, Ariz., and Mission Viejo, Calif., in late 2009.

Since then, Microsoft has seemed content to dip its toes in the water: a store opening here, another one there. The company could be reluctant to challenge big-box stores such as Best Buy that already sell Microsoft products and would doubtlessly be irritated if Redmond tried to seize a major chunk of their electronics revenue. But this could also be a more generalized feeling-out of the retail space; no sense in spending hundreds of millions on invading strip malls across the country if your company lacks the institutional knowledge to make such a strategy work.

In any case, Microsoft likely won't be challenging Apple store-for-store any time soon--but based on Koefoed's comments, the company obviously sees value in continuing the retail effort.

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