Microsoft Needs Retail Presence for Mobile Applications

Implications: By opening store locations, Microsoft realizes that being a player in the mobile space requires retail presence in order to get closer to the customer experience.

Analysis: With branded store locations, Microsoft will probably not gain significant retail presence but will advance its position in the mobile space.  For selling to the mobile lifestyle, retailing is necessary as shown by AT&T and Verizon each having about 2,000 company-owned stores and overall 20,000 points of distribution through agents and big-box retailers.  Microsoft attracted attention with the announcement of its Surface touch-based display being implemented in AT&T stores.  The touch-screen table enables the customer to interact with live demonstrations and customize handsets by “dropping” in features.  However, AT&T has a product line of handsets covering five operating systems besides Windows Mobile.
The challenge for Microsoft is to create demand for its mobile operating system.  Microsoft’s retail model could be a small number of strategically located stores such as Nokia’s flagship stores in Chicago and New York City that showcase the Eseries and N-gage devices.  If the Yahoo acquisition is successful, Microsoft gains Yahoo’s portal service with T-Mobile and the co-branded AT&T-Yahoo! Go Mobile.  With retail stores, Microsoft continues to get closer to the mobile customer experience.  It is unlikely that Microsoft can quickly replicate the over 200 Apple worldwide stores with loyal user traffic.  In launching the iPhone, Apple stores became the marketing tactic to show the demand for the touch-screen handset.  Microsoft could similarly use strategic store locations to initiate new Windows Mobile applications.