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Originally published February 13, 2009 at 12:00 AM | Page modified February 13, 2009 at 8:56 AM

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Microsoft to open own retail stores

The company announced Thursday it will open its own branded retail stores — selling its software and hardware, such as the Xbox 360 game console — though it didn't specify where or when.

Seattle Times technology reporter

A decade after its first attempt at retail, Microsoft is trying anew as it works to gain greater control over the image of its products and how people buy them.

The company announced Thursday it will open its own branded retail stores — selling its software and hardware, such as the Xbox 360 game console — though it didn't specify where or when.

A spokeswoman said via e-mail that the company is targeting "a small number of high-profile experience stores in a few major cities around the world."

The effort immediately drew comparisons to Apple's iconic retail stores, which have helped the Cupertino, Calif., company grow its share of the U.S. personal-computer market.

Microsoft's move into retail, which Chief Operating Officer Kevin Turner described in a statement as "long-term," comes six months after it launched a broad marketing campaign for Windows, its flagship operating system brand.

In addition to quirky commercials starring Bill Gates and comedian Jerry Seinfeld, the campaign included efforts to work with retailers and computer makers to improve the experience of buying Windows PCs.

"They want to have more control over how end users are going to view Microsoft products," said Matt Rosoff, research vice president at Kirkland-based Directions on Microsoft, an independent analyst firm.

Rosoff said the marketing campaign, particularly its retail elements, was not getting the kind of traction Microsoft desired. The weak economy and one of the worst consumer-spending environments in memory haven't helped.

As part of recent efforts, Microsoft launched store-within-a-store concepts at Best Buy and Circuit City, though the latter has gone bankrupt and is being liquidated. Microsoft created a corps of "Microsoft Gurus," borrowing from Nordstrom's personal-shopper concept, to help people select specific products to suit their needs.

It also built a "Retail Experience Center" — a prototype store on its Redmond campus — to study PC buying and test new concepts.

The new retail stores will expand on these efforts "to create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy," Microsoft said in a statement.

The company has tapped David Porter to head the unit. Porter, who spent 25 years at mega-retailer Wal-Mart, most recently was in charge of product distribution for DreamWorks Animation. He will report to Turner, himself a former top Wal-Mart executive.

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Microsoft hasn't determined whether it will sell PCs made by its partners at the stores. The company does not make PCs, and moving into the PC retail business — albeit on a limited basis — could perturb both its retailer and PC-maker partners.

Porter sought to pre-empt any concerns, noting Thursday in a statement Microsoft will "share learnings from our stores with our existing retail and [PC manufacturer] partners that are critical to our success." Microsoft would not make executives available for this story.

Microsoft's first, short-lived retail effort — in June 1999 — was an 8,500-square-foot space in San Francisco's Metreon mall. The space was owned and operated by Sony Retail Entertainment and featured everything from "sweatshirts to software." It was similarly described as "a laboratory to develop retailing solutions" to share with partners.

Rosoff said he's been hearing questions for four or five years about when Microsoft would try retail again.

"They need a good venue to tell the whole story."

Apple has fewer concerns as a retailer because it makes both the software and the hardware in its computers. And while Apple also has done store-within-a-store concepts at Best Buy, it has found a winning formula in its own sleek outlets.

"[Microsoft] looks at Apple and their continued success at the high end of the consumer market, and I think the retail store has been a very good asset there," Rosoff said.

Apple reportedly is retooling its stores to focus more on software. The stores also will feature prominent comparisons between Macs and Windows PCs, according to ifoAppleStore, a Web site that follows details of the stores closely.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

Copyright © 2009 The Seattle Times Company

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