The Microsoft Store: 1994, 2009, 2020

Attending the Doing Business at Microsoft class in 1994 inspired me to propose that Microsoft open retail stores. I sent an email (see below), but nothing happened.

Microsoft did an experiment with Sony for a few years (1999-2001), and Apple opened its first successful retail stores in 2001. Eight years later, Microsoft opened the first Microsoft Store.

Fast forward to 2020, and the COVID-19 pandemic forced many retailers to close their physical stores. There were 116 Microsoft stores in the US, Canada, Australia, and the UK when Microsoft announced they would be closed permanently.

Timeline:
09/02/1994: Ben sends email (below) proposing physical retail stores. Nothing happens.
06/16/1999: microsoftSF retail environment opens at Sony Metreon in San Francisco.
10/26/2001: Microsoft and Sony announce closing of microsoftSF.
10/22/2009: At the launch of Windows 7, the first Microsoft retail store opens in Arizona.
06/26/2020: Microsoft closes all physical retail stores, takes $450M charge.

From: Ben Slivka 
Sent: Friday, September 02, 1994 5:17 PM
To: Liz Welch; Ray Emery; Greg Maffei; Jeff Raikes
Cc: Brad Silverberg; Brad Chase; Patty Stonesifer
Subject: Microsoft Store
 
After getting a glimpse at all the pieces of MS at the EMD 
class this week, I'd like to seriously propose that we pursue the 
design, development, and operation of retail Microsoft outposts, 
along the general lines of Nike Town (though I confess I've never 
been to one):
 
Goals
o Communicate and enhance the MS Brand
o Burnish the MS image (#1 retail buying experience in the world)
o Improve MS product forecasting
o Learn more about consumers and the consumer marketplace
o Laboratory for products and marketing programs
o Net revenue neutral (Price umbrella for our resellers)
o Spend some of that $4 billion of cash
 
Problems we have today
o Computer illiterate/novice consumers don't know what software can do for them.
      The Brand adds will help entice, but are too short and shallow (I am
      guessing) to show customers the full breadth of the power of our
      software.
o MS has a bad reputation among press, industry, MS partners.
      As one attack (PR is another) on this, if we have the absolutely most
      helpful, friendly, patient, energetic, service-oriented retail outlets ever
      to sell a product on the face of the earth (better than Nordstrom, maybe
      even out do the slavish devotion of Japanese retailers?), we can't 
      help but start to improve our image (of course, if the contrast between 
      our stores and our existing customer contacts is two wide, that could
      be bad, or maybe it will help us finally focus on improving the quality 
      of our existing contacts).
o MS is having an increasing hard time gather sell-through data.
      By establishing our own channel, we can get real data, and maybe
      even take the systems we develop and offer them to our existing
      channel partners.  This data will help us track true sell-through, which
      will improve product build forecasting and thus reduce "spoilage" in
      obsolete products.
o MS has lots of ideas about the consumer market, but no solid experience.
      There is no substitute for being out on the floor everyday talking
      to customers, learning what excites them and what bores the.
o No laboratory to get feedback on marketing programs (and products?).
      Just as consumer manufacturers will do trial programs for a new
      cheese spread in a few geographic areas, we can try out new
      marketing programs (30 days to upgrade your world) and promotions
      to get some real-world feedback before we roll them out big-time.
      And, just as the video game companies try games out in the video
      game parlors before bringing them down to the game cartridges,
      we could do the same for our games and Consumer offerings.
      Of course there is a risk of tipping our hand to competitors, plus I'm
      not sure how accurate the feedback would be.
o We've got all this cash lying around.
      Might as well design some nifty stores, build them from the ground
      up to be really cool looking from the outside and inside, hang the
      huge "product story" banners from the ceiling, have "product story"
      stations for "home finance", "writing papers", "online services",
      "games", "art", etc. where consumers can experience for themselves
      a real use of an MS product.
 
As long as we keep the prices higher than our local resellers, we won't steal
any significant business from them, and we should be able to increase their
volume because we rev up excitement about PCs and software and MS.
 
We would role out 1 store initially in a high-traffic, secondary market (Seattle?)
to get the kinks out, then do 5 more stores in major metro areas (hits more 
consumers, and get sell-through data for key markets -- San Francisco,
Los Angeles, Chicago, New York, Boston), and then continue rolling out to 
more geographic areas (US and overseas) as the concept proves itself.
 
There are obviously lots of details to being a retailer, but if we focus on 
providing an on-ramp to where PCs and entertainment are going, I think 
it is really compelling.
 
I'm on vacation next week, but I would love to get together and talk through
this stuff with you all.
--bens