Microstores n'est pas?

“The reason we put User Account Control into the platform was to annoy users. I’m serious.” — David Cross, Microsoft (Apr 10, 2008).

When your product managers talk like that, you know that it is the beginning of the end. Everyone knows the the bald Steve only knows how to copy the reality distorting Steve when it comes to designing products. But now, there are rumours that Fudzilla is considering a retail move, and will open up it’s own chain of stores, much like the Apple Stores sprouting everywhere. This must either be a belated April Fool’s joke or it’s a very bad sign of things to come.

According to the rumours, the stores will pack various products, from the failing Zune to the barely profitable Xbox and other nondescript keyboards and mice. They are even planning to have a place where customers can bring their problematic PCs to be looked at and have it fixed, just like how Apple does it with their ‘Genius Bar’ concept. Now, there are many reasons why it will fail, and I will try to spell out some.

Firstly, retail is a very different business from that of a software monopoly. Unlike Apple, these people have always been an software company while Apple has always been a hardware company that pushes boxes. Apple sells their products at a price premium, and has customers who are generally not looking for a commodity item. Therefore, their stores are like boutiques, where people go for the experience and to buy products that will stand out in a crowd.

PC retail is famously cut-throat, with razor thin profit margins. PC stores are generally like your grocery stores, where you go to get something that meets a need, at the lowest possible price. The only way to make a profit is to push products by volume and keep costs down. They won’t be able to keep costs down, for reasons that will become apparent soon. And just like grocery stores, there are already too many of them around and they need something to bring people in.

Secondly, they lack a flagship product to drive people to their stores. They do not have a single market leading product that can be used to entice people into their stores. Apple had the market leading iPod to draw customers into the stores. Once the customers were in, they will use their reality distortion field to try and push other products. To this end, Apple has an end-to-end product line, such as a MacBook for you to manage your tunes on, and it goes from there.

Now, look at the PC computer market. There are already too many other grocery stores doing it. The only credible product that can possibly bring customers in, is the Xbox. But this single product does not fit well with the rest of their products. It’s a singular product within it’s own ecosystem. You won’t be buying any MP3 players, keyboards nor mice to go with that. They just don’t have a good mix of products that help to sell each other.

Thirdly, and they may actually be banking on this, is their customer service. They may be able to turn a tidy profit from fixing computer problems. Goodness knows that if they open up an ‘Idiot Bar’, it will be swamped by customers who have problems with virii, spyware and crashing systems. It is safe to predict that this would be their main way of bringing customers in-store.

But there is a big drawback from this. They would not be able to fit the counter in-store. They would probably need to rent a warehouse or a stadium somewhere, to be able to handle the volume of customer service issues coming in. Goodness knows that they’ll need to hire hundreds of technicians per store, just to reinstall Windows for customers.

According to some analysts at Gartner, this week, Windows is collapsing and the situation is becoming untenable. That’s why there has been a flurry of various rumours and news in recent weeks. Usually, when something is in their death throes, they tend to lash out randomly. And I see this as them, trying random things, while they still have some money in the bank to play with.

PS: Everyone has always suspected bald Steve of not having all the marbles in the right place, but this is just too out of this world to believe in.

* image credit: theonion.com

Published by

Shawn Tan

Chip Doctor, Chartered/Professional Engineer, Entrepreneur, Law Graduate.

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