Best Buy To Carve Out Space For Microsoft Stores

UnknowingFool writes "Best Buy and Microsoft will launch 600 Microsoft stores within Best Buy retail locations in a store-within-a-store concept. The Microsoft stores will occupy 1500-2000 sq ft within each location. The terms of the deal are not announced, but I assume it benefits both as Best Buy would likely charge rent to help with declining revenue. For Microsoft, they may get cheaper facilities than building their own stores. The last I heard, MS had a very ambitious plan to launch hundreds of stores a year. I have doubts about the success of this venture, considering anecdotally almost every MS store I've seen in my travels was nearly empty. Since they all were located near Apple stores, the stark difference in foot traffic was apparent. The only exception was the MS store near Redmond, which had a decent crowd."

big box stores are dying

[cashman73]

I think this is clearly a sign that the old "Big Box" stores of the 90s and 00s are on the way out. Best Buy is slowly realizing that they'll never be able to compete with Amazon on price, and they don't want to serve as Amazon's showroom, where customers check out the products and head online to actually buy it. But they realize this trend, and how Apple can have a showroom in their Apple stores, and not care if someone ultimately buys it in the Apple store or on Apple.com (or even an Apple product in Best Buy) -- Apple gets paid either way. So by teaming with Microsoft to get them to put a store inside their store, they get to charge them rent, and Microsoft gets paid whether the customer buys the Microsoft product in the store or later on online. I'd almost expect Best Buy to do this with other companies, like having a Sony Store inside, which would ultimately effectively make Best Buy a "mini-mall" of electronics instead of a stand-alone store competing against amazon and walmart (two companies that are difficult to compete against). Microsoft could be a guinea pig here.

Re:Simple Inferiority

[tlhIngan]

The details of the deal were not disclosed. Is the MicroSoft stand going to draw customers to BestBuy, or the other way around? Is it a synergistic cross pollination that will better service consumer desire?

It appears MicroSoft now have to sublet the non-Apple section of the Best Buy computer department. That and a bunch of PR drivel.

Quite possibly it'll help bring higher end PCs to Best Buy. If you go there, you'll find a stunningly large number of people still go to best buy and purchases PCs there. Then look at what they sell - cheap ass $500 and below PCs make up the vast majority of what's on display, and what isn't, is basically because they're Apple Macs.

The Ultrabooks have helped somewhat, at least to bring higher end machines in.

Microsoft does however bring in something good - and that's the "Microsoft Premium PC" - basically it's to PCs what Nexus is to Android - a clean, fast Windows experience that has no trial crap and other stuff (even using tools like PC Decrapifier doesn't quite get rid of everything), and clean restore discs and everything (nothing's worse than having to reinstall and just getting the crap back).

But what's happening is Best Buy is actually evolving - they know most of their traffic is showrooming traffic, so they're evolving into being THE showroom. They know they can't compete with Amazon and other online retailers, so they don't. They'll take payments of rent from manufacturers who get to show off their stuff and people come in to look (with perhaps a small amount for those who really need it now), and let Amazon etc., fight for the actual sale. Because really, Best Buy has an existing network of stores that no manufacturer, not even Apple, can hope to match, but to whom bring in enough customers who want to look at stuff before they buy. Plus they can bring out the latest and greatest ASAP for show - it's up to the manufacturers to ship the demos ahead of time.

That I think is what is happening. The first three tenants are Apple, Samsung and Microsoft. But soon others will want in. Bonus points if the manufacturers can even handle returns and exchanges on the spot instead of obnoxiously complex return and exchange procedures (which can be nasty - like warranty exchanges require shipping to some warehouse in China - even if your product is DOA).