Microsoft is not Apple, has its own direction, there is no need to follow Apple. Yesterday saw the news that Microsoft was closing its brick-and-mortar store. The first reaction was a bit unexpected, but it was reasonable to think again. As the U.S. economy gradually reopens, Microsoft’s direct stores have not opened yet, and it seems to be decided. Microsoft abruptly announced yesterday that it was closing all its stores, including the U.S. market, as well as overseas markets.
Only four stores in New York, London, Sydney and Redmond, headquarters, will be left as hubs of experience, but will no longer be sold. Microsoft will therefore include $450 million in asset write-off charges related to the store. Microsoft currently has 116 direct stores worldwide, including 107 in the United States. In addition, Microsoft also has a “shop in the shop.”
It was not news that the U.S. closed its stores now. In the new crown epidemic, physical retail ingestion is clearly the most costly industry. A large number of brick-and-mortar stores have been closed for months, revenues have run out of money, high rents have been paid, and inventory pressures have been enormous. To save people on wages, most brick-and-mortar stores have employees without pay or simply fire home, leaving only the e-commerce department. Some of the entities that had previously been heavily indebted had to file for bankruptcy protection in the hope of restructuring their debts after cash flows were broken. Neiman Marcus, GNC, Barneys, J Crew, one established retail outlet after another, has fallen on this cold summer.
One wave is not flat, one wave is up again. At the end of May, when the outbreak had just improved, brick-and-mortar stores were preparing to open their doors and ushering in a wave of protests across the united states. As the tide of protests passes, the outbreak has soared again, with even more cases than in March. Apple has had to close some of its stores again under severe pressure from the outbreak. Even if the store opens again, traffic is unlikely to return to the levels it was before home in March.
Until vaccines and special effects, the downturn in U.S. retail stores will not improve significantly, and more retailers will fall victim to the new crown. Inevitably, the outbreak will lead to a gradual shift in American consumer habits from offline to online, and e-commerce will undoubtedly become the mainstream channel for consumer electronics. Even the hottest Apple stores will be hit by a marked drop in sales for the foreseeable future.
But Internet giants such as Microsoft have no cash-flow problems at all. Closed for a few months, the problem is not big, originally Microsoft also does not rely on direct stores to make money, has been losing money to support a facade. Now they just don’t want to play and give up.
The decade-long Apple Store parody show has finally come to an end. For Microsoft, it’s a failed business model attempt. Microsoft reported revenue of $36.9 billion last quarter, net profit of $11.6 billion and $450 million in store losses.
In fact, Microsoft opened a store earlier than Apple. Microsoft first opened its store in San Francisco in 1999, but closed before the Xbox was released in 2001. In the same year, Apple began to set up a direct store. Microsoft set up its own direct store again in October 2009 after a red-hot start to apple. In 2009 Microsoft did not have a Surface series, which features hardware products in addition to Xbox gaming products, is from many OEMs of Windows hardware. Oh, it seems like Zune.
There is no doubt that from the location to the store, Microsoft store scouring with the Apple store. Market analyst Thinknum counts Microsoft’s 85 retail stores in the U.S. (that’s the previous year’s statistics, so look at that), 82 of which are less than a mile from Apple stores (1.6 kilometers thick), 75 less than 800 meters away, or even 62 less than 400 meters. The vast majority of Microsoft stores are in the big storewhere where the Apple store is located; at The ValleyFair mall in Silicon Valley, the Microsoft store is located across the slope from the Apple store.
The intention to open a store is also clear, and Apple stores are usually the places with the most traffic. Opened near the Apple store, you can get a large number of people interested in consumer electronics, Microsoft wants them to come to their store to see. Apple store has genius bar Genius Bar, Microsoft store has answer desk. Microsoft Stores also gives priority to hiring Apple store staff.
The scenario, however, is quite good, but the reality is awkward. After visiting the Apple store so many times, you will also take a look at the Microsoft store, most of the case is the ice fire two days of embarrassment. There is a lot of door-to-door if the city, here’s the door can be, and even the number of customers is smaller than the number of shop assistants. There’s a corner of the Microsoft store that’s been buzzing, and kids love to play games in the display corner of the Xbox console.
Why does the same model, Apple open up, Microsoft can’t turn on? Apple has been opening retail stores since 2001, when there were very few products such as Maccomputers and iPods. Many people also have questions: so many shopping malls are selling Apple computers, why should Apple have to set up their own stores, and there is no discount, really stand up?
But the results were a surprise, and Mr Jobs had to be admired. Apple store spacious and bright, to create a comfortable and relaxed shopping environment for users, many Apple products can feel the product experience, Apple shop staff will not be like the hypermarket buyers so anxious to promote products, because their income and commission is not related. Users have questions can immediately get the professional answers of Apple clerks, there are product questions can also be sent directly for repair.
Taken together, these factors not only attract Apple’s existing users, but also bring a large number of potential Apple users. By the time Apple’s product line was enriched, followed by a number of product lines, such as mobile phones, tablets, watches, headsets, speakers, and so on, The Apple Store became the best offline store for user experience and purchase of Apple products.
Apple has stopped reporting retail sales since 2015, but for years, apple stores have sold more per square foot in the U.S. Apple sold $5,546 per square foot in 2017, compared with $2,951 for jewelry store Tiffany, and the highest-ranked clothing store was lululemon ($1,560). It won’t be overtaken until 2018, when Apple stores held their multi-year sales title, with the new owner being California marijuana chain MedMen ($6,541). It seems that the only thing that makes more money than Apple is drugs.
So how much less popular as Microsoft stores are than Apple? Because of the low traffic, Microsoft store smaller and more spacious than the Apple store, Microsoft store staff is also very enthusiastic and keep distance. There are many reasons why Microsoft’s brand appeal in consumer electronics hardware is far less attractive than Apple’s, and it’s an indisputable fact. Microsoft’s Surface series itself doesn’t sell well, not to mention a pop-up product like the iPhone. Microsoft’s Windows Phone, forget it, don’t mention it.
Although overall sales of Windows PCs far outstrip Mac pCs, Microsoft Store’s Windows PCs have many discounts in other channels, and the average consumer has little incentive to buy at Microsoft Store. Apple products are relatively discounted in other channels (except for subsidized contract phones offered by operators), and Apple fans are willing to pay a small premium to enjoy better pre-sales advice and after-sales service directly at Apple stores.
Microsoft has never disclosed revenue or operations in its brick-and-mortar stores. On the basis of poor foottraffic, these brick-and-mortar stores are bound to be loss-making, not to mention renting the entire building’s flagship store on New York’s Fifth Avenue. However, before Microsoft still insist on opening, nothing but want to make the brick-and-mortar store users understand their products experience window.
Why have you lost patience now? The outbreak has also been a catalyst. There were few consumers coming to Microsoft stores, and the retailer’s foresight would only fall sharply in the foreseeable future. As Microsoft itself puts it, “Our online sales are growing as Microsoft’s portfolio evolves into a digital-focused product.” “
Under such circumstances, Microsoft’s continued retention of physical stores that would not generate much revenue and no consumer experience has lost its original intent and significance. It’s enough to keep a few symbolic window of experience in New York, London, Sydney and headquarters.
Long before the outbreak, Sony, Samsung and Bose were shrinking to close their brick-and-mortar stores. They are somewhat similar to Microsoft, and the product itself is sold in many electronic stores. Direct stores are not the main sales channels, revenue can not be realized to offset, just as an experience window.
What’s more, Microsoft’s strategic focus has shifted to cloud services and the enterprise market, with products dominated by cloud-based software, and consumer hardware (Surface and Xbox) itself accounting for a tiny fraction of Microsoft’s revenue. Microsoft rarely releases specific sales figures for Surface and Xbox, which are part of Microsoft’s personalized computing business, where Windows OEMs are the main source of revenue.
For Microsoft, calling a halt to the second water-related brick-and-mortar store in the past decade is not a bad thing. Microsoft is not Apple, has its own advantage business, blindly follow the Apple retail store model can not replicate success. After transforming the cloud and corporate markets, Microsoft’s market capitalisation is also growing steadily, at close to $1.5 trillion, and the gap with Apple is not large. And Apple’s business has always been in a competitive environment, the main enterprise market Microsoft business is more resilient to shock.
For Microsoft CEO Nadella, the development of a brick-and-mortar model was a decision by his predecessor, Mr Ballmer, and there was no need to be embarrassed to close the store altogether. Mr. Della abandoned the Nokia hardware business, which Mr. Ballmer insisted on buying for $7bn, in his second year in office, writing down up to $7.5bn of assets directly.
Sina Technology Zheng Junfrom Silicon Valley, USA