Microsoft’s Best Buy Windows Store: A Critical Strategic Move With Several Drawbacks

When Samsung made its move to install 1,400 store-within-a-store concepts at Best Buy back in April, we recommended that Microsoft take note. And take note, it did: Today Microsoft and Best Buy announced the launch of a new Windows Store at 500 Best Buy locations in the United States and another 100 in Canada, for a total of 600 in North America.

Instead of a store-within-a-store concept (which both Apple and Samsung now employ at Best Buy), the Windows Store represents a complete take-over of the PC department. Windows Stores will effectively replace the computer department at these 600 Best Buy locations. But they will offer a wider range of Microsoft consumer products (PCs, tablets, and accessories, of course, but also Office, Windows Phone, and even Xbox) than just PCs.

Microsoft’s Windows Store represents a vital strategic step forward in its retail strategy and ought to yield some benefits. At the same time, the move should have happened several years ago; it isn’t quite as ambitious as it might have been, and Microsoft will have to work hard to overcome legacy practices within the Best Buy ecosystem.

Why is this move essential for Microsoft? Put simply, the non-Apple Store North American retail channel for consumer electronics is broken … and it’s getting more broken:

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Amazon’s Kindle Fire HD: A Stealth BYOD Tablet Competitor

Amazon announced today that its Kindle Fire HD tablet offerings will rocket from availability in just seven markets (U.S., U.K., Germany, France, Spain, Italy and Japan) to 170+ countries in mid-June. The 7” and 8.9” Amazon Kindle Fire HD models have enjoyed great success in the consumer market, as Forrester predicted they would even before the first device was released in November, 2011.

The move to expand geographically makes sense, as Amazon continues to capitalize on its core strength – its content + device + services value proposition – in consumer markets. Perhaps less obviously, though, Kindle Fire HD has turned out to be something of a stealth competitor in the bring-your-own-device (BYO) space.

In a survey of information workers in the U.S., Canada, U.K., France, and Germany – fielded from February to April 2013 – we found that, among those who say they use a tablet at least weekly for work:

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Segmenting Your Workforce Will Actually Drive Innovation

It’s (long past) time to put the era of One Size Fits All enterprise computing behind us. Providing workers with Standard Issue™ devices and software represents an antiquated paradigm. Instead, segmenting your workforce into different classes of workers – honoring the needs of each type of worker – can help you:

  • Save money. Overinvesting in computing power by giving a worker “too much machine” and over-investing in software licenses for applications that won’t be used are common implications of One Size Fits All enterprise computing. You can save money by provisioning appropriate hardware and software to various classes of workers.
  • Preempt BYO. While IT departments are coming around to the virtues and values of BYO, managing excessively diverse BYO comes with management costs. You can preempt some types of BYO by providing the right tool to the right worker at the right time… obviating the need for them to bring their own.
  • Drive worker productivity and innovation. Innovations like tablets and Chromebooks can empower certain classes of workers to achieve new levels of productivity. Providing the right worker – for example, a traveling salesperson – with a tablet can enable new scenarios and create tangible returns.
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Sorry, Blackberry: Tablets Won't Be Dead in 5 Years

BlackBerry CEO Thorsten Heins made news this week with his claim that tablets will be dead in five years. “Tablets themselves are not a good business model,” he claimed in an interview.

As Techcrunch wittily responded: “BlackBerry CEO Thorsten Heins Says Tablets “Not A Good Business Model,” Evidently Forgetting About iPad.” As I recently blogged, Apple’s iPad is the growth engine of its entire business so far in 2013, growing 65% year over year. Meanwhile, shipments of Android tablets have found their footing, particularly for Samsung, ASUS, and Amazon, growing in shipments so far this year.

So tablets certainly represent a thriving business model today. More importantly, the tablet will grow into a must-have computing device for much of the world by 2017.

The penetration of tablets into the consciousness of information workers, IT professionals, business people, and consumers only continues to grow. Much as with smartphones, tablets are increasingly taken for granted as a device one will have in one’s life.

Take, for example, information workers: We surveyed 9,766 global information workers about their preferences for which operating system they would like to use on their (next) work tablet. We also gave them an out: “I don’t plan to use a tablet for work.”

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‘Jurassic Park’ Proves That The PC Won’t Die

In the original Jurassic Park movie (which will be 20 years old this June), the young girl Lex Murphy (played by Ariana Richards) asks Dr. Alan Grant (played by Sam Neill) what happened to the dinosaurs. Dr. Grant replies with the thesis from his academic works (as quoted here):

Many scientists believe the dinosaurs never really died out 65 million years ago. These scientists believe dinosaurs live on today -- as birds. The dinosaurs were too large and their food supply is too small, so the dinosaurs became a likely example of natural selection -- in short, they were forced to adapt or perish.

The personal computer already experienced a large tectonic shift, evolving from velociraptor to sparrow in just a few years. Back in 2007, end user computing looked very different from today: It was a simpler world of form factors, operating systems, and ecosystems. Even so, in 2007 we predicted:

By 2012, the industry won't include just two form factors, laptops and desktops, but five or more form factors that are universally viewed as differentiated products.

We were correct, and computing “biodiversity” bloomed:  smartphones, tablets, laptops, desktops, eReaders, phablets, or adding in form factors that peaked and fell quickly (like netbooks). In fact, we are living in an era of unprecedented experimentation – a flowering of myriad computing form factors attempting to carve out their own evolutionary pathways. The descendants of the velociraptor include a wide array of connected devices, each blazing its own trail.

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Apple’s Healthy iPad Business

Apple’s earnings call yesterday (for the quarter ending March 30, 2013) revealed that its tablet product category, comprised of iPad and iPad Mini, is extremely healthy:

  • iPad quarterly sales rose year-over-year to 19.5 million compared with 11.8 million in the same quarter last year. This represented an over 65% increase. Seasonality effects – like the holiday season in many countries in November and December – meant that sequential-quarter sales dipped (as would be expected). What It Means: The iPad was the fastest-growing product segment for Apple by far. The iPad Mini has generated a new pathway for market penetration, while the iPad continues to be the market leader in its size category.
  • International – particularly Asian – iPad sales grew quickly. CEO Tim Cook called out successes in China (where iPad sales increased by 138%) and Japan. Apple plans to double number of stores in China from 11 to 22 in the next 2 years. What It Means: Having a healthy Asian business will be increasingly important to the iOS ecosystem as it competes with Android. (In China, for example, Android tablets enjoy a strong market presence). Apple is making the right moves to bolster its sales and its ecosystem in Asia.
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Bring Back The Start Button, Microsoft!

ZDNet’s legendary Microsoft watcher Mary Jo Foley reported on an intriguing possibility for the rumored forthcoming Windows Blue update to Windows 8: That Microsoft could bring back the Start Button for desktop mode and/or allow users to boot directly to the desktop.

These are features that Microsoft should indeed provide to its customers in the next release.

Some analysts and designers might argue against these moves. To truly reimagine Windows, the argument might go, users must be taught a completely new way to navigate. Key to the Windows 8/RT user interface (UI) are charms, which take the place of the Start Button and which provide a simplified navigation system that’s particularly suited to touch screens. Users should segue to charms full time, even when they are in Desktop Mode, if they are to build a bridge to the modern UI.

Those claims might hold some truth. Yet Microsoft should reinstitute the Start Button anyway, because:

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The Tablet Market Is Fragmenting Into Subcategories

In recent research, I have laid out some similarities and differences between tablets and laptops. But the tablet market is growing ever more fragmented, yielding subtleties that aren’t always captured with a simple “PC vs. tablet” dichotomy.  As Infrastructure & Operations (I&O) professionals try to determine the composition of their hardware portfolios, the product offerings themselves are more protean. Just describing the “tablet” space is much harder than it used to be. Today, we’re looking at multiple OSes (iOS, Android, Windows, Blackberry, forked Android), form factors (eReader, tablet, hybrid, convertible, touchscreen laptop), and screen sizes (from 5” phablets and to giant 27” furniture tablets) – not to mention a variety of brands, price points, and applications. If, as rumored, Microsoft were to enter the 7” to 8” space – competing with Google Nexus, Apple iPad Mini, and Kindle Fire HD – we would see even more permutations. Enterprise-specific – some vertically specific – devices are proliferating alongside increased BYO choices for workers.

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Samsung Shakes Up North American Retail. Microsoft Should Take Note.

Infrastructure & Operations (I&O) professionals, in the age of Bring-Your-Own (BYO) technology, are keeping closer tabs on the comings and goings of the consumer market. Most of the devices they find their companies’ employees using come from consumer retail, whether from physical retail locations like the Apple Store or Best Buy, or online venues like Amazon or Dell.com.

Samsung announced yesterday that it will be opening “Samsung Experience Shops -- based on a store-within-a-store concept -- in 1,400+ Best Buy locations in the US in coming weeks and months. By the second half of the year, Samsung will possess a significant retail presence tailored to its own devices and staffed with sales associates with greater knowledge of its products. CNET reports: “The shops in large-format Best Buy stores will include blue-shirted consultants who are employed and trained by Samsung, as well as Best Buy staffers who receive special instruction.”

Apple, of course, has enjoyed incredible success with its Apple Stores since they opened in North America in 2001. The Apple Store has been a powerful pillar of Apple’s overall consumer strategy because of:

  • The quality and effectiveness of its sales associates. Apple has been able to attract, train, and retain high quality staff for its stores. In an era when cost-cutting affects retail experiences across all categories, Apple’s associates create a high-quality customer experience for Apple's customers and prospects.
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Tablets Hold Their Own – And Then Some – In Work-Related Application Usage

Tablets drive worker productivity in part due to their hyper-portability, as I argued in a recent blog post. Workers can (and, we showed with data, do) use tablets in more places, places where they wouldn’t (and don’t) take their PCs.

The top question I’ve received about tablet hyper-portability is this one: “Tablets are very portable, sure, but are people using them as creation devices or as (mere) consumption devices?” The general assumption behind this question tends to be that “creation” activities are equal to “productivity,” while “consumption” activities are not. I believe this is a false dichotomy, however. Consuming the right information at the right time can increase worker productivity in and of itself. Let me offer a few examples showing how that can work:

  • Retail sales associates using tablets with customers. Retailers are equipping sales associates with tablets to use on the retail floor, creating richer interactions with customers – and driving higher sales.
  • Physicians conducting patient rounds with tablets. Physicians can gain rich, immediate insight into their patients’ health records – saving time and driving more accurate diagnoses in less time. They also use the tablets to show patients results (like x-ray images), creating a better patient experience.
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