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July 11, 2020

Microsoft Store Goes Completely Virtual

It always tickled me that even though the Microsoft Store turns up in the Start Menu as an app, it was also possible to visit physical retail locations also named “Microsoft Store.” Living here in the Austin, TX, area we were lucky enough to have one close by,  In fact, my son and I would regularly visit, to gawk at the huge number of screens on its walls, and to play with the game consoles and check out the cool gear on display there. This is all coming to a screeching halt, as recited in this LinkedIn post entitled “A New Day for Microsoft Store” dated June 26, 2020. Basically it announced that it is pivoting its business focus to make “a strategic change in our retail operations, including closing Microsoft Store physical locations.”

Why Close Brick-and-Mortar Microsoft Stores?

I’ve never been able to get the staff to tell me exactly what it costs to acquire, lay out and install all the gear for one of its retail locations. But a conservative guess — including the server room behind the scenes that most visitors never get to see, and the 10GB WAN connection to the Internet likewise — is on the order of US$1-2M. And with old hardware units giving way to newer, snazzier replacements, the ongoing equipment refresh costs for the showroom floor have to be on the order of at least US$250K per quarter (or more). I’ve never seen a store with less than 3 people on duty, and have counted as many as 8 Microsoft heads during busy holiday shopping hours, or when hosting presentations and demonstrations for customers. Simply put, this is a big and expensive operation.

With retail sales mostly shifting online and corporate sales with other channels available to them for demos and hand-holding, I have no trouble understanding why or how MS has come to this decision. I could have seen it coming, even if the coronavirus pandemic hadn’t thrown a monkeywrench into traditional brick-and-mortar retail as we used to know it. But with the stores most shutdown and now certain time for them to reopen, it makes sense to take those resources and put them to other, better uses. Apparently, MS plans to keep the physical Store teams at work (remotely and in MS offices) to keep supporting customers and providing sales, training and support. Digital storefronts will take over the teaching and information delivery roles that the stores played so well, “including virtual customer support from our trusted experts, online tutorial videos, virtual workshops with tips and much more.” This will also include “innovative digital solutions…[such as]…1:1 video sales support.” Finally, MS plans to “reimagine new spaces that serve our customers, including our Microsoft facilities in London, New York City, Sydney and Redmond campus locations.”

I bet they’ll be buying out of their retail space leases at the same time as they shutter the current physical Microsoft Store locations. Space at the Domain in Austin on the retail streets there can’t be cheap, and that Microsoft Store occupies at least 4,000 square feet. Out with the physical, in with the virtual. Given Microsoft’s shift in emphasis to virtualization in the cloud, this changes make even more sense than it possibly should!

Author: Ed Tittel

Ed Tittel is a 30-plus-year computer industry veteran. He’s a Princeton and multiple University of Texas graduate who’s worked in IT since 1981 when he started his first programming job. Over the past three decades he’s also worked as a manager, technical evangelist, consultant, trainer, and an expert witness. See his professional bio for all the details.

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