Best Buy Co. Inc. (NYSE: BBY) and Microsoft Corp. (NASDAQ: MSFT) have decided to set a deal for the world’s largest software company to have a store within a store, where Microsoft can sell flagging products like Windows 8. Each company has a troubled relationship with consumers, so the deal is one in which 1+1 barely equals 1.
The companies reported:
Microsoft Corp. and Best Buy Co. Inc. today announced a strategic partnership to create the Windows Store only at Best Buy. The comprehensive store-within-a-store will be in 500 Best Buy locations across the United States and in more than 100 Best Buy and Future Shop locations in Canada.
Ranging in size from 1,500 square feet to 2,200 square feet, the Windows Store will be the premier destination for consumers to see, try, compare and purchase a range of products and accessories, including Windows-based tablets and PCs, Windows Phones, Microsoft Office, Xbox, and more. Each store will feature an innovation space highlighting a variety of Windows scenarios across devices; a showcase section with the latest Windows-based PC form factors such as ultrabooks, convertibles, detachables and all-in-ones — including portable devices; and a standalone area featuring Microsoft Surface.
Microsoft believes that a direct conduit to consumers that allows them to experience Windows 8 in the flesh, along with some of its hardware products, will make sales of the products grow. Unfortunately, Best Buy continues to struggle to get growth in the number of customers it brings in its door, which makes it a poor choice for the distribution of consumer electronics. Microsoft would have been better to team with Amazon.com Inc. (NASDAQ: AMZN), which has crushed Best Buy in the market. However, the world’s largest e-commerce company competes with Microsoft across a broad spectrum of products and services, so the two are best viewed as enemies.
Of course, there is no evidence that more exposure for Windows 8 will help sales. Consumers have rejected it as too difficult to use and too foreign to earlier versions of the operating system. A presence within one large retailer will not help that.
Microsoft continues to have visions that the version of Windows that runs on smartphones will take market share from the dominant Google Inc. (NASDAQ: GOOG) Android and Apple Inc. (NASDAQ: AAPL) iOS. Demonstrations of Windows-powered phones at Best Buy are unlikely to help it gain share. Once again, consumers simply prefer the Android and the Apple systems. The chance for more customers to sample Windows will not solve that.
Finally, the Microsoft store will be lost inside of Best Buy, where hundreds of products are sold already, many from direct competitors to Redmond. Consumers will get to see, in the flesh, why the prefer products that are non-Microsoft. Putting its products side by side with better alternatives is a mistake.