Microsoft strengthens sales, customer ties with rebooted online store

In the midst of a holiday shopping season in which online retail sales fell for the first time, the general manager of Microsoft's online store said sales and traffic are "really good."
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Then again, Larry Engel said the point of his site, www.microsoftstore.com, is not just to post robust sales figures.

And Engel does not have much to compare 2008's results with: There was no online Microsoft store the year before.

In mid-November, Microsoft quietly announced that for the first time, all of the company's consumer products — from "Flight Simulator X" to Windows Vista — could be bought directly from Microsoft online in the United States. (It launched similar sites in six other countries.)

Most of the software is available for download. All of it is also available in a box.

Engel said the store extends a "direct connection" between the company and its customers.

Currently, he said, such a connection exists with buyers of Microsoft's Zune music player and its Xbox 360 video game console, which the company sells online.

One analyst said direct connections like those could become more important as Microsoft moves into providing services such as a Web-based version of Office, instead of just software in a package or for download.

"The name of the game in the end is finding ways to own the customer, to be able to not only sell them the operating system but (also) recurring revenue-based services," said Tim Bajarin, president of consulting firm Creative Strategies.

Microsoft's Engel said the company decided to open microsoftstore.com for a simple reason: Customers wanted it.

"Customers have been asking us to do it for years now," Engel said. "We are responding to something our customers have asked us to offer: an option for them to purchase directly from Microsoft."

He said some customers want to buy products, and others want a place to research the full range of Microsoft products.

"It is as much of an information site as a purchasing site," Engel said.

A previous incarnation of the Microsoft Store, Windows Marketplace, did not work, Engel said, because there wasn't enough demand for the store's selection of Microsoft and non-Microsoft products.

But Engel said Windows Marketplace demonstrated that there was a demand from customers who wanted to buy Microsoft products directly from the company.

"The vast majority of sales were Microsoft products, which we didn't expect. We expected to see a balance," Engel said.

Engel said the company had been considering launching the site for years but waited until now because it wanted to refine the technology for digital downloads.

"Well over 50 percent" of the site's software sales already come via digital downloads, Engel said.

And as Microsoft moves into providing Web-based services, the site could also provide an important outlet for Microsoft to sell those offerings to consumers.

Engel said the store's "road map would include any offerings for customers."

He also said that "in the future, I could see adding what we would call third-party products that complement what you could purchase from Microsoft."

Bajarin of Creative Strategies said he thought that Microsoft was inspired by Apple Inc., which launched its own online store more than a decade ago.

For the moment, Bajarin said, Microsoft "can't control the customer experience."

Bajarin added, "Apple makes it brain-dead simple to access the store, buy something and download it to your Mac or iPod. There's no question Microsoft is moving in the same direction."

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BY Joseph Tartakoff
Source：SEATTLE POST INTELLIGENCER