Microsoft "Stores Within Stores" to Appear in 600 Best Buy Locations

Andrew Klips |

MicrosoftThe little table and area that Apple, Inc. (AAPL) commands in Best Buy Co. (BBY) stores is about to get dwarfed by Microsoft Corp. (MSFT). Building upon the “store-within-a-store” concept that Best Buy announced in April to put dedicated Samsung areas in 1,400 locations, Microsoft and Best Buy announced on Thursday that 600 Best Buy stores will soon feature a new Windows Store.

The first three applications of Microsoft Stores in Best Buy opened on Thursday in Ft. Worth, Texas, Louisville, Texas and Rochester, Minnesota with plans to have all the locations in place in time for the back-to-school shopping season later this year.

Microsoft presently has about 70 store locations and mall kiosks of its own.

500 of the new stores –slated to be between 1,500 and 2,200 square feet – are going in existing Best Buy locations in the United States and 100 will be in Canada. More than 1,200 employees will be specially trained for Microsoft products.

In reality, Microsoft already dominates the computer section of Best Buy, given that the majority of the products being sold there run Windows operating systems. What shoppers will get is a wider range of Microsoft products (tablets, phones, PC’s, etc.) and a heavier visual dose of Microsoft with new wall decorations and spacious tables prominently displaying Windows products.

Apple launched their store-within-a-store platform with Best Buy about a decade ago when it first started selling Mac products at Best Buy. The Microsoft area will be about 10-times larger than Apple’s space.

The move by Microsoft is an attempt to grab greater market share for its Windows 8 product that was launched last fall. Highly touted, the reception of the latest operating system has been met with criticism calling it confusing, although more than 100 million copies have been sold. Sales of PCs and tablets running the system have not yet lived up to expectations, as consumers still flock to Apple iPads and tablets running Google’s Android operating system, but a new version, Windows 8.1, is scheduled to be released later in 2013.

The Microsoft partnership to turn-up sales dovetails with Best Buy’s initiatives to turn itself around by focusing on higher profit items like phones and tablets and fend-off competition from online retailers.

For the record, I am a Best Buy shopper, but I’m just wondering how many “stores” it can put inside it before it qualifies as a mall. Just being facetious, I actually like the separation within the stores and it seems like a natural progression for Best Buy and other consumer product makers to capitalize on co-marketing. Now, we’ll see how it translates for Microsoft (and Best Buy) in sales.

Shares of Best Buy closed ahead on Thursday by 2.5 percent at $27.56 to continue a march upward of about 135 percent in 2013. Shares of Microsoft slipped lower on the day by 0.8 percent to $34.72 and are up about 32 percent so far this year.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 109.90 0.41 0.37 26,527,997
BBY Best Buy Co. Inc. 45.67 0.22 0.48 3,815,484
ECR Eclipse Resources Corporation 3.11 0.08 2.64 734,627
MSFT Microsoft Corporation 59.25 0.05 0.08 25,515,665

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