Microsoft Permanently Closing All Retail Stores
https://www.cnbc.com/2020/06/26/microsoft-to-clos…
Microsoft just announced that they will be closing all physical stores permanently. Whenever a big name like this makes a decision against physical retail, it makes headlines in the real estate industry, especially those in retail.
This decision comes as Amazon and Apple are trying to expand their physical presences. Personally, I don't think this will have much immediate effect on retail real estate. After all, there are fewer than 100 Microsoft stores nationwide anyway. But would be interested in a discussion on the implications of this development and future impact on investor sentiment on retail assets.
Microsoft Stores in my mind were more for advertising / consumer demos than moneymakers. People understand the Surface now, and the Xbox kinect + cortona never became the future smart home. Apple stores are such a magnet for high-end consumers, they could demand free rent and malls would be forced to oblige. My guess is Amazon Stores will be closer to Microsoft stores, trying demo all Alexa's capabilities.
Amazon has a couple of brick and mortar concepts, but really only the kiosk style stands in the middle of malls focus solely on their tech products. The amazon books is just a book store, and the amazon 4 star sells so many different products, their own tech stuff kind of gets lost. I wouldn’t really compare the permanent spaces amazon is setting up to Apple stores or Microsoft stores.
I'm sure I could look this up, but I wonder what percentage of Microsoft's revenue comes from devices like the Surface Pro as opposed to software like the operating system and Microsoft Office. I'm leaving XBOX out of this, because you can obviously buy those anywhere.
I would imagine that compared to Apple's MacBook, iPad, iPhone, and Apple Watch universe, the devices themselves would be a significantly smaller percentage, making the need for a physical Microsoft store much smaller.
Bingo - https://www.investopedia.com/how-microsoft-makes-money-4798809
'Other Personal Computing' is their largest business unit out of the three but includes Microsoft Office, Xbox, Personal computers, etc. Their other two businesses, which is essentially all of their commercial and cloud services, is approx 64% of total revenue
I believe Satya is trying to grow their cloud computing business. Azure, Microsoft Teams, etc. are all doing very well
A pretty big announcement nonetheless. Queue every business news outlet shouting Retailpocalypse in 3... 2... 1..
This isn't that big of a deal. Only 83 locations. Microsoft was trying to mimic an Apple Store when they launched these, but I don't think they have been very successful. In my personal experience, I never noticed many people in them, and I don't think I've ever actually stepped foot in one. Microsoft is likely using Covid as an excuse to close all of the stores down. This is yet another hit to malls, though.
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