The Folly of Copying the Leader

What it is: After Apple proved successful with their retail stores, Microsoft created their own retail stores that look remarkably similar to Apple Stores.

If you’re always following, you can never be a leader. That bit of wisdom seems to escape the minds of so many companies, especially Microsoft. There are tow huge problems with following a leader. First, by following, you’re already behind. Second, by following, you risk getting caught in the same market conditions that can eventually hurt the leader.

Remember the good old days when Blockbuster Video stores dominated the video rental markets in practically every town in America? On Friday night, a huge crowd of people would rush to Blockbuster to grab the latest releases and pick up snacks along the way. Then rivals like Hollywood Video tried to copy that concept with similar large retail space with the latest movies every weekend. For a while, both Blockbuster and Hollywood Video stores did fine until streaming videos over the Internet (Netflix) and cheap DVD vending machines (Redbox) came along that decimated the traditional DVD rental market. Hollywood Videos went belly up first and then Blockbuster Video. That’s the danger of following the leader.

In the computer industry, Microsoft has made that same mistake multiple times. Way back in the early days of online services, CompuServe was the leader so Microsoft decided to make a CompuServe clone called the Microsoft Network, which arrived just in time as the Internet started to wipe out online services like Prodigy, Delphi, and CompuServe.

Back in the early days of MS-DOS programming, Turbo Pascal was a popular programming language so Microsoft cloned it and introduced QuickPascal, just as Borland International released a new version of Turbo Pascal that introduced object-oriented programming and made QuickPascal incompatible with Turbo Pascal code. If you never heard of QuickPascal, that’s the reason why. It died a quick death and never gained popularity.

Recently, Microsoft tried to clone Adobe’s Flash plug-in with Silverlight. When the plug-in market died with the rise of mobile computing in the form of smartphones and tablets, flash’s dominance faded and Silverlight died with it. Microsoft tried to make Silverlight a programming tool for their Windows Phone 7 operating system, which they hastily threw together to compete against iOS in the iPhone complete with a similar app store. Windows Phone was simply too late to the mobile computing market as Android and iOS carved up the market among themselves. Today, even Microsoft employees seem to be ignoring Windows Phone.

Rather than just copy a leader, it’s always best to leap one step ahead and compete in an area the leader is currently ignoring. Back when Apple started opening their own retail stores, everyone thought they were crazy since Gateway Computers had just started shutting down their own retail stores. Yet the conditions between the two were starkly different.

Gateway’s stores simply showcased their products but didn’t actually sell anything. Even worse, Gateway computers were just one of many PCs on the market, so you could easily see different types of PCs at various retailers like Best Buy or Fry’s Electronics stores. You didn’t need to go to a dedicated Gateway Computer store just to evaluate different PCs in person.

That was completely different with Apple products. Back then, most retail stores sold Windows PCs and accessories because that’s what sold the most. As a result, they rarely sold Apple products at all. If you wanted to go to a store to evaluate an Apple product, you couldn’t.

That’s the gap that Apple Stores filled. By providing you with a dedicated store filled with nothing but Apple products you could try as long as you wished, Apple Stores gave people a place to go to evaluate and purchase Apple products of all kinds along with accessories. Apple Stores filled a missing gap in retail shopping. Gateway Computer stores did not.

After Apple’s success with Apple Stores, Microsoft decided to open their own retail stores that looked remarkably similar to Apple Stores with the same type of open layout. Yet if you happen to live in a town with a Microsoft Store and an Apple Store, you’ll notice that the Microsoft Store is largely empty most of the time, even during the holiday shopping season. In comparison, the Apple Stores are mostly crowded so much that they can get uncomfortable visiting due to the crowds of people testing out various products.

Apple Stores make the largest amount of money per square foot of any retailer. So far, Microsoft has never listed how much their Microsoft Stores make per square foot. Most likely this is because Microsoft Stores pay high rent to put them in the same upscale shopping malls as Apple Stores, but with far fewer customers, Microsoft Stores most likely lose money every month. The problem with Microsoft Stores is that they sell PCs and other Microsoft products like Windows Phone devices and Xbox game consoles. Yet like Gateway computer Stores, you can buy those same products at a dozen other retailers, so why bother making a special trip to a Microsoft Store?

Microsoft Stores are visible proof that copying a leader is never a smart strategy if all you’re trying to do is look the same as the leader. There’s a reason why a leader in any industry becomes a leader. It’s because they filled a need at one time and they continue filling a need right now. The moment they no longer fill a need (think Blockbuster Video), they’ll go out of business.

Right now Apple Stores continue filling a need. Microsoft Stores do not. The folly of copying Apple Stores with Microsoft Stores makes as much sense as Oracle trying to open their own retail stores to sell products. Oracle’s products sell mostly to corporations and Microsoft makes most of their profits off corporations as well. Trying to sell to individuals is mostly a waste of time and money for Microsoft, yet that’s exactly what the Microsoft Store is meant to do, which is why it’s such a glaring failure.

For the most part, the Microsoft Store is just an expensive billboard for Microsoft that costs money to maintain with very little in return. Yet Microsoft keeps opening more stores in a futile attempt to show their relevance. In any business, it’s foolish to keep flushing money down the toilet, but that’s what Microsoft keeps doing with their Microsoft Stores with no end in sight. What’s the long-term strategy for the Microsoft Stores? There doesn’t seem to be one, which is why it’s a failure. When you have no clear goals or results in mind, it’s not surprising when you fail to reach anything worthwhile.

To read more about the Microsoft Stores, click here.