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Tech Deal: Microsoft to Open Stores-Within-Stores at Best Buy

Thursday, 13 Jun 2013 | 12:19 PM ET
Microsoft Buys Space At Best Buy
Thursday, 13 Jun 2013 | 1:15 PM ET
Microsoft is creating a "store-within-a-store" at Best Buy locations in the U.S. and Canada. CNBC's Jon Fortt speaks to Tami Reller, CFO and CMO of Microsoft Windows, about the move.

Best Buy is partnering with Microsoft to feature a store-within-a-store for Windows products.

The locations, which begin opening this month, will offer Windows-based PCs, tablets, Xbox and accessories, as well as trained staff to answer customer questions about Windows 8.

The move comes as the Minneapolis-based retailer, along with others, battles the "showrooming" effect: people browsing stores, and then buying the items at a lower price online. The trend has led to concerns that the big-box format could become obsolete.

But major electronics retailers are finding benefits in having physical destinations where professionals can assist shoppers. Best Buy has similar store-within-stores for Apple, Samsung and Magnolia products.

Belus Capital Markets analyst Brian Sozzi said that the move "absolutely makes sense" and that expects Best Buy to offer more along these lines.

"The fact is Best Buy has prime floor space up for grabs, and tech companies want their best offerings in there (along with the customer service), instead of buried on Amazon," he said in a note to clients.

The chance for demonstration is a particular advantage for Microsoft, whose Windows 8 line has had slow sales. Its tile format represents a complete break with over two decades of Windows products and offers few signals about where to tap and click to perform basic functions. More than 1,200 Microsoft-trained workers will staff the kiosks.

"The Windows Store offers a large-scale, hands-on customer experience," that provides insight and information about Windows and Microsoft devices and services, said Tami Reller, CFO and chief marketing officer for Windows.

The move is a "vital strategic step forward" in Microsoft's retail strategy, Forrester analyst JP Gownder wrote in an online post. It isn't as ambitious a move as if Microsoft had opened more of its own stores, he said, though that would have been more expensive.

Windows has more than 70 retail stores in the U.S., Canada and Puerto Rico.

The store rollout in 500 Best Buys in the U.S. and 100 in Canada should be complete by September. A similar Windows store will be available at Bestbuy.com, with updates on locations and deals.

Best Buy shares rose 18 cents to $27.06 in midday trading Thursday. Microsoft shares slipped 32 cents to $34.68.

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  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.