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Microsoft Unveils Its New Retail Stores

I'm in Scottsdale, Arizona where Microsoft just unveiled its new retail concept, and it is a mob scene.

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Photo: CNBC

Over a thousand people are in line to check out the colorful store, and hoping to get one of the gift bags Microsoft will hand out to early visitors.

A few dozen of these Windows fanatics camped out over night.

I got an early peek at the store, which is colorful and dynamic, thanks to the 60 screens that line the 100-foot length of the space.

Fans were especially excited about the four touch-screen table surfaces, that allow visitors do everything from play games to explore Microsoft's music and entertainment options.

They were also particularly looking forward to playing with the XBox 360 in the store's gaming corner. There are dozens of computers, organized by size, made by different manufacturers, but all featuring windows software, plus accessories selected for their compatibility with Microsoft.

The screens on the walls promote what Microsoft calls its "themes" including education, homework and wellness.

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Photo: CNBC

The store's four so called "feature zones" include an area for personalization, where visitors can right there print out and buy a "skin" for their Zune or XBox 360 imprinted with a favorite pattern or photo.

Another section is devoted to showing how you can watch TV on your PC, and how all these devices, from music players to cameras, all work together. An area with cell phones allows users to buy and activate devices from AT&T, Sprint and Verizon. And right at the front of the store the brand new Windows 7 operating system is in the spotlight.

Microsoft's new store centers around an "Answers Bar" that looks and operates a lot like the "Genius Bar" in an Apple store. You can make an appointment online and the experts will help with your products no matter where you bought them.

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Photo: CNBC

The obvious difference is the fact that Microsoft is selling products from dozens of manufacturers, products consumers usually buy at Best Buy, and may not associate with the Microsoft software running on the gadgets.

The similarity to the Apple stores is no coincidence: Microsoft hired the former Apple exec who helped launch its retail stores as a consultant on this.

And just like Apple turned to someone with experience at a big box retailer, hiring a former Target alum to work on Apple's retail chain, Microsoft turned to a former Wal-Martexec to oversee its retail push.

Microsoft even reportedly hired former Apple salespeople to man the store.

Why Scottsdale?

Well, it's not Manhattan, San Francisco or Los Angeles, where a weak launch or a technical snafu would really be in the spotlight.

It's a fancy mall, but there isn't an Apple store in it. The next store opening is in Mission Viejo California, the same mall as an Apple store, though not next door to it.

The question is whether this store bolsters the Microsoft brand, growing awareness of how its software works in a range of gadgets. Or, will big partners like Best Buy and Wal-Mart see this as cannibalizing their sales of XBoxes and Zunes? That's not an issue now, with just one store, but it'll be interesting to see how Microsoft handles a retail rollout.

UPDATE: There were a handful of teenage girls and their mothers close to the front of the line: the first 1,000 people visiting the store will each get two tickets to the Ashley Tisdale concert and the first 100 visitors get an Ashley Tisdale autograph after the concert. Ashley Tisdale is known for her starring role in Disney's "High School Musical" not Windows software, but this is a pretty good way to get a younger demographic into the stores to check out the Interactive experience.

Questions? Comments? MediaMoney@cnbc.com