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Microsoft to open Fifth Ave store 5 blocks from Apple

Microsoft has signed a lease to open its first flagship store on New York's Fifth Avenue just five blocks away from Apple's glass building, in a move mirroring its California-based rival.

The site will take the place of the current Fendi store at 677 Fifth Avenue and is a significant announcement in Microsoft's five-year retail drive as it tries to strengthen its brand and win back market share from the likes of Apple and Samsung.

"As our first flagship store, it will serve as the centerpiece of our Microsoft Stores experience," David Porter, corporate vice president of worldwide retail stores at Microsoft, said on the company's official blog.

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"Our Fifth Avenue location will be much more than just a Microsoft Store," Porter added, saying the site will allow the company to "further engage with our customers and partners in new and innovative ways".

'Emulating Apple'

The shop will sell Microsoft's flagship products such as Windows Phones, Xbox One and Surface Pro tablets. Windows Phones have fallen behind Apple and Android devices and in the second quarter of 2014, and had just a 2.5 percent global market share, according to IDC.

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Joe Raedle | Getty Images

"Essentially they are trying to emulate Apple," Daniel Gleeson, senior mobile analyst at IHS, told CNBC by phone, adding that Microsoft wants to regain the "brand value" it has lost over the past few years.

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"It is about building the brand up again and to hopefully be able to generate some sort of premium on its products that doesn't exist at the moment."

'Holistic'

Microsoft unveiled the large screen Surface Pro 3 tablet this year in a bid to challenge laptops and also released the Windows Phone 8.1-based Lumia 730 and Lumia 830 touting the high-end camera feature on the phones with a budget-friendly price point.

Microsoft has tried to cement its smartphone credentials by buying Nokia's devices and services business earlier this year for 5.44 billion euro ($7.5 billion). The deal has allowed the Redmond, WA-based technology giant to have control of making its own software and hardware.

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The Fifth Avenue location will add to the current 104 Microsoft stores in the U.S., Canada and Puerto Rico. Microsoft also said it plans to open 10 more by the holiday season. The New York store will be key for Microsoft to offer customers a "holistic" experience with all its products, one analyst said.

"Microsoft is going to be closely integrating devices and service and wants to present to consumers with one experiential location which they couldn't previously provide," Sam Gee, senior technology analyst at Mintel, told CNBC in a phone interview.

By CNBC's Arjun Kharpal