You might be forgiven for thinking that Microsoft (the granddaddy of all American software companies) already had an online store for sales within the United States. But actually, the company has lagged way behind the competition in this regard, with sales of Microsoft software products only available from authorized dealers.
But now Microsoft is finally opening up an online retail store to sell their software to US consumers. Microsoft CEO Steve Ballmer broke the news about the new store a few weeks ago while speaking in Australia, and hinted that the company would be making their products available in more countries online in the near future.
However, what Steve Ballmer failed to mention when announcing the new online store was that Microsoft expects their customers to pay more for their products online than they do at most US retail outlets. For example, a certified copy of Microsoft Vista is available at the Microsoft online store for $239.95; but the very same product can be purchased elsewhere on the Web much cheaper, including Amazon.com, who offer the full version of Vista for only $222.99.
Other retailers have slashed the price even further, like Bizrate, who are selling Vista for less than $170 online. Unfortunately, the high prices on the Microsoft online store are not limited to just the Vista operating system. The company’s Office Standard 2007 is listed at $399.95. But other online retailers offer the same program for a little as $170.
So while Microsoft spokespeople are busy touting the importance of selling online, and reducing the company’s carbon footprint, they seem to have neglected to take into account the highly competitive nature of online retail sales. With their current pricing scheme, the company will (ironically) have a hard time competing to sell their own products online.
Of course, Microsoft isn’t the first software company to sell their wares at a premium online, even when other authorized dealers offered huge discounts. Companies like Adobe and Apple have also allowed retailers to discount their products, while selling them for full price on their Web stores.
In a strange way, Microsoft’s tenuous first steps into online retailing serves to underscore how the company has dragged its heels in embracing the Internet and taking advantage of the Web to expand their business. Companies like Google and even Yahoo saw the potential and profitability of the Web long before Microsoft. The company’s new online store is another reminder that Microsoft is still playing catch-up when it comes to utilizing the power of the Web.