CompUSA Closings and Microsoft
|
Over the weekend, I visited my local CompUSA, looking for a mouse. The store had dismantled its Office 2007 and Windows Vista displays and filled the space with discounted items for quick sale. The shuttering of this store—and many others—can't be good for Microsoft. |
In late February, CompUSA announced plans to close 126 stores, which would leave 103 locations in 39 states.
"In general, for Microsoft, it's a negative," said Stephen Baker, NPD's vice president of industry analysis. "Microsoft is very much about the PC. When the largest PC-centric retailer has trouble like this, it's not a good sign [about the future role of the PC]."
Just weeks before the closure announcement, CompUSA stood at the forefront of the Office 2007 and Windows Vista launches. My local stores had massive, eye-catching displays promoting both products. The amount of shelf space CompUSA dedicated to the products doesn't come cheap. Typically, Microsoft and retailers engage in co-marketing deals for the kind of marketing and shelf space CompUSA gave to Office 2007 and Windows Vista.
CompUSA also offered low-cost installation and upgrade services, among other goodies, for Office 2007 or Windows Vista upgraders. Poof! Office 2007 and Windows Vista have been replaced by 30-percent-off signs and posters offering display fixtures for sale.
Certainly, Microsoft has other large retail partners. For example, Circuit City has 600 stores and Best Buy 940 stores. But CompUSA offered business services, such as installation, repair and training. Poof. They're gone.
Given the context of the store closures, maybe last week's CompUSA-Microsoft partnership for small business specialists was ill-timed.
CompUSA has been an important Microsoft partner. In November, Microsoft issued a press release that CompUSA would offer Vista Business licenses to small businesses. While some other partners could sell the same licenses, during the two-month period of limited Vista availability, Microsoft singled out CompUSA.
"Microsoft used CompUSA to try and drive things into the small business market," Baker said. "But they saw this coming, like everybody did. That's why you saw Microsoft in deals with Best Buy for small businesses."
The retailer also has preeminent status in other areas, such as CompUSA Tech Pro Providers, through Microsoft's Partner program.
Microsoft won't be the only high-tech company feeling the sting of the CompUSA store closings. Apple and Sony have stores within stores at CompUSA. While both computer companies have their own stores, too, CompUSA gave them presence in locales where they had no retail locations of their own.
Observing the demise of my local CompUSA is painful. The once-thriving store was largely vacant of customers on what typically would have been one of the busiest days of the week. While the "up to 30 percent" signs might have attracted some customers, the big sale circulars were gone, as were rebates and other incentives.
Store managers stood out for their attire, which symbolically was as stripped down as their status. They wore plain, white T-Shirts.
The closing of my local store, in Rockville, Md., surprised because that CompUSA was busy pretty most everyday. I asked one of the technical staff about this, and he said closure decisions were made based on revenue versus cost to rent. Rockville certainly isn't a low-rent district. CompUSA stores will remain open in Columbia, Md. and Towson, Md., which are both closer to Baltimore than Washington and also likely lower-rent areas.
A survey of the actual store closures shows CompUSA exiting virtually every major market, but keeping some presence in smaller locales.
"In a market where people have lots of choices, CompUSA is a tough choice to make," Baker said.
Comments (13)
Here's the complete llist - looks like all the stores in the Seattle area are closing:
http://www.compusa.com/locations/closing_stores.asp
Posted by Robert | March 20, 2007 10:16 AM
Pinning one's market dreams on Vista is problematic, because Vista's main problem is that it excises a significant part of the PC market--all of the low end and some of the mid-range, in real cost terms.
Consumers seem to have quickly determined that a relatively low-priced or even mid-range Vista PC is much less user-ready or speed-equivalent than the same hardware config running Windows XP.
For example, there are no really cheap laptops in Canada now whereas with XP you would see the odd $600 CDN laptop that would have 512 megs RAM and run XP well, with good speed.
Now we see $800-$1,100 CDN laptops selling with Windows Vista Basic and as little as 512 megs RAM. And we see $1,300-$1,800 CDN mid-range laptops with Vista Premium with just 1 gig RAM.
The problem is that many consumers already know that 2 gigs RAM and ideally 4 gigs are ideal for a Vista machine. Have you priced the cost of taking a 512 meg laptop to even 2 gigs RAM?
That unfortunately reflects what we might call a "windows XP equivalent cost" when running Vista. In other words--very much more expensive. Then, consider that it gets even much more expensive if one wants similar to XP video performance in any one price category.
Small wonder that the FAA and one other U.S. government branch have banned Vista rollouts. And why consumers have already made a similar decision.
And we have not even got to the issue of obsolescing a lot of expensive software like PageMaker 7.01 that will NEVER run on Vista.
Posted by PolarUpgrade | March 20, 2007 10:27 AM
As David Pogue's New York Times blog (and responses) points out, CompUSA stores are generally awful, and won't be missed by many people. I sure won't miss our local store.
Speaking of Vista, I see that HP's web site now offers Ultimate as a (lower price) +$80 option.
I look forward to using Vista, when it comes preinstalled on my next computer.
Posted by TomT | March 20, 2007 11:23 AM
Did CompUSA truly offer 'business services'? It seems they were focused on very small business, which would go along way to explaining their demise. Big business has their own IT staff, and their IT staff doesn't drive to the local office supply store to buy 25 Open License versions of Office 2007. They hop online or on the phone to contact CDW, Insight, or Wasatch Software. CompUSA somehow found themselves stuck inbetween the home users that Best Buy serves, and the larger customers that Wasatch Software and CDW assist. Could this have been their downfall?
Posted by Spencer Ferguson | March 20, 2007 6:03 PM
Microsoft doesn't have much to worry about with the retreat of CompUSA. There are plenty of other retailers, including Apple, to fill the void.
Apple has two stores in Bethesda that sell Microsoft Office for Mac. Apple also has stores in Columbia, Towson, and Annapolis. ;-)
http://www.apple.com/retail/storelist/
Posted by btn | March 20, 2007 9:07 PM
CompUSA has not been doing well for many years.
There is no correlation between the closure of CompUSA store and the selling of Windows Vista.
I am amazed that Joe drawn this silly conclusion based on plain observation.
The least thing I would like you to do is be a professonal journalist
Posted by John | March 21, 2007 2:24 AM
Joe, I opine that many of these large shop can thrive by differentiating themselves and it is a shame that none has got the guts to escape the secret and exclusionary OEM contracts (made public owing to the Iowa trials). By offering a mainstream distribution of GNU/Linux, for example (and I beg you to ignore the sterotypes and myths), these shops can attract a curious crowd which has had enough of 'that other universe'. It is clear that Windows is facing a development wall. As Dell's polls have shown, there is a large market out there.
Posted by Roy Schestowitz | March 21, 2007 6:25 AM
I used to work for CompUSA's competitor Computer City, back in the day. Both chains were horribly run, and as could be expected, can't keep up with the loss leaders of bigger brands like Best Buy and even Wal-Mart. We're not losing most of our stores here in Colorado, but I wouldn't miss them for a second if they did go under. The good thing about the free market is that bad businesses go under sooner or later and get replaced, though I can't say my local Best Buy is much of an improvement...
Posted by Nick | March 22, 2007 11:17 AM
Nick noted that "The good thing about the free market is that bad businesses go under sooner or later and get replaced, though I can't say my local Best Buy is much of an improvement..."
Sadly, Nick's assertion that CompUSA was a crummy retailer does not negate the cold hard reality that CompUSA was at the forefront of the Vista and Office 2007 launches.
When the first-tier sales arm for a bevy of new Microsoft products goes under when the product launch should have done the opposite for CompUSA, that means somethin' more negative for MS than for CompUSA.
The bigger issue here is that the PC market appears to have been strategically eclipsed or at least realigned with the Vista/Office 2007 intro, such that that bottom third of the market ain't there anymore owing to the hardware barrier to entry cost being raised so high. And so CompUSA ain't there anymore either.
A rather high price to pay to let Redmond play more at the Mac and of the market and make fatter margins, is it not?
Posted by PolarUpgrade | March 22, 2007 1:42 PM
Microsoft charges a lot for Vista, not because they like too, but because they have to. Their overhead is huge. They can't cut the price as they have done with zune & xbox because it is their flagship. Since it isn't selling watch for the Coke Classic strategy, XP Classic will be released to keep the cash cow going as Microsoft fumbles inexorably forward. CompUSA is a barometer of the continued saturation of the pc market. How many computers do people need? Really only one that works all the time. The older machines are sold/given away, there is virually no 2nd hand market because unlike autos, pc lose their value so fast that no wants a 10 year old computer, unlike a 10 year old BMW. With globalization and wage stagnation we are wiping out the middle class, how many pc's will the upper class buy? Does Jose need a pc to keep track of how many yards he's mowed or will a paper notebook do?
CompUSA is the canary in the coalmine. The economy is being rewrote and it won't be pretty and Microsoft doesn't seem to be in a postion of turning that ocean liner around anytime soon.
Posted by James Gougler | March 24, 2007 1:39 PM
@James Gougler
Microsoft charges a lot for Vista, not because they like too, but because they have to. Their overhead is huge. They can't cut the price as they have done with zune & xbox because it is their flagship.
Let's wait for the SEC quarterly filings to come out. I suspect the net margin on Vista is closer to the 85% from years gone by than you think...
The older machines are sold/given away, there is virually no 2nd hand market because unlike autos, pc lose their value so fast that no wants a 10 year old computer, unlike a 10 year old BMW.
Their value may be gone, but they only lose their usefulness if you insist on having the latest version of Windows. These PCs will run just about any x86-32 Linux Distro quite nicely.
I'd still take that old BMW off your hands...
With globalization and wage stagnation we are wiping out the middle class,...
The (American) economy is growing quite nicely. Ownership of second homes is going up, as are boat and RV ownership. How do you get to "wiping out the middle class?" It doesn't follow from the actual evidence around you - if you are in the U.S.
...how many pc's will the upper class buy?
How about "as many as they want?" That would probably range from none to more than one... ;-)
Does Jose need a pc to keep track of how many yards he's mowed or will a paper notebook do?
Just how racist did you plan to sound?? You have certainly exceeded expectations!
CompUSA is the canary in the coalmine.
Quite likely. It does not portend well for Redmond, in my opinion.
Posted by Frank McGowan | March 27, 2007 5:10 PM
There are many things that I must say are funny. I have worked for CompUSA for over 14 years. Setup and managed the first ?Apple Store? within Computer City (1993) and later CompUSA. I have seen quite a lot. Some of the most stupid things that occurred were the hiring of considerable numbers of Part Time workers by the Management. The Part Timers had the don?t give a shit attitude, since ?this was not their real job?. This of course made my life a living hell, because they would not help customers or could not because of their lack of knowledge and unwillingness to learn. They also got paid more per hour. Ok, hire cashiers and customer service employees that work in a computer store and know nothing about computers. Uh duh. Wonder why they had to page for other Team Members. Wonder why they get shitty attitudes when the customers ask them computer questions? This is (was) typical of the CompUSA Management nationwide.
I have seen Managers throwing away brand new shelves and other expensive things, because they did not want to put up the new shelves to replace the old bent ones. At a couple hundred dollars a box of four shelves, times two full pallets of boxes. Times many stores.
Another stupid was moving to a staturated market from a low demand market. Sales dropped to less than half Monday to Friday, Saturday and Sunday, Holidays. Also paying rent/lease at both places. This is also typical of CompUSA Management.
Then there was the new shirts. Ok, three shirts at $20.00 per full time employee, two shirts at $20.00 per part time employee times the number of employees at a store, times the number of stores. I would rather have had a pay raise than a new shirt that sheds red lint everywhere.
Most of the store remodels were a joke. None of it made sense. Gee, Hard Drives mixed in with Software? Thank you, CompUSA Management for driving customers out who could not find anything after the remodels. Specifically, Thank You Barry M. for those planographs. Thank the General Managers for not complaining to CompUSA Corporate. Thank the local Managers for hiring all those part timers who did not want to or could not help the customers find anything because they did not want to. I lost a lot of weight and am healthier from walking all those customers all over the store since the part timers did not want to learn were anything was. Gee, wonder why CompUSA was losing sales? By the time everything was redone to make sense, too late, plus all of those employee paid hours wasted on redoing everything. If something works don?t fix it.
To all those that gripe about Customer Service at CompUSA, we are a business to make money. Try getting paid low wages or working more than one job to make ends meet and being a techno geek with customer service expertise and able to talk about technical things so that a person that does not know the difference between a CPU and a Computer can understand you in plain english. So in short, walk in my shoes or you have no reason to complain. In those areas that previously CompUSA closed, 126 Stores, now all of those that previously cried or bitched about CompUSA are now crying about how they are treated by Best Buy, Circuit City, Fry?s. We kept other retailers in check by doing price matches. They are now realizing how much they miss CompUSA, but of course it is now too late. Live with your decisions and be responsible for you comments. Did anyone comment about Best Buy and Ciruit City raising their prices in those areas? Wait till the rest of the CompUSAs close.
It is true also about some (not all) of the compUSA Executives having ?Golden Parachutes?, after all, there is no law in the United States against that behavior. Worldcom, Enron, now CompUSA. Other countries yes, those Executives would have been proscuted and sent to jail by those Governments for gutting the company that they were responsible for. Maybe everyones new goal should not to be a Doctor, Lawyer, Nurse, Banker. We should all become Corporate Executives so that we too can make Million of Dollars for gutting the Company that we are responsible for and having a ?Golden Parachute?. Screw the pions (employees), Just give me my Millions. In the United States employees are expendable like toilet paper. In other Countries, businesses and employees are National Assets that support their GNP and money. And their laws reflect this attitude. So after I get ?laid off?, I am going on vacation, and moving to another Country that I lived in for over 20 years. When I get employed there I will get paid in Euros, so that when ,not if, the U.S. economy takes a dump, I won?t have to worry. If you think this is not Patriotic, I am a U.S. Military Veteran, not once but twice. I paid for your rights, in the hospital, more than one occasion, with my blood. Did you get stabbed or shot for me?
By the way can you blame Carlos Slim Helu, for giving up on CompUSA after CompUSA Executives at Texas squandering his Billions of Dollars and forming ?Golden Parachutes? for themselves. He was smart enough of a businessman to cut his losses. He did not get to be the richest man in the world by being stupid and pouring money down a black hole.
Many of my longtime customers want to know where I am going after the store closes. I have let them know that I am done with retail ?hell?. I am going on vacation (unemployment). I am going to shave my beard, cut my hair (change my appearance). While on vacation if anyone asks me if I worked at Com?? Nope, Do you know how to repair Compute?..Nope. Didn?t you sell me my first compute?..nope. I have this problem with my computer and the Apple Store cannot help me?.nope. My network does not work?.nope. Do you know how to build a tournment level gaming computer?nope. Do you know how to replace the bulb on my projection screen tv??.nope. Take a swig of beer, soak up the sun on the beach for the first time in over 14 years,a vacation. Done with retail hell for a few months. I am going to write my Masters of Business Administration Thesis on CompUSA, since I have the ?inside? scoop from all levels of CompUSA, including the Headquarters (CompUSA Corporate). I kept a Daily Log of names, dates, times and places, since 1990s.
? Posted by David
Posted by david | January 29, 2008 10:54 PM
Digital Audio Outputs (like AES, SPDIF, Coaxial or Optical) on your set- top box or Digital Television Receiver (HDTV) are NOT controllable from the remote control that comes with your cable box. The reason is too technical for this article, but the key take- away is that if you decide to use the digital audio output of your cable box, you will need a universal remote control (that you must configure) to work with your television and your home theater audio system. However, you will get excellent quality...
Posted by flat panel tv mount | May 8, 2008 5:13 AM