Is Brick-and-Mortar the Next Big Thing For Big Tech?

Joseph is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Apple (NASDAQ: AAPL) pioneered it. The retail store that has become iconic and synonymous with the iPad, iPhone, or whatever iGadget you want. Apple's CEO, Tim Cook, likes these stores so much that he describes them as an equivalent to "Prozac." Heck, I would too if they averaged $50 million in revenue each for my company last year. The Apple Store has been wildly successful, with about 400 stores in operation in 12 different countries-- with plans to expand with over 30 more this year. Apple blazed the path and successfully merged technology with retail stores to help ascend the throne as the (until recently) largest company in the world. Is it any wonder others want in on the action?

You're a mac, I'm a PC...

And then came Microsoft (NASDAQ: MSFT). It shouldn't be any surprise that Microsoft wants in on the action, seeing how successful the Apple Stores are, and considering they opted for the first time to produce a tablet in-house. The Surface RT and Surface Pro need a home, and the Microsoft stores are the perfect place to showcase them. The success of the Microsoft stores has been hotly debated by opposing factions-- as has the success of Windows 8 and the Surface models-- but they seem to be picking up steam. Some of the stores also look eerily familiar (albeit a little less sterile looking):

<img src="/media/images/user_14543/microsoft-store-_large.jpg" />

Apparently there are only 29 Microsoft Stores open nationwide, but an expansion is also coming: with the company planning on opening 11 more this year. And why not? Microsoft is desperately trying to make its presence felt in mobile, and physical stores where customers can come and actually get their hands on new products shouldn't hurt. The company can also focus on their overall ecosystem, which is slowly being glued together. Things like the Windows phone, the Xbox, Ultrabooks, and Office connected together gives the company a reputable ecosystem-- one that is hard to duplicate.

Is imitation flattery? Or is three a crowd?

There's a rumor going around town that Google (NASDAQ: GOOG) may want a piece of the brick-and-mortar pie. Dan Farber, a contributor for CNET, thinks that:

"[I]n light of Apple's retail success and Microsoft's major retail push, Google could be compelled to make a large- scale, brick-and-mortar investment." 

Since many carriers do not offer the newest Google product, the Nexus 4 (which runs on Android), this would also make sense. The company could start pushing their highly-demanded products themselves just like Apple, and as of recently, Microsoft. Rumor has it that Google will roll out its first stores by the 2013 holiday season, with most of them being located in major metropolitan areas. With the "Google Glass" project also coming, it seems that retail stores make sense- especially as a way for the company to showcase its innovative (and possibly game-changing) augmented reality product as well.

The bottom line

Apple started the trend and capitalized in a major way from it. Microsoft is playing copycat and following them, which isn't a bad thing for Microsoft-- and may even prove to be a success. If Google follows suit, we as consumers may be able to pick between the three stores at our local malls, and if it gets to that point it seems that the superior ecosystems (or the ecosystem that caters to the individual consumer) will be the deciding factor.

Each company is unique-- Apple has the "cool" image and is known for quality, Microsoft's strengths (as of now) are seen in its enterprise offerings and Xbox, with Google selling plenty of Android gadgets that are quickly taking over the market for mobile. Similarly, investing in these companies is unique: Apple is so cheap that it has become a value play (trading at only around 9 times forward earnings), Microsoft is a safe play for yield (at a little over 3%), and Google still appears to be a good growth play. All three companies serve their unique purpose to the consumer, just like all three can help fill an unique need in your portfolio.


Jharry1 owns shares of Microsoft. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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