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Apple raises retail stakes against Microsoft

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Apple plans to refurbish 100 of its retail stores this year, just as Microsoft prepares its first tentative moves into the bricks-and-mortar sector.

Ron Johnson, Apple's senior vice president of retail, is reported to have said the Cupertino computer consumer-electronics trend-setter will buff up its retail spaces by adding room for more products, increasing space for One to One customer-training offerings, and expanding its Genius Bar help desks by 50 per cent.

Yes, the economy may still be in the midst of the global meltdown, but that doesn't bother Johnson. "We know that a lot of people are cutting back, but we're doing the opposite," he told USA Today. "We're investing in the downturn."

And Apple's retail-store investments have certainly paid off - although when the first stores opened in May 2001, more than a few analysts said they were doomed to failure. Perhaps most famously, the president of research firm Channel Marketing, David Goldstein, told BusinessWeek at the time that: "I give them two years before they're turning out the lights on a very painful and expensive mistake."

Sorry, Dave. It's now been eight years, and Apple has 255 retail stores - 209 in 41 US states, 20 in the UK, nine in Canada, seven in Japan, five in Australia, two in Switzerland, and one each in China, Germany, and Italy.

And there are more to come. According to Johnson, Apple has 25 new stores in the works, including a fourth New York City retail extravaganza, the long-awaited first Paris location, and new stores in Italy and Germany.

Microsoft has been watching Apple's success, and - understandably - wants some of that revenue-generating retail action. However, while Apple is preparing Retail 3.0 (version 2.0, the Apple "mini store," launched in 2004), Microsoft hasn't even released a beta.

As we reported in February of this year, Microsoft has hired Wal-Mart veteran David Porter to head up a retail push. Presumably he's now hard at work figuring our exactly where and when to open Redmond's first real-world retail spots.

Porter has his job cut out for him. Apple has succeeded in large part because it managed to transfer the sleek, hip look-and-feel of its products into an equally sleek and hip series of retail "experiences."

Arguably, Microsoft doesn't have the cachet needed to match Apple's formidable fleet of product-moving, culture-instilling, training-and-support-delivering, 255-and-counting destination-class sites.

It also remains to be seen whether Porter's 25 years at Wal-Mart will enable him to create a series of Microsoft retail destinations more enticing than those of his big-box former employer - or whether Redmond's retail efforts will be more akin to those of Gateway, which abandoned its sadly underperforming stores in 2004.

One thing is clear, though. Even as Microsoft prepares its first forays into the brick-and-mortar world, Apple isn't standing pat. With well over a third of its exisiting stores planned for revenue-enhancing facelifts, Cupertino is set to widen its real-world computer-shopping lead.®

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