So not having a price guarantee makes sense.

But that does beg the question of why have your own store at all if you're not going to compete hard with your own channel.

That's actually the more interesting, question, Lidija. I'd be interested to hear what you and your readers think.

If your go-to-market strategy for the retail channel is heavily dependent on channel partners (i.e. the retailers), why open up a store and compete with them?

Think about this from Microsoft's perspective. Why open the store? If it's not a profit play (which it doesn't sound like it is if they're not going to compete on price), then what is it?

It would be interesting to make this store work with the different resellers/channel partners websites. Corporations and large companies have often difficulties to deal with all their MS licensing and the ESD storage could be extremely attractive, especially if correctly used WITH partners, instead of bypassing them. ESD via the cloud, I would like to see how Amazon and MS are going to work together on this, most probably Amazon will store the software on their own network while MS will keep it on their one.
-Lorenzo

I think that it's obvious that there must be a markte for going direct to customers... otherwise they wouldn't bother doing it. Running a online store isn't easy, so I doubt they'd just throw this up without thinking there would be good ROI.

I'm definitely not their target customer since I always want to buy a product for the cheapest price, so it's usually off to Newegg for me! But my guess is there is a large number of people that would find value in buying from their store just because it's direct from Microsoft.

Setting the pricing issue aside, it is rather neat that they store product keys forever, and allow you to download products for so long. They stated "typically 5 years" (main support time), frankly speaking, I don't think I really need longer than this. I can't rmember the last piece of software I really used beyond 5 years (even including an OS). I guess if I really wanted to, I could download it and burn it to dvd or put it on an external HD to keep forever.

No product keys to lose, no product keys to store, make as many copies as you like and distribute to all your friends.

Das Goat

PS. Since Ms, in their infinite wisdom, "broke" using Hotmail from Linux clients, I am moving away from even using Hotmail, after more than eight years as a user. Good job MS.

From here on out, we shouldn't be suprised when Microsoft finally jumps onboard with any product or service that the rest of the world wants. We also shouldn't be surprised if they try to morph that product/service/goodwill into their own image.

Thank goodness for Google.

Tying this to the other channels--for physical media, for example, to major distributors/wholesalers--you'd be surprised how high the margins are for M$FT products relative to the "real" value-add they deliver.

- agent mulder lives

This has nothing to do with whether there are competing products out there that are "free" like Pengiun Tom tried to point out. Nor does it have to do with whether they are first to market for downloadable software. Who cares if they aren't? I didn't see anywhere were they are claiming that. Again this always seems to be degenrating into a convo about whether MS is an innovator. who cares?!!

This is news more about the fact that Microsoft is going direct to customers which IS news. Microsoft normally uses exclusively OEM and retailers. like bobby said above, if people want to buy direct from Microsoft, then let them. they are selling at MSRP.

If people say that the new iPhone 2.x firmware is news, then this is news also. Seeing as I don't even use an iPhone, I would much rather read about an MS store than about iPhone firmware anyways.

http://www.onlinewebaccounting.com/

So how do you protect the desktop businesses?
Cut spending. Don't pay partners for promotion and advertising.
Can they do that upfront, directly? Not easy.
Can they give a good excuse? Not easy.
But look, there is a recession and M$ needs to cut costs to maintain shareholder value!
So, ESD and the online store.
Who cares what happens to the channels partners?
Do they care for M$? Hardly. This is trading and business, unlike developers, ISVs and VARs.

This is the best time for M$ to do this - they simply claim recession and cost-cutting, to which channels partners will readily agree. But the real reason is to continue the same returns on their desktop businesses while trying out cloud services.
They never reveal how much they spend on channels for promotion, do they? That's a cost that developers or the public typically don't know of.
And the cloud threat from Google/Amazon is something that many channel partners don't expect to succeed wildly. That's because they know a different reality in 'corporate businesses'.
Only analysts,M$ and watchful observers know both.
Sly as ever, M$ stands to win on both counts.
That's how Big Bill got rich - looking for cracks and loopholes - his father runs a prestigious *law* firm, after all.

Now all M$ has to do is regularly ask channel magazines and newspapers to publish some news items about how the channels are in dire straits - like 'the war on terror' and slowly reduce the price because a large volume of end-users are demanding that prices be reduced at the ESD store.

Channels have to realize that the money now is not in Microsoft reseller business, but in open source software support, but only if they stop adhering to trading-only models and start adding actual technical value to new service offerings.
If they cannot do that, they should probably keep their customers away from the internet and M$ ESD, or switch to trading in any other consumer goods - there are enough segments in the electronics/communication/UMPC/mobile verticals for trading to remain profitable if not in margins, at least in volumes.

Channels should read the definition of 'open source' - that they are legally allowed to redistribute the code with modifications and services of their own.

Here's wishing the channels good luck.

- agent mulder lives

http://www.srihit.com/

This is blowing a story way out of proportion, this isn't news at all. This is blown out just because Microsoft does what every other software vendor does now?

No it's typical fodder for Apple/Linux warmongers to chew on, even though it's typical around all individual markets offering online content - to charge more than Amazon and 3rd parties.

I mean, if someone wants something from a company their first thought is to go to their site to get it! MS offers it now, so it only makes the software more accessible.

If people want to penny pinch, they can look on EBay all they want. Microsoft is not competing with Amazon or anyone else as a retailer, they're just offering another source. That's like smiting Apple for selling an OSX Family pack for 199.99 while it's only 135$ on a 3rd party site. Makes no sense.

While you've clearly thought about this, your comment is full of inaccuracies.

ESD via their store is an attractive option for corporate end-users.

Since the MS online store charges full retail price, any corporation that buys from MS online store is paying astronomically higher prices than they get in their volume agreement. In other words, no.

M$ do spend lots of invisible money on promotion, channel partner programs and advertisement. All that money is now saved.

Again, no. Whatever their long-term plans, I guarantee that MS has not simply turned off all their reseller partner programs overnight. And keep in mind, this is just the retail channel, not volume or OEM. The retail channel for MS is TINY compared to volume licensing and OEM.

The idea is simple: To compete with web apps ...oops... i meant 'cloud computing providers' they need to have a cloud service of their own. Which clearly cannibalizes their own desktop business.

This is an online store, not a cloud service.

Channel Analyst - I do hope nobody is paying you for your "analysis".

It does make me wonder whether this is just part one of a long term plan to completely remove the boxed versions – well, one day. I agree with Bobby – they clearly have put much thought into this. But as usual, it’s tricky to guess what motivates them.

Lorenzo, interesting point. I guess time will tell whether they plan work with resellers, clearly you’d think they would have to.

Bobby, thank you. That is very true; they really couldn’t price it lower than their resellers. I too am not part of their target market, like you I look for the best price, but certainly there will be people who prefer to buy it direct from the company. I have to admit, I like the idea of them keeping the keys; if I’m at a pc what better way to quickly access them – saves me rummaging through the CD collection ;)

Penguin Tom, of course :)

Roy – Alas, whether we like it or not, Microsoft is still very relevant, and I suspect will be for a long time.

Das Goat – I don’t know; I keep waiting for Billy to pull the magic something out of his sleeve 

Agent Mulder – I noticed that; much of the information in the store is already on their site – but there are a lot of folk that only know/trust MS, but as I expect they are not typical of the folks here, they may need a very definitive way of finding the product. The MS site is simply huge – and unfortunately a little tricky to navigate for some.

Fred – very nicely said and very much appreciated. Thank you.

Channel Analyst – thank you for taking the time to put so much down. My only question is – do they really need to protect their desktop business? Maybe right now and for a few more years, but after that, I suspect most people will be used to buying online

Beautiful girl – sorry, but we have to agree to disagree on this one. I think Microsoft still has a way to go.

Hunny – I think they do care about partners; that’s exactly why the pricing varies so much.

As far as I can tell, the Microsoft Store isn't cannot be used by customers outside the US. Obviously, Microsoft had to make it like this, as their product pricing varies from country to country, but will there be MS Stores for non-US customers as well? Or, are we talking Zune Marketplace here?

The Microsoft Store USA site launched, but they already have international stores in United Kingdom, Korea and Germany. They said they are launching it in Netherlands, Spain and France "very soon".