Microsoft Online Store May Drive Another Nail in Retail Coffin

The days of buying packaged software loaded onto CDs are numbered. Thursday, Microsoft quietly drove another nail into the coffin of packaged software by launching the Microsoft Store on the Web. After testing the software download store in Europe and Korea, Microsoft opened up its U.S. version Thursday.

The store sells all Microsoft software from Office to Xbox 360 games. Instead of shipping the software in the mail, you download it over the Web. Just like you can download apps directly to your iPhone from the iTunes App Store, the Microsoft Store takes the same approach for its own PC and server software. (It does not distribute mobile apps or software made by other companies).

CEO Steve Ballmer hinted this would happen last week. But the company did not make a big deal about today’s launch, perhaps not wanting to alienate any of its retail distribution partners. . Microsoft program manager Trevin Chow put out the word on his personal blog, explaining the benefits of Electronic Software Distribution (ESD):

You pay for an ESD product just like you would for one that would be physically shipped to you. The big difference is that after your payment is confirmed, you can immediately download the product to your computer and install it right away. There is no longer any need to pay for shipping costs and waiting for the big brown truck to drive across the country. You’ll be able to enjoy your software almost immediately – all it takes is the download time of the product, which will vary depending on the size of the digital download.

The obvious fear for most users buying ESD products is not having the software on physical media to re-install the product at a later time. Microsoft Store solves this by letting you re-download the product until mainstream support for the product ends. Typically this is 5 years after the product is released. You always have the option of copying the downloaded products to physical media if you want to have it available longer than the mainstream support lifetime.

The store also sells Microsoft peripherals such as Xbox 360 consoles, computer mice and keyboards (those need to be shipped).

Original post

Comments

[JWG:]

Eric S wrote: "You always have the option of copying the downloaded products to physical media if you want to have it available longer than the mainstream support lifetime."

Well... no, you probably won't ALWAYS have that option.

As soon as the ESD model is established and customers have no remaining alternatives, it is in the interests of vendors to take that option away, which they can easily do. Just make the installer a bootstrap program that interacts with their download server. This is already widely done, even where the software is free, for convenience' sake (java.sun.com for example). But then you can't re-install without their server, where they can establish their toll booth if desired.

2008 Nov 14 11:22 AM

[Jolly_Rancher:]

Seems like Microsoft is a decade behind in this.

2008 Nov 14 11:25 AM

[Josh Thompson:]

the prices appears to be the full suggested retail price. that is sticker shock.

2008 Nov 14 11:27 AM

[jack dee:]

Wake up kids.

MSFT not setting up this shop to compete with suppliers or to some how trick you.

They are simply making it easy for the odd punter who wishes to get a piece of software now and not bother going to the store.

They make the software and as such should not sell below MSRP. Or at least only do so for promos.

MSFT is not 10 years behind on this, they provide much of the tech people having been using to sell downloads for years, so again, think like a big boy.

It is a pretty small deal.

2008 Nov 14 01:24 PM

[daveborn:]

Intraware (ITRA) does this type of thing, though they do more ESDM. Too bad they have bounced along the rocky shore of profitability for a number of years, and are now selling themselves for a crap price. Ah well.

2008 Nov 14 01:55 PM