Best Buy prepares for Windows 8 release with deals, demos

The consumer-electronics retailer is hoping to capitalize on the launch of Windows 8. It's trying to lure customers with exclusive computers and staffers trained to explain and demonstrate the new operating system from Microsoft Corp.

Retailers and manufacturers typically look to major launches to drive customers into stores. But analysts aren't certain how much the Windows 8 launch will help Best Buy. The company has been struggling with tough competition and a shift in consumer tastes away from big-ticket computers and TVs toward smartphones and tablets, which are less profitable for retailers.

Windows 8 has a new look that's intended to create a seamless experience for users, whether they're on PCs, tablets or smartphones. Featuring a colorful array of tiles that fill the screen instead of the familiar start menu and icons, it's designed especially for touch-sensitive screens. Windows 8 will come pre-installed on almost all new PCs.

Best Buy Co. spent three years coming up with a plan for the launch, according to Jason Bonfig, vice president for computing at Best Buy.

That includes two years of developing 45 exclusive Windows 8 computers and laptops designed with manufacturers such as Hewlett-Packard Co. and AsusTek Computer Inc. Nearly half of those computers feature touch screens.

They will have combinations of colors and technical specifications available only at Best Buy retail stores and its website. Some examples of exclusives include Lenovo's 13-inch IdeaPad Yoga, which flips into several different configurations, and HP's Envy Touch, a more conventional touch-screen laptop. Each will sell for $1,000. Best Buy will also carry a wide range of non-exclusive Windows products, including tablets and smartphones.

Microsoft's radical remake of Windows arrives at a time when Best Buy is struggling to avoid the fate of Circuit City, which liquidated in 2009. Best Buy has reported a net income decline or loss for the past eight quarters. Earnings fell 90 percent to $12 million in its most recent quarter, hurt by restructuring charges and weak sales.

The Minneapolis company hopes the new Windows will spur sales as it faces tough competition from online retailers and discounters. Consumers are increasingly using Best Buy stores to browse for electronics before they buy the items online at lower prices, a practice known as showrooming.

Exclusive products are one way traditional brick-and-mortar stores are battling showrooming.

Another is customer service. To that end, Best Buy spent 50,000 hours training its staff members to show customers the ins and outs of Windows 8, as it's very different from its predecessors. Windows 8 is the biggest Windows revamp since Windows 95.

In addition, its Geek Squad technical service staff created 12 two-minute tutorials available online, each explaining a different feature of Windows 8.

"The demo experience becomes very, very important because of newness of touch feature," Bonfig said.

Morningstar analyst R.J. Hottovy's expectations are muted in terms of how much Best Buy will benefit from the launch. He believes Windows 8 "might give a temporary lift to sales, but longer term it doesn't solve any of the real issues facing the company," he said.

Barclays analyst Alan Rifkin crunched numbers on past Windows launches and found they did not provide a significant boost to retailers.

"While our research reveals that personal computer demand has been uniformly weak in the two to three quarters preceding a Windows release, historical Windows releases have not been identified as significant drivers of improved (retailer) performance once the launch has taken place," he wrote in a note last week.

Best Buy sounded more positive. The retailer started taking advance orders for Windows 8 devices and demonstrating the product in all stores on Sunday, and so far the response has been positive, Bonfig said.