Almost overshadowed by the launch of its new operating system Windows 7, Microsoft's other big news Friday was the debut of its new retail concept. 

The Seattle-based computer giant is banking on its new retail stores - set to become a global chain - to take some of the edge of rival Apple, whose sales to consumers who have a choice of hardware and operating system are starting to make heavy inroads into Microsoft's bottom line.

Microsoft this week reported a profit dip of 18 per cent against the background of a US recession. Apple, recession-proof thanks to the iPhone especially, announced a 47 per cent increase over the same quarter.

Microsoft's first retail store opened in Scottsdale, Arizona. It said the store was designed to give shoppers "a chance to experience the best of Microsoft and its partners".

"The store offers customers a select line of laptops, netbooks, all-in-one PCs, Xbox consoles, Windows Mobile phones and one of the largest selections of third-party software titles in any store."

A second store will open October 29, in Mission Viejo, California.

“Our customers have told us they want choice, better value and great service when shopping for technology, and that is what we will deliver through our Microsoft stores,” said David Porter, corporate vice president of Microsoft Retail, in a media statement.

Porter, a 27-year veteran of the retail industry, was hired by Microsoft in February to lead the effort.

Opening a retail store is a major step for Microsoft, and is the latest in a series of initiatives to engage more directly with customers and improve the experience of purchasing and using Microsoft-based technology.

Porter says the design of the stores is uniquely Microsoft, with four “zones” that focus on different types of technology experiences. “We want to showcase what’s possible with the full Microsoft brand.”

The store's layout clearly takes some inspiration from Apple, one of the world's highest trading retailers on a square footage basis.

Laptops are displayed on large cedar tables are front and center, with seating so shoppers can sit and try out the gadgets on display. The walls are lined with giant LCD screens that envelop the space with landscapes and product images designed to create interest and spark curiosity. Below the images, stylish all-in-one PCs are set up with Zunes, Xbox consoles, headphones and widescreen displays, demonstrating how all the items work together to create a multimedia experience.

Toward the back of the store are laptop bags and an array of software titles before you turn the corner and reach a veritable bonanza for Xbox enthusiasts — a gaming zone featuring a 94-inch widescreen, with seating and an array of controllers to play with.

Store manager Cheryl Hibbard, every detail of the Scottsdale space has been designed to facilitate interaction among customers, the technology, and the store’s highly trained staff.

“Our employees will be able to showcase our products in a way that’s never been done before,” Hibbard says. “Our job in the retail stores is to provide a welcoming environment where everyone can learn more about our products and how to use them to benefit their life.”

According to Hibbard, the store design and experience is centered on three core principles: elevating customer choice, providing more value and delivering great service.

“In the area of choice, the product assortment in the store represents the best, newest and most popular consumer products,” she says. “The Microsoft Stores also celebrate personal choice and preference, and so the service offerings in the stores let people express their individual style through technology — inside and out.”

Hibbard says that while having an array of the latest devices from a variety of manufacturers is important, customers will also be able to personalize and customize their computers, Xbox consoles, Zunes and other devices with external “skins,” through a partnership with an outside company called Skin-It.

“If you want to have Disney characters on your laptop or an NFL team on your Xbox, we’ll build a nice library of licensed products that you can use, or you also can bring in a picture of your dog or your family and make it custom,” she says.

Another personalisation feature for customers is the ability to create an original ring tone for their Windows phone. The store is set up with Microsoft Surface tables that make creating a ring tone as easy as selecting a theme and “drawing” the tone, then sending it to your phone.

“Surface can also be used to compare cell phone rate plans,” Hibbard says. “The possibilities are virtually endless and the best part is it’s free.”

More important than skins and ring tones, says Hibbard, is the ability to customise devices from the inside, so the experience of using them is just the way customers want.

Once a PC is purchased, store employees will offer a 15-minute session to help customers set up their passwords and networks, and tailor their browser, e-mail and other applications to their personal preferences.

Hibbard says the setup session is a key element of providing superior service.

“Customers can launch their computer from hibernate the minute they take it home,” she says. “With this set-up session, we’re taking the typical ‘ready to assemble’ PC ownership experience to ‘ready to run’.”

Another differentiator for the store, says Microsoft, is its commitment to showcasing the best products available on the Microsoft platform. "With so many suppliers creating new hardware, cutting-edge laptops, PCs, monitors and other devices, one ongoing mission of the Microsoft Store will be to find the latest and greatest products for display."

“Once we open the first stores and people see what we’re about in terms of showcasing the choice, highlighting the value and providing a full service experience for customers, I believe the supplier base is going to want to make some investments and figure out how what they can move into the store,” says Porter.

Porter says the company understands that won’t happen overnight and thinks that Microsoft can take a long view and build on what the company thinks is a solid plan.

“Retail is an interesting business,” he says. “In retail you’re never finished. There’s always a new item. There’s always a better way. We can always improve service. So let’s get better tomorrow. That’s what Microsoft retail will be. It will be better tomorrow than it is today, and it will steadily make progress every single day.”