Microsoft Launches Web Store in US, Fundamentally Changes Software Distribution Model

Today Microsoft launched its web store for the United States. It may have also marked the beginning of the end for the contemporary method of distributing software. For nearly two decades the primary way that customers received software — be it an operating system, productivity suite, photo editing tool, etc. — was by going to a store, physical or virtual, and purchasing a CD/DVD which contained the software. The customer would then take the disc home and install it on his or her computer.

Under the new model via its web store, Microsoft is employing a technology called Electronic Software Distribution (ESD), whereby customers are able to immediately download the software they purchased once their transaction has completed. The major benefits of this approach are first and foremost, not having to pay extra money for shipping (or gas if you drive to a physical location), and secondly not having to wait for your package to arrive in the mail.

Microsoft has alleviated the most common fear of customers which is not having a physical disc of the software by allowing purchasers to re-download the product until mainstream support for the product ends — which is generally around five years.

Obviously from a Microsoft perspective this is a great move as it allows them to more directly interact with their customers while resolving some of the common, frustrating barriers of software distribution. Where it hurts is with the distributors and partners that Microsoft has formed strong relationships with over the past 10-20 years. These companies that have been selling Microsoft software and helping to expand the brand on a global level are essentially getting left out in the cold. Companies like Best Buy and Staples that sell a lot of Microsoft software could be facing a noticeable loss of revenue. Even if the profit margins on the Microsoft software weren’t that high to begin with, they’ll now be losing out on secondary purchases made by customers while they were in the store shopping for Microsoft software.