Late breaking news: Microsoft (NASDAQ MSFT) announces plans to open a chain of company branded retail stores throughout the U.S. and around the world. I can see it now, “Ladies and gentlemen, we are proud to announce our new ambassador to Microsoft…”

According to Microsoft, the goal of these stores is to “create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy.”

Excuse me, but this is coming from Microsoft? How many years have they been around, 25 or so? You’d think they’d have already heard what Windows users want: an operating system that works as it was promised to work. I can only imagine the lines at these stores when they open. Not lines to get in, no, lines at the technical assistance cubicle.

It’s interesting that the man in charge of opening these stores by Microsoft is a former Wal-Mart (NYSE WMT) executive. Imagine the new marketing slogans. “Get Windows…we always give you less!”

The opening of the stores is reportedly going to be timed to the release of Microsoft’s “new” operating system, Windows 7. A product reminiscent of the way Vistas hit the marketplace. It seems that whenever a particular Microsoft operating system runs afoul of public opinion, interest is redirected to another new operating system that is promised will solve all the problems of the previous operating system.

As I think about it, I actually can feel myself getting angry over this whole thing. If you understand the marketing of retail products, the success of any item hitting the marketplace is tied to two things: marketing and markup.

I must give Microsoft the edge in marketing. They are the very best at the old “carrot on a string” approach. They have always been able to tie our desire for a better, more intuitive system, into their marketing. Who can argue with a marketing machine that promises the world and delivers Rhode Island?

It’s the second mark of success - markup, that gives me pause. Simply put, for the first time, I come face to face with just how much money Microsoft must be making from every single operating system software we buy. Think about this… There must be obscene markups if they can afford to open retail stores.

You’d think that Microsoft would have learned from Apple’s (NASDAQ AAPL) attempt at going retail in the neighborhood. For any number of reasons, it simply didn’t work. Oh sure, it was great for the branding of the product, it just didn’t make much money. But then again, Apple didn’t have the resources of Microsoft.
Selling Windows 7 based on a Wal-Mart model may just work out. I for one wouldn’t bet against it.