Microsoft is stepping up the Mac versus PC battles by fighting Apple on its own turf.

The two companies have been running competing Mac Vs. PC ads. And this winter, Microsoft announced that the company would open retail stores similar to Apple’s. Now, the software giant is saying those stores will be right next door to its competitor.

Speaking at the Worldwide Partner Conference this week, Microsoft COO Kevin Turner dropped the news:

“And stay tuned, because we’re going to have some retail stores opened
up that are right next door to Apple stores this fall. Stay
tuned, just stay tuned.”

While a side by side comparison of Apple and Microsoft store design is likely a losing battle for Microsoft, the company is hoping that it can outperform Apple on price. And that strategy has been working well so far.

The company took the bait from Apple after years of being pummelled by the company’s popular Mac vs. PC ads starring Justin Long and John Hodgman which paint Microsoft products as stodgy, buggy and inept. But starting last year, Microsoft started testing out that comparison with its own ads. They hired their own Hodgman look alike, embraced a populist image and launched a series of “PC Hunters” ads. In the ads, Microsoft gives consumers $1000 or $1500 and lets them loose to purchase their own laptops. After oogling Apple’s design, the shoppers go to the Microsoft computer when it comes time to make a purchasing decision.

That’s clearly the reaction that Microsoft is hoping to inspire by placing its stores so close to Apple’s.

Since starting its comparison campaign, Microsoft has grown its PC sales. Meanwhile, Apple has lost marketshare in the first quarter of 2009. Especially in a recession, Microsoft is likely to benefit from a side by side retail comparison.

The ads are working so well that Apple has asked Microsoft to stop running them.

Speaking at the Worldwide Partner Conference, Turner continued:

“And you know why I know they’re working? Because two weeks ago we got a
call from the Apple legal department saying, hey — this is a true
story — saying, “Hey, you need to stop running those ads, we lowered
our prices.” They took like $100 off or something. It was the greatest
single phone call in the history that I’ve ever taken in business.”

This effort is clearly not a comprehensive strategy for Microsoft. But it could be helpful part of the puzzle. And while Macs may have more exciting features and packaging, Microsoft has a lot to gain if customers burned by sticker shock come next door to see them.

Image: TechRadar