The idea that hundreds of people would line up outside anything to do with Microsoft would have been far-fetched only a few years ago -- but on Thursday that's what happened when the software giant opened its first retail store in Scottsdale, Arizona.

Around 500 people, some of whom had camped out all night, waited in line for the opening of store the Fashion Square Mall in this upscale city, where they were met with cheers by staff wearing Microsoft T-shirts.

Microsoft has at least partially succeeded in changing opinion about its lack of coolness, helped by positive reviews for its new Windows 7 operating system.

It's a good idea to give consumers a warm and fuzzy (feeling) about using an operating system... It will make consumers feel better about their purchase, said shopper Hafthor Stefansson, an IT consultant who said he uses both Apple and Microsoft systems, as he stood outside the store.

The Scottsdale store is the first of a planned chain of Microsoft-branded stores, aiming to match rival Apple Inc's successful foray into retailing.

It is Microsoft's second bite at the retail business after a short-lived experiment in conjunction with Sony Corp in San Francisco's Metreon Center 10 years ago.

Customers picked over hardware including Xbox 360s, Hewlett-Packard Co and Dell Inc laptops, as well as the Windows 7 operating system, which launched on Thursday.

Microsoft said in February it planned to open stores, hiring a former Wal-Mart Stores Inc executive to run them. A second store is due to open shortly in Orange County, California.

Microsoft may have a way to shed its traditionally dowdy image and emulate Apple's splashy store openings and product launches. For example, when Apple began selling its 3G iPhone in July 2008, thousands of people from all over the world camped outside its stores for days for the chance to buy one.

Microsoft Chief Executive Steve Ballmer said last week that through the stores, the company was looking to make a direct connection with users, showing the customer what you really can do.

TAKING ON APPLE

They're doing exactly what Apple did five years ago -- the concept's a rip off, said James Smith, 31, a taxi driver who turned out for the opening. Microsoft might have come up with a better idea than taking Apple's straight out.

But videographer Erin Phoenix, a long-time Apple user wearing an iPhone T-shirt to the opener, said he thought the result would be good for consumers.

They are kind of copying the concept the Apple Stores have of customer service ... (but) it will also give Apple more competition.

At the nearest Apple Store, several miles away in Phoenix, a few dozen customers browsed computers and applications.

I'm Microsoft free... so it's not of interest, said Jerry Delgado, an IT specialist who sells professional audio and video equipment.

I'm not a Windows user, I'm not an Office user, so they really don't offer anything else that I would buy... I'm satisfied with Apple.

Alyssa Shevlin, who had bought a PowerBook and iPod, also was uninterested in the Microsoft store.

My computer is compatible with my iPod, so I see no need to go over there.

(Reporting by Tim Gaynor; editing by Leslie Gevirtz)

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