"This model for convenient, one-stop shopping will allow us to greatly accelerate America's conversion to broadband services," said Bill Gates, Microsoft's chief executive officer, in a statement.
Shares of Tandy Corp., the parent company of RadioShack, rose 4 1/4, or 6.5 percent, to 71 3/8. Microsoft's stock gained 1 7/16 to 88 9/16.
The alliance may help Microsoft expand its Internet presence, with RadioShack showcasing Microsoft products, services and high-speed Internet access. Both dial-up and high-speed MSN services will be available at RadioShack.
Microsoft's $100 million equity investment in the newly launched RadioShack.com will help the site increase its e-commerce offerings. The online store will have "premier placement" across all of MSN -- the Microsoft Network -- and its properties.
RadioShack is the single largest retailer of cellular and PCS phones in the county and, in total, expects to sign up 5 million people this year for wireless, satellite TV and long-distance services, Gates said during a conference call with analysts.
"That's why we reached out to RadioShack as a partner -- in order to make this everyday Web a reality for a broad set of consumers," Gates said.
Along with MSN, the Microsoft store in RadioShack will feature WebTV gear and Windows CE-based hand-held devices. Customers will be able to sign up for narrowband or broadband MSN Internet service and will have access to a version of MSN co-branded with RadioShack.
The launch of the new "store within a store" concept is scheduled for the third quarter of 2000.
Leonard Roberts, chief executive officer of Tandy/RadioShack, said that in Microsoft Tandy has found a "home connectivity partner, offering not just services but innovative technologies as well."
Roberts added during the conference call that the partnership will also bring the company a healthy and recurring stream of revenue.
"This alliance means our (Tandy/RadioShack) customers get great service, Microsoft gets new customers and we get a portion of the monthly fee," Roberts said. "It works out for everyone."
Microsoft stands to gain resources from Tandy's sales force of 25,000 as well.
Microsoft's store is the latest in a series of similar joint alliances by RadioShack, including the RCA Digital Entertainment Center at RadioShack and the Compaq Creative Learning Center. Sprint has a similar relationship with RadioShack.
Apple struck a comparable deal with CompUSA in 1998 to set up kiosks featuring its IMac at CompUSA retail stores.
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