MICROSOFT WILL SOON OPEN 'STORE-WITHIN-A-STORE' AT UP TO 7,000 RADIO SHACKS: Companies Form Five-Year Alliance To Sell MSN Web-Access, Other Products To Consumers.

Under a five-year agreement announced late last week between Microsoft Corp. and Radio Shack, the two companies will establish a Microsoft "store within a store" in as many as 7,000 RadioShack locations across the US. Customers will be able to see demonstrations of and sign up for MSN dial-up or broadband Internet access.

As part of the deal, Microsoft will also make a $100 million equity investment in the newly launched RadioShack.com web site to help build it into a leading e-commerce property. The online store will have premier placement across all of MSN and its properties, including the newly launched MSN eShop online shopping service.

The goal is to accelerate adoption rate of narrowband and broadband Internet access using Microsoft products and services, as well as those from Microsoft partners, using RadioShack stores nationwide. RadioShack will showcase a broad range of solutions and services based on Microsoft technologies, including MSN Internet Access, Microsoft WebTV Network services, Windows CE-based handheld devices, MSN mobile solutions and Microsoft home networking. Customers can sign up for narrowband or broadband MSN Internet service and will have access to a version of MSN co-branded with RadioShack.

An aggressive rollout of the new "store within a store" concept is scheduled to begin during the third quarter of 2000 in RadioShack's network of 5,000 company-owned stores and up to 2,000 more RadioShack dealers. Microsoft's store is the latest in a series of similar joint alliances by RadioShack, including the RCA Digital Entertainment Center, the Compaq Creative Learning Center and the Sprint Store.

Both companies say they will make "substantial" contributions to joint marketing efforts over the life of the agreement, beginning with a jointly funded consumer marketing launch late next year. Microsoft will also fund the initial store fixturing, in addition to planned updates to the Microsoft "store within a store" at up to 7,000 RadioShack locations.

Microsoft, in conjunction with NorthPoint Communications Inc., which has relationships with both companies, will provide broadband access to all RadioShack company-owned stores at no cost. About half of the stores are expected to use digital subscriber line (DSL) services from NorthPoint, with Microsoft arranging for the remaining high-speed connections.

RadioShack will also be a major advertiser on the MSN network and will occupy one of the top spots on the MSN eShop online shopping service site. RadioShack.com will also adopt the Microsoft Passport electronic "wallet" automated authentication and wallet technology.