RadioShack stores will begin displaying the Microsoft Internet Center, an in-store kiosk peddling the software giant's MSN Web services. As part of the deal, Microsoft will also begin selling MSN High Speed, a broadband service that bundles MSN with digital subscriber line (DSL) or satellite Internet access.
The move comes roughly one year after the two companies formed a surprise alliance to promote high-speed Internet connections and other services to revitalize Microsoft's Web strategy and boost RadioShack's revenues.
NorthPoint Communications will provide DSL service for $39.95 a month, while StarBand will provide satellite service for $59.95 a month and $299 for a dish setup with a one-year commitment. MSN High Speed will include MSN Explorer, Microsoft's newly unveiled Internet service that integrates its Internet Explorer browser with its free Web email service Hotmail, MSN Messenger and Windows Media player.
The incarnation of its deal with RadioShack marks another attempt by Microsoft to attract prospective new Internet users onto its services. Microsoft over the years has taken many stabs at turning MSN into an Internet leader, but has fallen short of overthrowing America Online's reign. But in typical Microsoft form, the company has poured more money into its online efforts and will continue to re-tweak its strategies until it gets it right.
The deal also offers a peek at how Microsoft is beginning to package its broadband efforts together. Microsoft is essentially tying its relationship with two broadband companies to its Internet services and showing them off through RadioShack. Microsoft has stakes in NorthPoint and Gilat Satellite Networks the two companies offering broadband service to RadioShack customers.
With the RadioShack deal, Microsoft has targeted one of the most pervasive retail chains in the country as ground zero in its Internet campaign. The software giant hopes its high speed displays will dazzle shoppers enough to either subscribe to dial-up MSN Internet Access service, or to become potential broadband subscribers.
"Our strong alliance with RadioShack is an important first step in our comprehensive broadband offering," Rick Belluzzo, group vice president at Microsoft, and head of its Internet efforts, said in a statement.
Microsoft will begin linking up all of RadioShack's stores to broadband connections by the end of the year. However, the service cannot promise the same for many consumers interested in DSL. NorthPoint currently services 22 million households in 38 states across the country, according to Alan Alper, an analyst at Gomez. That's a far cry from ubiquity, and makes it difficult for many RadioShack shoppers to get the high speed service they want.
More importantly, questions remain as to whether RadioShack customers are looking for broadband in the first place. The store known for selling inexpensive electronics goods has lured many cell phone and computer shoppers with its in-store marketing deals with Sprint PCS and Compaq Computer. But Gomez' Alper remains skeptical that shoppers will be on the hunt for a fatter Internet pipe.
"I'm not so sure that the RadioShack customer base is thinking about high-speed access yet," said Alper.
Nonetheless, the RadioShack promotions may give additional exposure to other Microsoft products, including its interactive television service, WebTV, and Windows CE-based handheld devices.