Tandy’s five-year ISP pact with Microsoft completes a critical piece of chairman Len Roberts’ home connectivity strategy for RadioShack.
Following a pattern Roberts established with Sprint, Compaq and RCA, the software giant will pay for the rollout of some 7,000 Microsoft shops that will begin appearing in RadioShack stores next summer. From that vantage, the new partners will sell a broad range of Microsoft services, including dial-up and broadband Internet access, WebTV, home networking and wireless applications.
“We actually found a home connectivity partner, offering not just services but innovative technologies as well,” said Roberts, who is repositioning RadioShack as “America’s Home Connectivity Store.”
Laying the groundwork for that transition was the acquisition of AmeriLink, a national installer of cable, telephony and high-bandwidth products, plus earlier agreements with Sprint for its multi-phone and high-speed Internet access lines, and NorthPoint Communications for DSL service.
As part of the latest deal, Microsoft will make a $100 million equity investment in Tandy’s new online arm, radioshack.com, and give the e-commerce site prominent placement across all of MSN and its properties.
Microsoft also holds an equity position in Thomson Multimedia, parent of Thomson Consumer Electronics, which forged a five-year A/V alliance with Tandy last spring.
Like the run-off between RCA and Sony for most-favored A/V brand status at RadioShack, Microsoft reportedly had gone toe to toe with AOL for Tandy’s ISP business.
Microsoft chairman Bill Gates noted that, through its alliance with RadioShack, “We’re reaching customers in a new way, giving them a unique opportunity to experience and obtain online solutions. This model for convenient, one-stop shopping will allow us to greatly accelerate America’s conversion to broadband services.”
Roberts said separately that the Microsoft deal will boost Tandy’s recurring revenue stream from subscriber fees of $60 million this year to $250 million by 2004.
Also see:
Tandy, Thomson Sign In-Store Deal
24-May-1999
