RadioShack Stores Pump MSN with Kiosks

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New York-RadioShack Corp. and Microsoft Corp. last week unveiled new interactive retail kiosks designed to sell broadband Internet services to a nationwide, mass-market audience.

With financial help from Microsoft, the nationwide consumer-electronics retailer has installed Microsoft Internet Centers in over 5,800 of its stores, so would-be users can test-drive Microsoft's MSN Internet service.

More than half of those Radio-Shack stores are also wired for high-speed access, either through a digital-subscriber line provided by Northpoint Communications Group Inc. or via satellite by StarBand Communications Inc., formerly Gilat-to-Home.

At a press conference here, RadioShack chairman Leonard Roberts predicted the retailer would give details of its cable-modem service plans before the end of the year. Ultimately, the retailer plans to sell four high-speed options: DSL, satellite, cable and fixed wireless.

Most consumers are not yet likely to have all four of these high-speed technologies available to them. But RadioShack wants to provide a high-speed alternative in markets where DSL is not yet offered.

Three years from now, Roberts predicted, RadioShack's high-speed customers would likely be split between DSL (40 percent), cable modems (40 percent) and satellite (20 percent). In the shorter term, however, he believes satellite will see a bigger share.

Roberts told reporters that RadioShack and the cable industry are already allies, and the retailer has already started to test cable-modem sales in some markets.

RadioShack wants to wait until it signs strategic-marketing agreements with the top seven or so MSOs before it starts promoting cable-modem availability on a nationwide basis, Roberts said.

Revenue-sharing disputes aren't holding up the cable announcements, Roberts insisted. "That was last year's issue," he said.

TAKING A CUT

Top retailers such as RadioShack are demanding a cut from the ongoing revenues generated by ISPs or other service providers they promote, whether they sell digital cable, direct-broadcast satellite, pagers or wireless phones.

"We will earn recurring revenues from the ongoing Internet usage of every online customer we sign up," Roberts said. "It's no secret we love these recurring revenues."

At present, RadioShack earns recurring revenues from 5 million customers across its various telecommunications services, RadioShack chief operating officer Dave Edmondson said.

Those recurring revenues will generate $100 million "in pure profits" for the retailer this year, said Roberts.

Microsoft has also made friends among the different Internet distribution platforms, through such moves as its significant financial investments in cable operators. The software titan takes a platform-agnostic view of broadband, said Micro-soft group vice president of personal services and devices Rick Belluzzo.

Consumers will come to appreciate both the speed and the "always-on" features of broadband-Internet service, Belluzzo said. What's held the technology back has been what he called "the whole experience," from the sale of the service to its installation and customer support.

"Customers need fast installation," Belluzzo said. "They need their expectations met throughout the whole process."

Last year, RadioShack purchased a customer-installation network from AmeriLink, which provides the retailer with 2,000 service trucks across the country.

Backed by funding from Microsoft, RadioShack late last month began an aggressive advertising campaign to promote the new Internet kiosks. The chain is running television spots featuring its long-running spokescouple, actress Teri Hatcher and ex-football player Howie Long, and will add newspaper flyers and direct-mail components to the campaign in October.

The MSN promotional effort will be extended at least through the holiday selling season.

FREE SCANNERS

To draw more consumers to its stores, RadioShack is offering free Cue: Cat scanners that can use information from electronic print-ad bar codes to take online users directly to an advertiser's Web site.

The retailer is also offering a $400 shopping spree to first-time MSN dial-up customers, as well as free installation and equipment incentives worth about $400 to select customers who upgrade to MSN High-Speed over DSL. The service sells for $39.95 a month.

The StarBand Internet-over-satellite offering will be available at RadioShack sometime in November. Initially, the retailer will only sell the StarBand high-speed service when bundled with a new Compaq personal computer, likely to retail for about $1,000, RadioShack executives said.

RadioShack has no plans to offer a combination StarBand and Dish Network DBS system, said Roberts, who emphasized that the retailer does not have a relationship with EchoStar Communications Corp.

For consumers who prefer to get their video and Internet services through one satellite system, RadioShack plans to offer a bundled DirecTV Inc. and DirecPC two-way broadband service after it's available later this year, Roberts said.

Today, about one-third of the RadioShack stores wired for a high-speed demonstration employ DSL connections, and the other two-thirds use StarBand satellite equipment.

An interactive demonstration allows shoppers to compare the relative speed of dial-up and broadband connections, and also demonstrates video applications that wouldn't be practical on a dial-up line.

On-site sales staff can punch in a customer's address and phone number to determine if the high-speed products are available in their area.

Many cable systems across the country have struck retail partnerships to promote their high-speed Internet services. National cable ISPs such as Excite@Home Corp. have relationships with large retailers such as CompUSA Inc.

But few retailers have the sheer reach of RadioShack, which boasts a store within a five-minute drive of 94 percent of the U.S. population.

"We get one million people in our stores every single day," Roberts said. "That's not hits on the Internet-that's real, live people."

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