Microsoft and Best Buy In Pact to Open 600 Store Within Stores

Microsoft (NASDAQ: MSFT) and Best Buy (NYSE: BBY) announced Thursday that the two companies have entered a pact to open 600 Windows stores within Best Buy stores across North America. Microsoft will sponsor 500 Windows stores in the U.S. and 100 in Canada.

Stores Within Stores

The companies announced that Microsoft will sponsor 600 Windows exhibitions inside Best Buys ranging from 1,500-2,200 square feet each. The areas will feature Windows products including tablets, PC's, and smartphones as well as Microsoft Office and Xbox.

The partnership will also create about 1,200 jobs across the U.S. and Canada. Microsoft will train the employees specifically on its products and then these employees will be stationed inside the Best Buys. These 1,200 employees would be in addition to the already installed Microsoft experts located within Best Buy stores.

New Business Model?

The Microsoft deal is the second such deal that Best Buy has reached with a major hardware supplier. Best Buy already has a deal with Samsung to host stores within its stores, raising questions whether the approach marks a new business model for Best Buy.

The store within the store model has worked for Apple (NASDAQ: AAPL) at locations such as Target (NYSE: TGT) and Wal-Mart (NYSE: WMT). The model was even a key tenet of Ron Johnson's revival plan at J.C. Penney (NYSE: JCP) before he ran out of time and was fired.

Market Reaction

Markets cheered the news from Best Buy's perspective as shares popped on the news. The stock rose nearly 1 percent to $27.13 although Microsoft shares remained lower after opening weakly.