Fictionwise may also receive earn out payments for achieving certain performance targets over the next two years, the Fortune 500 company that operates 799 bookstores in 50 states said in a statement.

After the deal, Barnes & Noble, which plans to launch an e-Bookstore later this year, intends to keep Fictionwise as a separate business unit and founders, Steve and Scott Pendergrast, will continue to operate the business.

The world’s largest software company, which also makes the Xbox video game console and the Zune digital music player, did not say how many stores it was looking to open, or when, or which of its products would be on sale.

That is to be decided by David Porter, a former DreamWorks Animation executive, which Microsoft named as its new vice president of retail stores.

Turner, a former Wal-Mart Stores Inc manager, will report to Microsoft chief operating officer Kevin Turner.

The long-rumored move to open stores comes as consumer spending is under severe pressure due to the recession, which has already pushed electronics chain Circuit City into bankruptcy. A similar attempt by computer maker Gateway to open its own stores some years ago was not successful.

Microsoft, bruised by the poor reception of its latest Vista operating system, is facing increased competition from Apple, which is eating into the personal computer market and dominates the personal digital music player market with its iPod line.

Apple’s stylish stores, now numbering more than 200 worldwide, have been crucial in attracting customers in recent years.