Microsoft is teaming up with Best Buy to promote machines with its latest Windows 8 operating system as the software maker and electronics retailer try to combat the worst personal computer slump on record.

Microsoft is setting up its own Windows stores inside 500 Best Buy outlets in the United States and 100 in Canada, the companies said in a statement Thursday. Other Microsoft products including the Windows Phone and Xbox gaming machine will also be featured as part of the alliance.

Windows 8, an overhaul of Microsoft's flagship operating system released in October to appeal to mobile users, has failed to reignite the ailing PC market, where shipments plummeted by their largest margin on record in the latest quarter, according to research firm IDC. Best Buy, the world's largest consumer-electronics retailer, posted an $81-million first-quarter loss amid mounting online competition.

Microsoft follows Samsung Electronics Co. in striking an agreement with Best Buy. Hubert Joly, the retailer's chief executive, is working to lure more customers to his more than 1,000 U.S. locations amid rising competition from Inc. and other Web rivals.

In April, Samsung started opening mini-stores in Best Buy outlets staffed by its own employees with expertise to demonstrate new features of its devices such as the Galaxy S4 phone.

Earlier this year, Best Buy made permanent its holiday policy of matching Internet competitors' prices, cutting down on "showrooming" by consumers who visit the retailer's outlets and buy items cheaper online later, Joly said.

Samsung is spending a portion of its marketing budget to generate traffic to Best Buy stores, he told analysts last month.

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While Microsoft has sold more than 100 million licenses to use Windows 8, the product has failed to gain more than a few percentage points of market share in the tablet computers and as customers avoid purchasing notebook machines in favor of handheld devices like Apple's iPad and machines made by Amazon and Samsung.