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September 27, 2006

Carphone :Sort of like CarToys

Posted by Tricia Duryee at 1:44 PM

When I was at CTIA in LA a couple of weeks ago, a group of wireless executives gushed about a company in London called the Carphone Warehouse during a panel discussion.

At the time, I was picturing a gigantic building, a la Costco, where the staff sold nothing but cellphones and accessories. The feature so beloved by the executives from Helio, Virgin Mobile, Verizon Wireless and others was the amount of time a salesperson would spend with a consumer to discover their needs and match them with the best phone possible.

Turns out that these executives then go to Carphone Warehouse to pick the minds of salespeople to get a sense of what people are willing to pay for when it comes to devices, plans and features.

What's interesting is that Carphone Warehouse said Tuesday that it had reached agreement with Best Buy to introduce a U.S. retail business under the "Best Buy Mobile" brand. In return, Best Buy will introduce a home computing customer service business in the UK under the "Geek Squad" brand.

A move by the largest U.K. mobile retailer (which I now picture more like a Best Buy or maybe a CarToys) to come to this country seems to validates this market. It may really change the way cellphones are sold today.

In large part, people in the U.S. buy phones and plans directly from a carrier, whether it's online, at a kiosk, or a retail store. In other countries, people frequently buy phones and plans separately. In that model, consumers must pay full price for a phone, but then they aren't locked into multi-year agreement.

Quote Carpone Warehouse CEO Charles Dunstone:

The U.S. market is very large but has little retail distribution on the Carphone Warehouse mode. In addition, when we look at the explosion of broadband penetration and home computing, we can easily see why the Geek Squad has been so successful in the States. For either of us to take our expertise into the other's market on our own would be a step into the unknown. Together, the complementary skills of Carphone Warehouse and Best Buy mean we can jointly test out both of these exciting opportunities at low cost, with low risk and little diversion of management time.

Reuters reported that Carphone Warehouse said a trial period for the U.S. retail venture, during which stores would be opened in New York City, was about to get under way. It also expects that the Geek Squad initiative to be launched next year.

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Tricia Duryee
Tricia Duryee
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