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Connect is Disconnecting – Another MVNO Closes its Doors

by James Brehm 30. April 2012 09:47

The US market has been one of struggle not success for MVNOs and today’s announcement by consumer electronics giant BestBuy is another sign that you better have a bullet proof business model , compelling value proposition, or targeted demographic to get into the space.

Subscribers to Connect, BestBuy’s 2-year-old private-label broadband mobile phone service have but 35 days left to hear a dial tone because on June 1, 2012 the operation will cease. BestBuy management announced that while a strategic decision had been made to get out of the business, they don’t want to alienate customers. Current customers will be given the choice of a gift card or to transfer to a new technologically compatible service.

I’m not quite sure why BestBuy made the move to private-label a service. The offering made little business sense in light of BestBuy’s strategic move to offer devices and services from multiple vendors and service providers in a store-within-a-store model in each of its retail establishments. Why compete against your partners? Why capture the OPEX overhead of a private-label service? And why confuse your customers?

After 2 years, untold capital, and with just 11,000 customers to show for it, BestBuy’s decision comes just two weeks after announcing Brian Dunn was stepping down as CEO. While the company’s statement on Dunn’s resignation mentioned personal conduct issues rather than operational or financial issues, Connect’s performance combined with the performance of BestBuy’s stock indicates the necessity for change. We believe that BestBuy’s customers will be better served by focusing on being the best retailer in the consumer electronics space and by offering access to the widest possible variety of devices and service offerings under one roof.

 

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James Brehm is a Geek, Technology Evangelist, Analyst, Consultant, and Senior Strategist at Compass Intelligence. Brehm is a frequent contributor to CNBC’s Closing Bell and is regularly quoted by media outlets such as the Hearst Corporation, RCR Wireless, The eCommerce Times, and Wireless Week. Brehm leads M2M, IoT, and connected device research and custom consulting projects, represents Compass Intelligence at industry events and is a frequent speaker at industry gatherings on such topics as: M2M communications and the internet of things (IoT), 4G, VoIP, next-generation mobile infrastructure, cloud computing, mobile applications, mobile commerce, the security and compliance of web applications, emerging wireless devices and vertical market deployment of Web-enabled services. You can contact James at jbrehm@compassintelligence.com or follow him on twitter at:http://www.twitter.com/jamesbrehm

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