Best Buy becomes first independent iPhone retailer in the United States

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By: switchtoamac at: 12:28 AM on August 13, 2008 | Comments (0)
U.S. retail chain Best Buy Co. has announced that it will start selling the Apple iPhone 3G on Sunday September 7.  Best Buy is the first U.S. retail chain authorized to sell the device outside of Apple retail and AT&T stores.  Best Buy operates as a specialty retailer of consumer electronics and related merchandise.
An expanded retail footprint
The deal with Best Buy gives Apple more than 970 additional outlets to reach customers.  Best Buy is one of the top technology retail chains in the United States and recently rebranded its cellphone department as Best Buy Mobile following a two-year revamp.  Shawn Score, president of Best Buy Mobile states:

"We had a lot of work to do, obviously, to get in a position where Apple and AT&T would feel good about Best Buy Mobile carrying it, and that's what we've done in the last 18 months,"

The relationship between Apple and Best Buy appears to be strengthened by this deal as the retailer already serves as an Apple Authorized Reseller for Apple Macintosh computers and iPod players.  Approximately 600 Best Buy stores have so called "In-store Apple stores" with dedicated Apple displays, computers, and other products within the computer departments.

Commentary - Strategic move by Apple
Best Buy Mobile has recently seen its share of the cellphone reseller market share rise by 80 percent over the past year, as it currently owns 3.6 percent share up from last years 2 percent.

The timing, scope, and size of the deal cannot be understated.   Apple, AT&T, and Best Buy have strategically created this deal ahead of the 2008 holiday shopping season.  The iPhone 3G will be available at over 3175 retail locations starting September 7 and the deal increases the number of retail locations in the United States by approximately 45 percent.  Best Buy accounts for over 20% of the retail electronics market in the United States.

We believe that this deal argues against iPhone 3G shortages this holiday season as Best Buy would likely have secured an adequate supply of iPhone units as a condition of entering into this venture.  Why would a retailer such as Best Buy enter into this agreement and then find itself with no iPhones to offer customers?  It's just not going to happen.  Best Buy's position as a top retailer that captures a significant share of consumer electronics traffic will serve to drive iPhone sales this holiday season.  I expect that this deal will further fuel the popularity of the iPhone because it will expose more customers to the device, specifically those shoppers who do not visit Apple or AT&T retail locations.

10 million iPhones target to bite the dust
This expanded distribution channel will help Apple surpass their 10 million iPhone target by the end of 2008.   I expect the iPhone 3G to be one of the hottest gadgets this holiday season as a result of this deal.

Gift Card Purchases?
What I'd like to know is will Apple and Best Buy allow the iPhone to be purchased with gift cards.  If so, expect iPhone sales to spike soon after December 25 as buyers who received Best Buy gift cards over the holidays will redeem them for iPhones.

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