Best Buy's Internet Play Brian Caulfield, 03.27.07, 6:00 PM ET Burlingame, Calif. -
Like dot.com stocks and Razor scooters, Internet service providers are supposed to be a relic of the late 1990s. Just ask Time Warner's America Online, which began life as an ISP and is now ditching the business entirely. So why is consumer electronics giant Best Buy spending $97 million on Speakeasy, a Seattle-based ISP? The answer lies in shift in the big-box retailer's strategy: It wants to sell computers and tech services to small businesses and home offices. It's a surprisingly fragmented market full of small players, and one Best Buy thinks it can muscle its way into. Speakeasy, which began its life as an Internet café before evolving into a DSL service for geeks, now specializes in selling high-speed Internet access to small businesses and home offices. The Richfield, Minn.-based retailer will fold Speakeasy into its Best Buy for Business unit; presumably it will bundle Internet access into its tech sales and support packages. Unlike big companies, who can call on major firms like IBM Global Services to take care of their technology needs, small businesses typically rely on small consulting firms to set up their office networks and configure their PCs, often buying everything from PCs to networking equipment on their client's behalf. Best Buy has been steadily pushing into business services, expanding its Best Buy for Business to more than 250 locations. In October of 2006, Best Buy hired David Hemler, former president of Microsoft Canada, as vice president of sales and operations for the new unit. Branching out could help protect the company from a drop in the prices of expensive television sets, which have helped fuel its growth in recent years. It has already diversified successfully into computer support, via its 2002 acquisition of roving computer help service Geek Squad. But Best Buy doesn't have an unblemished acquisition track record. In 2001, it bought music retailer Musicland for $700 in cash and assumed debt, just as peer-to-peer file swapping services were about to take a huge bite out of the record business. In 2003, Best Buy gave away the chain to an affiliate of Sun Capital after taking $410 million worth of charges against the business. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| ColdFusion MX7 and Flex 2 Build sales & marketing dashboard RIAâs for your business. Upgrade now http://www.adobe.com/products/coldfusion/flex2?sdid=RVJT Archive: http://www.houseoffusion.com/groups/CF-Community/message.cfm/messageid:231535 Subscription: http://www.houseoffusion.com/groups/CF-Community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
