Best Buy, a leading US retailer of consumer electronics, computers and software, has announced plans to offer broadband Internet services from several leading vendors at more than 400 retail locations.
The company plans to install interactive displays at its retail locations that will enable consumers to trial high-speed Internet services from The Microsoft Network, Flashcom and Sprint, as well as existing in-store offerings from AT&T Broadband and Hughes Network Systems, the maker of DirecPC satellite systems.
Although other major retailers have been offering broadband Internet access services for the past year, the Best Buy announcement signals the full-fledged entry of broadband technologies into the retail sector, say analysts. Best Buy will offer Digital Subscriber Line (DSL), satellite, and cable and fixed wireless access based on the availability of those technologies around the country. The company will get a percentage of all sales made at its retail outlets.
"This is a good shot in the arm for broadband and something that the market needed," said Jack DaQuano, senior analyst for broadband services at US-based Hurwitz Group. "One of the big problems has been that people don't know what broadband is. And getting to the consumer market for these broadband companies is difficult to do by phone."
"This is putting us where our customers are," said Tracy Baumgartner, a spokesperson for AT&T. To date, AT&T has made only limited product deployments with retailer Circuit City.
"Retail stores have the potential to make themselves a destination spot for broadband services," said Everet Conway, vice president for marketing and product development at Sprint.
Bill Cimino, a spokesman for Circuit City, agreed that the move to retail for broadband vendors is a growing trend. Circuit City began offering broadband cable modems last year. Soon it plans to have agreements in place for services through Cox Communications, Comcast and other vendors. The company has also deployed America Online kiosks in all of its stores, and offers DSL services and interactive television, he said.
"It makes sense for these companies to offer services and products where people are shopping for them," said Cimino. "If you're buying a computer today, you are going to be looking for Internet connectivity. It's a one-stop shopping experience. We can highlight these products, but we can also demonstrate them. Consumers want to be able to see it, feel it and touch it."
Lisa Pierce, vice president and research leader for converged network services at Giga Information Group, said the primary motivation from the service provider's perspective is to expand sales channels through Best Buy's hundreds of retail stores nationwide. But there could be drawbacks for Best Buy, warned Pierce.
"My only concern is that it is one thing to encourage demand when you have your supply chain straight. But, as in the case of DSL availability, you can set expectations inappropriately," said Pierce. "When the customer can't get it, he might be mad at more than the provider."