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April 09, 2019
Best Buy removes carrier-branded ‘stores-within-stores’ at some locations

Best Buy has removed its carrier-branded stores-within-stores, displays and desks at some locations, according to the latest postpaid report from Wave7 Research.

Jeff Moore, principal analyst at Wave7, told FierceWireless the changes started in mid-March. Wave7 has documented the removal of carrier “pods,” as they are sometimes called, in three stores in various locations across the country. “What we currently do not know is what percent of Best Buy stores have had the change,” Moore said. “We’ve checked six stores in the last few weeks, and three of them had the change.”

Best Buy has removed the large carrier-branded signage and tables for Sprint, Verizon and AT&T at the three locations. Moore said the company appears to be arranging phones by manufacturer, rather than carrier, at the three stores in question. “It’s a major conceptual change, from my perspective,” he said. “There is no major branded presence for postpaid carriers in these Best Buy locations. In the stores that have had the change, you can still activate phones for AT&T, Verizon and Sprint, but the carrier at these stores seems to be an afterthought. The emphasis seems to be on phones, on the OEMs themselves.”

BestBuy May Be Making More Margin Selling Phones vs Activation Fees

We’ve commented in the past that most significant line item of revenue growth for an operator is hardware sales.

Given this development one may conclude that BestBuy (as a proxy for retailers/Operator Dealers) may be making more margin selling hardware vs. the activation fee.

If it turns out the above assumption is correct then this will mark a bottom in terms of pricing of wireless airtime; as BestBuy would seem to be more interested in the hardware revenue streams and associate gross margins.

The USA may be turning into an Open Market region; where retailers such as BestBuy will be onboarding devices that perhaps are not within the traditional operator handset supply chain. Given the price points for hardware from Android manufacturers in China and India; this creates a pretty significant opportunity for BestBuy to bring in their own sources devices make a very substantial gross margin; and have equipment that is considerably cheaper than what an operator would source.

Best Buy removes carrier-branded ‘stores-within-stores’ at some locations