Carphone spies opportunity to ‘tether’ tablets to mobiles in bid to seize share in fast-growing market
Carphone Warehouse has thrown down a gauntlet to rivals with audacious plans to stage a landgrab in the fast-growing tablet market.
The retailer outlined ambitions to achieve the same market share of the devices, which are quickly attaining must-have status among consumers, as it has in mobile phones.
Carphone, which is part of the Best Buy Europe joint venture with US giant Best Buy, controls about 25% of the mobiles market.
Founder Charles Dunstone said: “The tablet market can either follow the business model of the laptop or of the mobile phone - ie, a connected device with some sort of subsidy attached. We are increasingly confident that it is taking the model of the mobile phone.”
Carphone chief executive Roger Taylor said that the “tethering” of smartphones to tablets - which links the two devices - creates an opportunity. The retailer believes its wireless world store model, carrying a wider range of products and services than its traditional shops, is “ideally suited to offer a wide range of tablets”. At present there are 106 wireless world shops in six markets and by the end of the year there will be between 350 and 400.
Oriel analyst Ben Hunt said tethering of smartphones and tablets would put Carphone “in an ideal position to offer both in one package with the likely effect of pushing more pre-pay customers over to post-pay contracts”.
However, an electricals market insider questioned the extent to which tethering of product will characterise the tablet market and said that data limits on deals might put consumers off.
Electricals group Dixons is the tablet market leader at present and Arden analyst Nick Bubb said Carphone’s tablet hopes seemed “a tad ambitious”.
On Tuesday Carphone reported a 67% rise in group full-year EBIT to £63m.
Best buy boxed in?
Carphone is reviewing the future of its fledgling Best Buy big-box chain, and bosses admitted it is likely to rack up similar losses this year to last - about £60m. The retailer had been expected to reveal a decision on Wednesday but will not now do so for some months because partner Best Buy is also reviewing its US formats. Dunstone said:
“We’re still trying to work out what is the right format for selling consumer electronics in the UK. There’s no point in having a different strategy.” Carphone chief executive Roger Taylor said it would probably cost between £30m and £40m to shut the big boxes.