BrightPoint Diversifying Into New Communications Categories

Plainfield, Ind.— Cellular-phone distributor and logistics company BrightPoint continued to diversify with the recent announcements that it will distribute RTX America's VoIP cordless-phone system and Skype's VoIP services.

Earlier this year, BrightPoint became a master agent to market and support Vonage VoIP service plans, devices and customer activations, and it began distributing Wi-Fi networking equipment for the first time when it entered a distribution agreement with Belkin.

In another diversification move, BrightPoint said it would begin in the fourth quarter to offer prepaid content such as cellphone ringtone downloads and games in the United States.

As part of the diversification effort, the company also intends to distribute satellite-radio products later this year.

BrightPoint is diversifying for multiple reasons, executives told TWICE. One is to become a one-stop communications provider to major retailers and to tier-two and tier-three cellular carriers. Another is to target new channels such as Wi-Fi hot-spot operators, college bookstores and phone and cable companies operating in secondary and tertiary markets. Another new distribution channel includes value-added resellers and systems integrators who can target enterprises with more complete communications solutions, the company said.

Just as important, BrightPoint contends its expanded product offerings will help independent cellular specialty stores transform themselves into value-added communications specialty stores by offering Wi-Fi networking, landline VoIP products and satellite radio.

In another effort to expand distribution channels, BrightPoint wants to use camera phones as a way to boost camera stores' share of the cellphone market. "With camera functionality, there's more opportunity for the channel," said David Brown, advanced wireless services division VP.

In outlining diversification's potential for BrightPoint and the industry, Brown noted that Skype's PC-based VoIP products and services could be marketed through hot-spot operators such as Starbucks, through college stores and through cable and DSL operators.

BrightPoint will also take Wi-Fi and VoIP equipment to national and independent retailers. "We expect national retailers to offer more shelf space to WLAN and VoIP," Brown said. The Belkin Wi-Fi agreement, however, calls only for distribution to independents.

As a distributor and as a logistics provider, BrightPoint claims to "touch" 17 percent to 19 percent of all handsets sold in the United States. About 70 percent of its unit volume comes from providing logistics services to tier one, two and three carriers and to Mobile Virtual Network Operators (MVNOs). The services include phone programming, packaging and inventory management of phones purchased by the carriers and by MVNOs from manufacturers and delivered to BrightPoint on a consignment basis for shipment to customers, including mass retailers.

Another 30 percent comes from two-step distribution of handsets to tier two and three carriers, and dealer agents, and from its master agent operation, which supplies independent dealers with phones and manages the dealers' relationships with carriers.

BrightPoint also distributes cellular accessories to dealers and mass retailers.