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Best Buy Goes Beyond Notebooks

Faced with trying to find a new way to boost PC-based revenue, Best Buy will implement a new potential revenue maker, infomercials, through its vpr Matrix house brand computer line.

With the launch of its newest vpr Matrix notebook computer, the 200A5, Best Buy has the ability to place what amount to four-minute infomercials on the hard drive. The vpr Matrix notebook, and upcoming desktops, have a new button on the keyboard that launches a tutorial on the product, said Steven Lee, Best Buy’s VP for strategic development. However, vpr has the ability to offer this tutorial space to other vendors looking to hype their product. Selling product placements in the tutorial is also a possibility, Lee said, adding that the tutorial also will help limit returns.

“As a retailer we are concerned about returns and the help button launches an actual video to help customers,” he said. The ability to launch these videos opens the door to several other possibilities, he added.

The tutorials are placed on the hard drive during the manufacturing process, but in the future vpr will make others available on its Web site for consumers to download when they wish to learn about other aspects of the notebook or other products. Best Buy has created a team to develop the videos and the plan is to change the original video about every 30 days. Upcoming models of vpr Matrix desktop PCs will add the help/infomercial button.

Best Buy is not going to depend on vendor-placed videos as its primary profit center for the computer line. “We will make sure the hardware is profitable on its own, and this will be a separate revenue stream,” Lee said.

Despite being Best Buy’s house brand, vpr Matrix is managed as a separate division and must compete with the other PC makers to the point that its offices were moved out of Best Buy’s headquarters so it would not have any extra influence, said Lee. The vpr line is also operated so it does not outperform sales of products from other vendors.

“We are here to offer another alternative to the customer. We have to be very careful on sales. When they get too hot we must dial it back,” Lee said.

However, the company is considering offering its products in areas that would not directly compete with Best Buy’s customers, such as corporations.

Others product areas catching the eye of the vpr designers are music, digital imaging and networking. Lee would not say if products in these categories are forthcoming, but all of them fit into Best Buy’s overall corporate strategy. The retailer’s weekly advertising circular is now organized by category, not products, and the chain is testing home networking installation in stores in Dallas and Minneapolis.

The new notebook that is kicking off this effort is also the first that is fully designed by vpr Matrix. The first few offerings introduced earlier this year were simply white boxes bought under an OEM arrangement with the vpr Matrix name slapped on. But the 200A5 and all subsequent vpr products will be designed by an in-house engineering team, Lee said. The notebook has a 15.2-inch display with a 3:2 wide-aspect ratio and a new 24-bit audio card developed by the vpr team. It is powered by an Intel Pentium 4 2GHz processor, has 512MB of RAM, two USB 2.0 ports and two 1394 ports. Lee said this optimizes the notebook for entertainment and business uses by allowing better widescreen movie and spreadsheet viewing.

While the 200A5 is somewhat heavy at 6.2 pounds, this extra weight was dedicated, Lee said, to adding a larger battery, enabling the notebook to play an entire movie without recharging.

The 200A5 is now shipping with a $2,399 suggested retail price.

Again, with an eye toward building profitability into PC sales, Best Buy is extending its computer service offerings with the addition of Computer Alley service centers in its stores. These are located in the middle of the computer department and staffed with trained technicians who can handle upgrades. The Computer Alleys will be retrofitted into about 195 of Best Buy’s existing stores and is included in all new construction.