Updated! Best Buy is putting its money where its mouth is — to the tune of $800 million cash — with the planned purchase of Jitterbug parent GreatCall.
The San Diego-based MVNO provides cellphones, medical-alert devices and mobile plans for some 900,000 paying seniors, and represents a major buildout of Best Buy’s remote-monitoring services strategy.
The plan is part of the retailer’s next-phase growth blueprint dubbed Best Buy 2020, which emphasizes in-home and subscription-based services to broaden its portfolio, tap into connected-home technologies, leverage its Geek Squad expertise and further differentiate it from online-only competitors.
Best Buy turned its attention to aging Americans and their millennial caregivers last year with a home monitoring pilot called Assured Living, which has since been expanded to 21 major markets.
“We know technology can improve the quality of life of the aging population and those who care for them,” said Best Buy chairman/CEO Hubert Joly in making the acquisition announcement. “Now, we have a great opportunity to serve the needs of these customers by combining GreatCall’s expertise with Best Buy’s unique merchandising, marketing, sales and services capabilities.”
Looking ahead, he added that Best Buy is “excited by the opportunities we have in the health space and the strengths we can bring to bear in this area, especially our experience with technology and serving customers in their home.”
There are currently some 50 million Americans over age 65, the company noted, and that number is expected to increase by more than 50 percent within the next 20 years.
Under terms of the deal, GreatCall would keep its CEO, David Inns, and maintain its San Diego headquarters and care centers in Carlsbad, Calif., and Reno, Nev.
Inns, an executive board member of the Consumer Technology Association (CTA), helped grow GreatCall from a startup in 2006 to a 1,000-plus-employee business with over $300 million in annual revenue. He described the merger as “an incredibly powerful partnership.”
Analyst reaction, as collected by Seeking Alpha, was laudatory. “It gives Best Buy a relevant service, driven by technology, that it can offer to consumers,” noted GlobalData Research. “In our view, it also helps counterbalance the pressure on both sales growth and margins of electronics products.”
Added Clavis Insight’s chief marketing officer Danny Silverman, “When you consider that Best Buy is facing the same big box obsolescence threat that many others have lost to Amazon, it’s interesting to see Best Buy shifting their strategy from pure retail, to services and devices.”
Indeed, in its official news announcement, Best Buy updated its nomenclature from retailer to “technology products and services provider.”
The acquisition is subject to regulatory approvals but is expected to close by November.