In 2007, over 75 millions Americans purchased a mobile phone from a carrier-owned store, while roughly 5.5 million bought their handsets from a consumer electronics or other retail chain. That's quite an imbalance. But as networks open up and many handsets are sold in an "unlocked" state, does it make sense for carriers like AT&T, Inc. (NYSE: T) and Sprint Nextel Corp. (NYSE: S) to continue to operate their own retail stores?After all, if the exclusivity of certain handsets is no longer the domain of a certain wireless carrier, why operate an expensive chain of national retail stores that compete with the fast-and-furious retailers like Best Buy, Inc. (NYSE: BBY) and Radio Shack Corp. (NYSE: RSH)? Although AT&T and Verizon Wireless won most of the licenses at a recently-completed FCC auction, one possibility that emerged from the auctions itself was the promise of being able to use non-carrier cellphones on any network which is technically compatible. For example, one could buy a Sprint Nextel phone and use it on Verizon's network.
Does this kind of move erase any incentive for carriers to continue operating expensive retail stores across the U.S.? That is the question retailers like Best Buy would like answered, as the largest consumer electronics chain in the U.S. would like to up its mobile phone sales market share from 2% now into the double digits within five years. Financially, it may make more sense for the large wireless carriers to eventually exit the retail business and let the mega retailer -- which has better overall selling efficiency anyway -- handle phone sales. It's already ramping up Best Buy Mobile, so the strategy may be underway anyway.
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