Reply to post: Re: They are making profits of over £100m...

Phones 4u slips into administration after EE cuts ties with Brit mobe retailer

Michael Jennings

Re: They are making profits of over £100m...

There is a class of middle-men (Carphone Warehouse, Phones 4U, Buymobiles etc) that exist between the mobile networks and many of their customers. These retailers are very expensive for the mobile networks, the networks have always resented their existence and have always thought that the profits being made by these people are rightfully theirs. The trouble is that many customers keep using the third party retailers rather than the mobile networks own direct sales businesses. This is because of the astounding level of incompetence of the networks' own in-house retail businesses. The networks are unaware of the level of their own incompetence at retail, which has made this very hard for them to fix. (Phones 4 U are pretty awful themselves, so their continued existence kind of baffles me, but they and the other third party retailers are providing *something* that the networks themselves are not).

It has always been inevitable that the networks would at some point squeeze out the third party retailers by simply refusing to do business with them. This explains Carphone Warehouse's attempts over the last few years to transform itself into a general consumer electronics retail business, variously by stocking other products in its shops (remember when they were full of laptops?), doing an ultimately disastrous deal with Best Buy, and ultimately through a merger with Dixons/Currys/PC World. I am not sure that this means better service for customers - in fact I am pretty sure it means worse - but that's where we are.

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