Best Buy, the nation's largest standalone retailer of electronics, added another piece to its growing service portfolio on Tuesday, when it announced the purchase of the Seattle-based Speakeasy, a provider of broadband voice, data, and I.T. services.
In a published statement, the companies said that Best Buy will pay approximately $97 million for Speakeasy, and that the deal is expected to close in first quarter 2008. Speakeasy reported a customer base of 40,000 and earnings of roughly $80 million in 2006.
Speakeasy was launched in 1994 as one of the country's first Internet cafes, and has since grown into a well-known provider of Voice over Internet Protocol (VoIP) services. It currently has about 300 employees, and will become a subsidiary of Best Buy.
Ken Dulaney, vice president and distinguished analyst at Gartner, said that the acquisition of Speakeasy is an attempt by Best Buy to move beyond one-time purchases. "Best Buy is looking for ways to add recurring revenue streams to its financial picture," he said. "In that sense, it's similar to the company's 2002 purchase of Geek Squad, which they've since added to all their stores across the country."
Focus on Small Businesses
According to the two companies, a primary goal of the purchase is to enhance Best Buy's growing "Best Buy for Business" unit.
"Best Buy For Business is all about helping small businesses grow or operate more efficiently through technology," said Darren Jackson, Best Buy executive vice president and CFO. "By joining forces with Speakeasy, a company with a true passion for helping entrepreneurs run their businesses, we are making technology more accessible to small businesses by creating a single source for their I.T. needs."
Speakeasy's CEO, Bruce Chatterly, echoed Jackson's sentiments.
"By joining with Best Buy For Business," Chatterly said, "we aim to become the champion for small business I.T. and communications solutions, simplifying technology, making it accessible, and improving business performance."
Strength of VoIP Market Uncertain
Over the past several years, VoIP has become an increasingly viable alternative to landline-based communications, but there is still some question about how successful it will prove to be.
Dulaney agreed that there are several advantages to VoIP communications, most notably the ease of checking messages online, forwarding calls to others as e-mail attachments, and so forth. He also said that as companies begin designing phones specifically for VoIP use, some useful new features might appear, such as the ability of the Verizon VoIP phone to constantly display the local weather on the handset when not in use.
"There's no question," he said, "that VoIP is a mature technology. I just don't think that it's quite as successful economically as people expected it to be."
"The market penetration of VoIP is being countered by a number of factors, most notably the number of people using their cell phone as their main means of communication," Dulaney added. "I think that there are more factors affecting the market than the VoIP people anticipated."