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Apple looks to Best Buy to boost iPhone's reach

The plan to sell the 3G through the big retailer may signify an end to shortages.

August 14, 2008|Michelle Quinn and Alana Semuels | Times Staff Writers

The pending arrival of the iPhone 3G in Best Buy stores across the country signals that shortages of the Apple Inc. devices are easing, analysts said Wednesday.

Apple and Best Buy Co., the top U.S. electronics retail chain, announced late Tuesday a deal to sell the popular gadget in Best Buy's 970 stores nationwide starting Sept. 7.

The move will put the iPhone for sale in towns and suburbs where it hasn't been available and suggests that Apple is boosting its inventory for the Christmas shopping season.

"Apple wants to really move this product and really create volume for the iPhone," said Charlie Wolf, an analyst with Needham & Co. "I don't think supply is going to be an issue unless demand is off the charts."

The iPhone 3G, which runs on a faster network than the previous iPhone and starts at $199 and $299 with a two-year wireless plan, hit the market July 11. In the first few weeks, Apple and its U.S. wireless partner, AT&T Inc., left many would-be iPhone buyers emptyhanded.

Even now, AT&T says there is a seven- to 10-day wait for people who order an iPhone 3G from its stores. Apple's website advises potential iPhone buyers to check the site after 9 p.m. to see whether their Apple store has phones.

The shortages arose because Apple underestimated demand, analysts said.

Julie Hawkins, 41, wanted to buy an iPhone for a friend last week at the Apple store in Northridge, but lines snaked out the door. When she walked by later, the store had posted a sign saying it was out of iPhones.

But Wednesday, Hawkins, a creative director at a shoe company, tried again and her friend was able to buy the phone at the Beverly Center, which had bins full of the black-and-white iPhone boxes. "I'm surprised they have so many here," she said.

Best Buy, which has experience with hot items such as video game consoles, isn't worried about iPhone shortages, spokesman Jeff Dudash said.

"With a popular item, demand will exceed supply," he said. "We've talked to Apple. We've been told we will have product on our shelves on Sept. 7. We'll do the best we can do."

Until recently, Best Buy wasn't a place most people went for a cellphone. Selection was limited, and the same store clerk gave advice on the new Justin Timberlake CD and a cellphone purchase, Dudash acknowledged.

"Customers hated that," he said.

Two years ago, Richfield, Minn.-based Best Buy partnered with Britain's CarPhone Warehouse to expand its cellphone category and created a store within a store called Best Buy Mobile. Its staff now receives at least 40 hours of training, and every Best Buy store has about 95 handsets for sale on as many as nine carriers, Dudash said.

In the last year, the retailer sold 3.6% of all mobile phones in the U.S., up from less than 2% last year. Its goal is to capture 10% of the U.S. market in the next several years, Dudash said.

Clearly, Best Buy is hoping that by adding the iPhone to its lineup, it will reach its goal.

Best Buy shares gained 47 cents to $45.38. Apple rose $2.57 to $179.30.

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michelle.quinn@latimes.com

alana.semuels@latimes.com

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