For Mort Rosenthal, that represents an opportunity. Rosenthal, the founder of Corporate Software, at one point the world's largest PC software distributor, with more than $1 billion in sales, wants to take the legwork -- and complexity -- out of selecting a cell phone and plan. His idea: Create a nationwide chain of one-stop retail outlets for all your wireless needs.
BUYERS' FRUSTRATION. Unlike most of today's cellular resellers, which offer only a handful of plans, his new outfit, called imo (short for independent mobile) and based in Waltham, Mass., will sell all of the U.S. carriers' plans and phones in one store. Each imo will be modeled in part after Apple electronics stores. Best of all, it will charge the same prices as the carriers do at their own outlets, says Rosenthal, CEO of the reseller.
Rosenthal, 51, has nursed his retail idea ever since he left Corporate Software, which was eventually sold to Level 3 Communications (LVLT
) in 1998. "Every time I've purchased a wireless phone, I've experienced frustration," he says.
Highland Capital Partners is betting that lots of other people have been similarly frustrated. While Rosenthal won't say how much funding he's received from Highland already, he notes, "There's plenty of money to open up the [first few] stores." He adds that Highland plans to pump more money into the business.
GOING NATIONWIDE. In fact, Highland partner and Staples founder Tom Stemberg is on imo's board and is actively involved in mapping out the company's retail strategy. Rosenthal met Stemberg years ago, when they had the same VC backing their previous ventures.
The plan is to roll out two to three stores in 2005, then take the business nationwide within a few years, says Rosenthal, who spoke with BusinessWeek Online reporter Olga Kharif. Following are edited excerpts of the interview.
Q: How will imo differ from other cellular resellers and from what the carriers offer through their own stores?
A: Our tagline is, "It's your call." We carry everything: All calling plans and phones from all the carriers. So it's really about selection. We'll charge the same prices as carriers.
And we provide the tools for you to make the choice. For example, the one thing that nobody offers and we will offer is detailed wireless-coverage maps. You'll be able to see whether you're covered by a carrier in your home and office and where your dead spots are. We're doing the drive tests ourselves.
Q: What will your stores look like?
A: We'll have three major areas. One, we call the "bar" area. In a bar-like setting, you can sit down and make comparisons between major carriers on a computer screen. The software is built so that no matter what question you're trying to ask, it's very easy to get an answer. The questions can be, "How much can $49 a month buy me?" Or "which carrier has the best coverage in my area?" Or "I use a BlackBerry. What's the best price for unlimited data service?"
Then, you can ask one of our store associates, which we call "bartenders," to give you the phones to play with.
Q: And the other two areas?
A: Then, there's "the explorer" area, the part that will look like the Apple store. We will have three or four educational modules, about 10 feet each. One might be on wireless e-mail. It might have a BlackBerry, a Treo, and a Windows Mobile device [for you to play with] and offer comparisons on how all three of them do wireless e-mail.
Those areas will change every few months. They might highlight music phones or new mobile video phones. Basically, they'll offer a glimpse of what the wireless world might look like some time from now.
And the third area is the "learn" area. While you wait for your phone to be activated, we'll teach you how to use your phone: enter contacts, configure your e-mail, download ringtones and games.
Q: All of this is predicated on having extremely knowledgeable salespeople, isn't it?
A: Well, actually, we're spending a lot on computer systems. Salespeople have to know how to get the information, which they'll have access to. They don't have to have all the information in their head.
Q: Which retailers are you modeling the experience after?
A: We're trying to emulate attributes of many retailers: The expertise that exists in the Apple stores, the high level of service that exists at Nordstrom, and then there's Starbucks, a place where you're comfortable hanging out.
Q: It sounds like your business will be costly to run?
A: Absolutely. We're trying to build a valuable brand for the customer. We want the customers to come back to the imo store every time they need something new. We want them to recommend us to their friends and neighbors because of the quality of the service. We actually heard one non-U.S. carrier talk about their relationship with the customer as "Line up. Sign up. Shut up." We're very different. We want a long-term, lifetime relationship with the customer.
Q: Building a brand is expensive. Do you have that kind of money?
A: Highland Capital is our only investment partner today. They're a $2 billion private equity firm. And there are other firms who are quite interested in what we're doing. I think that if we're delivering the value to customers, then money follows.
Q: What's your store rollout plan?
A: This fall, we will open between two to four stores in Boston and Columbus, Ohio. Once we get that right, we will, as quickly as possible, enter multiple markets. Our goal is to be national in a relatively few number of years.
Q: As you open the stores, are you concerned about an emergence of copycats?
A: We're obviously concerned about copycats. But this idea is relatively easy to copy on a conceptual basis and not so easy on a practical basis. It's hard to establish relationships with the carriers. It's hard to build information systems like ours, which are proprietary. Even to run such a transaction across all carriers is not trivial. This takes very high quality execution, and we expect to execute extremely well.
Q: If the stores take off, what impact do you think the concept will have on the wireless industry?
A: I'd like to think that us and, presumably, some successful copycat, will increase customer satisfaction with wireless service. Markets [outside of the U.S.] where there are better retailers have much higher cell-phone penetration than the U.S.
Q: If such wireless retailers are to succeed, wouldn't that also make the industry a lot more competitive?
A: How could it be any more competitive? You go to a mall, and there are multiple cell-phone outlets from every carrier. Our stores will simply allow that competition to be played out on a level playing field.