Brightpoint aims to stay ahead of wireless pack: Phone distributor looks to focus on add-on devices

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If Brightpoint Inc. wants to keep its place at the top of the cell phone distribution business, its leaders know they can’t expect to rest on their laurels.

That’s why the Plainfield-based company hired mobile industry veteran Bashar Nejdawi to spearhead an effort to expand Brightpoint’s so-called mobile enhancement business, selling add-ons that enhance a phone’s functionality, such as hands-free devices, battery chargers, phone cases and software.

The company already offers such accessories, but has not seen substantial success outside the United States, said Mark Howell, cochief operating officer. Brightpoint’s August acquisition of European rival Dangaard Telecom A/S gives the company a foothold there and will make it easier to market such products globally.

“Being in the handset side, we have a responsibility to be a leader on the accessory side,” he said.

Historically, Brightpoint has struggled to make a mark in that realm because of the devices’ low selling prices. Now, accessories such as Bluetooth earpieces and the accompanying software often sell for more than the phone itself.

With revenue of $4.4 billion in 2006, the combined Brightpoint/Dangaard is more than twice as big as its next-largest competitor. The company does not release sales data for specific products, but executive Anurag Gupta said accessories make up a small percentage of the total.

“That’s why we’ve put the focus here,” he said.

Brightpoint’s new focus also will help accessory manufacturers such as Nokia and Motorola increase their market share, forming partnerships to access additional distribution outlets in Latin America, Europe and Asia, Gupta said.

“We will develop alternate channels [for distribution], we will align ourselves better with manufacturers, and we will provide support for products,” said Gupta, senior vice president for global strategy.

Founded in 1989, Brightpoint has made a name for itself in mobile phone distribution and logistics. The company buys products in bulk from manufacturers and distributes them to retailers. It also offers a variety of logistics services, including loading applications onto phones, packaging products, and storing them.

Applying its cell phone expertise to the accessories business could be lucrative for both Brightpoint and its suppliers.

“Brightpoint can drive the costs out of the mobile enhancement supply chain,” Gupta said.

Gartner Research analyst Tuong H. Nguyen said Brightpoint’s latest move will help it maintain its position as the world’s largest wireless phone distributor.

“This just adds to their overall portfolio,” said Nguyen, senior analyst of mobile devices at the Stamford, Conn.-based firm. “I think it’s a more holistic approach to the … services they already offer. I would say [mobile enhancement] is the next step for them.”

Although accessories will be a small part of Brightpoint’s total revenue base, the product line presents a strong growth opportunity for the company, said Mike Walkley, senior research analyst at Piper Jaffrey and Co. in Minneapolis.

“Brightpoint has got a strong distribution channel, so adding new accessories makes a lot of sense,” he said. “We look at this as a positive in terms of taking advantage of the assets they have in place.”

The move could help Brightpoint’s shares rally after dropping 29 percent since their 52-week high of $18.28 in November, Walkley said. It also could help Brightpoint avoid financial woes that have affected companies such as Motorola, which reported an 84-percent drop in fourth-quarter profit, to $100 million from $623 million.

“Brightpoint is down with the overall tech [industry], but we view their current business as solid and expect strong December … results,” he said.

Although Brightpoint’s focus on accessories is expected to increase revenue, it’s unclear by how much. Company leaders also don’t know whether they’ll have to hire more workers, since Nejdawi is still working on the business plan. Brightpoint employs 3,300 workers worldwide, including 900 in central Indiana.

“If the business plan supports new hires, we’ll certainly support more,” Gupta said. “[Nejdawi] can leverage existing infrastructure or employees, or he can hire new people to help run the business.”

Nejdawi came to Brightpoint from Motorola, where he worked on global marketing and distribution. The position gave him the opportunity to work directly with Brightpoint.

“He has experience on a global basis,” said Brightpoint’s Howell. “He has good relationships with Brightpoint leadership around the world, and he’s someone I’ve known and worked with for years that I think the world of.”

Brightpoint started work on the new business line Jan 28. Nejdawi, who lives in Chicago, has been working from both home and the company’s Plainfield office.

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