Best Buy = Bad Deal

One golden rule every VAR and vendor on the planet should remember in this solutions age: Those who live by the price sword die by the price sword. That maxim is being hammered home every day as we witness market troubles from the likes of Best Buy, CompUSA and, of course, direct marketing behemoth Dell.

STEVEN BURKE Can be reached at (781) 839-1221 or via e-mail at sburke@cmp.com.

Let's start with Best Buy, which is being investigated by the Connecticut Attorney General after Hartford Courant columnist George Gombossy detailed the experience of a consumer buying a laptop who found one price online and another at the store. It turns out Best Buy employees were getting the higher prices from an internal Best Buy Web site. There is no surer way to raise the ire of a customer than to advertise a low price and then beg off. It's called bait and switch.

Best Buy has built a huge market in consumer electronics by promoting itself as offering the "best buy" on all makes of digital gear. Best Buy is also attempting to build that same type of story on the services front with its Geek Squad and Magnolia home theater unit. The point is that Best Buy by its very name has positioned itself in the low-price dungeon.

Lenovo and Microsoft are hoping to capture more share without diminishing their brand statures by taking the Best Buy plunge. That is certainly a big stretch when dealing with Microsoft software, which is always a challenge. As for Lenovo, remember that IBM promoted ThinkPad for many years as the Rolls Royce of the laptop set. CompUSA is also feeling the heat, recently disclosing it is closing more

than half of its U.S. stores. Once again, this is a story of a retailer pushing low prices above all else. How many small businesses or consumers think of service when they think of CompUSA? To its credit, CompUSA has launched several initiatives to partner with VARs to support its clients. Best Buy and Dell would be wise to follow CompUSA's lead.

Dell, for its part, has boasted for years that it offers the lowest prices on the latest technology. The computer giant cut its customer service to the bone trying to keep that low-price edge. Now Chairman Michael Dell is frantically attempting to rewrite the story and build a services business. All these players built big businesses promoting low prices. And they all found, including the once-mighty Dell, that a low-price business is ultimately untenable. It goes to show once again that sometimes a best buy is nothing but a bad deal.

What do you think of Best Buy, CompUSA, Dell?
Contact Steven Burke at (781) 839-1221 or via e-mail at sburke@cmp.com.