Count me as one of the surprised ones when the news broken late yesterday that Bell would be The Source By Circuit City's White Knight.
Now I would have been even more surprised if it was Microsoft, but that is another story.
When you look at this story it will have all the elements of a great drama. Bell plays the hero. The Source is the damsel in distress. The poor economy is the bad guy. At stake is the livelihoods of employees at 750 retail outlets across Canada. And, Bell rescues them all.
Not to make light of this because I do believe that Bell is a White Knight here. However, make no mistake that this also has the making of a very sound business deal. The Source exclusively carriers Rogers cellular products. That deal runs through to the end of this year according to a source. Since this deal will become official sometime in the third quarter of this year and the fact that The Source will be run independently from Bell I think they will honour the contract and live with the fact they will be selling competitive products for a few months.
But after that Bell/The Source will be saying sayonara to Rogers. This deal is a blow to Rogers' retail strategy. I am not sure how much revenue it generated from The Source outlets, but 750 stores most in malls with heavy foot and eye traffic has to make a dent in sales.
If you look inside most major malls in Canada today you will fine a Bell World store, a Bell Mobility kiosk of some kind, Wireless Wave, The Phone Booth and now The Source all offering Bell products and services. This to me looks like a surround and smother type of strategy.
We must also keep in mind that there will be more competition coming soon from companies such as DAVE Wireless, Globellive Communications and Public Mobile. By acquiring The Source, Bell basically blocks those vendors from gaining a foothold in at least the mall marketplace.
Finally I also think it will help Bell with its Solo Mobile offering out west. What do you think? Let me know.
One quick hit before I go. Bruce Claflin, the much maligned CEO of 3Com, is now the chairman of the board of directors for AMD. Claflin replaces Hector Ruiz, who retired from AMD’s Board in conjunction with assuming the position of chairman of the board of The Foundry Company.
Also from AMD, its board appointed Waleed Al Mokarrab to the board of directors. Al Mokarrab is COO of Mubadala Development Company.