As the wireless industry descends on New Orleans for the first time since Hurricane Katrina, device manufacturers are introducing new products at an unprecedented pace. While carriers scramble to predict customer demand, they must also manage an increasing influx of returns and exchanges from those who want to upgrade. These carrier pain points are creating new opportunities for device lifecycle management companies like BrightPoint (CELL), Brighstar, CEVA Logistics (CEVA) and PCS Wireless.
These companies assume inventory risk for carriers by buying devices and managing their distribution into retail channels. “We buy products from Nokia and HTC and Samsung and RIM … and sell at a margin to our channels,” says BrightPoint’s Anurag Gupta, president of the company’s EMEA region. This distribution business accounted for 90% of the company’s revenue last year. But many customers know the company for its complementary logistics business, which helps carriers forecast stock levels and demand, and helps them meet demand by refurbishing returned phones. More than three quarters of the 112 million handsets Brightpoint worked with last year were handled by its logistics business.
No service provider wants to be short-handed when a hot new product launches, but carrying excess inventory can be just as costly. “You have to make sure you have the right quantity,” says Jeff Gower, head of supply chain services for Brightstar. Although Brightstar and BrightPoint have similar names and similar business models, the companies are unrelated. In fact, they compete head-on, offering supply chain services that are increasingly valuable to carriers. “They recognize that profit margins are shrinking and they have to target their customer base much more effectively,” says Gower.
One major difference between these two leaders in the field is manufacturing. Brightstar makes components and devices for OEM and carrier customers, while BrightPoint does not. But BrightPoint recently announced an agreement with Foxconn, the global manufacturer best known for its relationship with Apple. “They are experts in repair and spare parts management,” says BrightPoint’s Gupta. “And what we do best is providing reverse logistics and transportation management services. This combination offers a one-stop shop for carrier customers and OEM partners.”
Another point of distinction: BrightPoint is a public company (CELL) while Brightstar is number 70 on Forbes’ most recent list of the largest private companies, which was based on 2010 revenue. Brightstar’s 2011 revenue was $5.6 billion, and BrightPoint’s was $5.2 billion.
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