Did Apple Just Make Best Buy a Better Buy?

Best Buy was left for dead in the wake of the move to e-commerce, but it has defied its detractors and is now a go-to place for broken iPhone screens. Things are looking up.

Danny Vena
Danny Vena
Jun 22, 2017 at 4:48PM
Technology and Telecom

The ubiquitous nature of the Apple Inc.'s (NASDAQ:AAPL) iPhone is well known, with more than a billion sold worldwide. If you need to get your cracked screen repaired, however, your options become much more limited. The best option is an Apple retail store, which will provide authorized repairs, but these come with increasingly long waits. You can mail your phone to Apple, but that process can take days or even weeks. You can also take your chances with a mom-and-pop shop, or the kiosk at the mall, but if the vendor damages the phone, it can void your warranty. These options leave a lot to be desired.

A report by Reuters reveals that iPhone owners will soon have a new option to repair their damaged phone. Apple will be deploying its renowned Horizon repair machine to 400 partner repair centers in 25 countries. The machine was largely the thing of rumor and legend until recently, and Apple had not even acknowledged its existence until now. One of the first partners to receive the machines will be big-box electronics store and longtime Apple partner Best Buy Co., Inc. (NYSE:BBY)

A young couple in a consumer-electronics store shops for a TV.

Best Buy has been leveraging its partnership with Apple. Image source: Getty Images.


Best Buy has long leveraged its connections to Apple to gain competitive advantage, and this move will add to its resume. Two years ago, the company redesigned the majority of its locations with its store-within-a-store concept, highlighting Apple products and featuring Apple-approved displays. It was also the first non-Apple retailer to offer the Apple Watch upon its release. Best Buy's position as an Apple Authorized Service Provider and a seller of Apple Care and Apple Care+ gives consumers another venue for all things Apple -- and it also accepts Apple Pay. Having the Horizon machine and adding screen repair to its repertoire will give consumers yet another reason to visit its stores.

For several years, Best Buy has battled the perception that it isn't long for this world. Competition from online retailer Amazon.com, Inc. (NASDAQ:AMZN) led to the demise of big-box electronics store Circuit City in 2009, and hhgregg earlier this year. The advent of e-commerce led to the phenomenon of showrooming, the practice of window-shopping and trying out products in a physical store before buying them for a lower price online.

Back from the dead

Best Buy fought back by reinventing itself in the face of adversity. It matched Amazon's and other competitors' prices, offered same-day pickup at its stores for online orders, and invested heavily in its e-commerce capabilities. Best Buy states that 70% of the U.S. population lives within 15 minutes of one of its stores, and half of all online orders are now picked up or shipped from a store. 

In its most recent quarter, Best Buy reported a better-than-expected 1.6% revenue increase over the prior-year quarter, but the headline was the nearly 23% increase in online sales year over year. Eliminating a one-time settlement that occurred in the prior-year quarter, earnings per share grew 40%. Investors were pleased, and the stock jumped 21% on the news to an all-time high.

The company has also moved to reduce its share count, announcing a new $5 billion share-repurchase authorization, with $3 billion expected to be completed over the next two years. 

A Best Buy storefront, including the store logo.

Best Buy is back from the dead. Image source: Best Buy.

Ulterior motives?

Apple's move may not be completely altruistic, as a number of states have been considering "right to repair" legislation. Bills have been introduced in New York, Massachusetts, Tennessee, Illinois, Minnesota, Nebraska, Kansas, and Wyoming that would require Apple and others to publish repair manuals and sell diagnostic software, tools, and spare parts to consumers and independent repair shops, something it doesn't do now.

Apple has opposed these efforts, arguing that it would expose proprietary technology and trade secrets, making it easier for hackers to access personal information. Apple also asserts that this is the only way the company can control the quality of the repairs. Opponents argue that by controlling the technology, Apple can charge much more for repairs than independent shops.

In any case, this recent move is a win-win for consumers and for Best Buy.

Best Buy a better buy?

Things are certainly looking up for the electronics retailer. It recently increased its guidance, expecting to grow revenue by 2.5% for 2017. The move by Apple to include Best Buy in the distribution plan for its Horizon machines gives iPhone owners just one more reason to shop there. Best Buy has pulled off what many thought impossible, and the reports of its death have been greatly exaggerated. Its turnaround has been nothing short of spectacular, and it's in a better position now than it has been in years.