At roughly the same time that ex-NEC sales bod Charles Dunstone dipped his toe into mobile phone retail working out of his flat on London’s Marylebone Road, Mark Finlayson (pictured), ex-double glazing salesman, lorry driver and employee of Ringwood-based Cell Call was in the process of setting up his own shop on the outskirts of Southampton.
And so it came to pass; Carphone Warehouse and Next Communications were born and trading within months of each other.
Finlayson can remember meeting Dunstone some two years previously, in 1986. The occasion was a photoshoot at London Bridge. Finlayson was assisting his father Graham, one of the country’s most celebrated photojournalists who had been commissioned by Time magazine.
Dunstone duly appeared on the set with some NEC mobile hardware for use as props in the shoot.
Fast-forward a couple of years and Dunstone had ditched NEC to found Carphone Warehouse with David Ross whilst Finlayson had swapped the role of photographer’s assistant for the brave new world of mobile.
Back in the day, the market was small, but perfectly formed. It consisted of high net worth individuals and businesses content to shell out £1,995 plus VAT for a hand portable or phone with fixed car kit.
Models like the Motorola 8000X ruled the roost, call charges were 25p a minute with a £25 monthly line rental and dealers actually made money on hardware.
Recalls Finlayson: “We focused on business from day one. And we were in profit almost immediately. The break-even sales target to cover all overheads including salaries during the first year was 11 handsets a month.”
As time went on, margins got even better and airtime providers like Martin Dawes started paying £90 a connection. Then came the ongoing revenue model, invented (Finlayson believes) by Philips, with which Next Communications had already developed a relationship.
The early 1990s saw the advent of affordable phones for the masses and a dichotomy in the market. At that time, Next looked seriously at leaving its B2B roots and placing its eggs in the retail basket.
“We did feasibility studies,” says Finlayson. “But I never liked the high street model. I’m not, by nature, a retailer. I’ve always been comfortable selling to business users. Even though the high street in 1995 was much less crowded than it is now, I remember working out that a city centre presence would cost us upwards of £100,000 a year before we paid any staff.
“And with networks that could and often did exercise their contractual right to walk away after 12 months, I decided against it.”
And Finlayson has a point. Nine years left to run on a lease with no network support is not a particularly alluring prospect.
So, with the clear hindsight that only the passage of time can provide, does Finlayson have any regrets?
Full article in Mobile News issue 445 (August 10, 2009).
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