A supermarket for cellphone buyers

By Scott Kirsner  |  November 21, 2005

Mort Rosenthal, founder of Waltham-based IMO, makes a surprising observation: There may be more stores selling mobile phones inside Interstate 495 than there are Dunkin' Donuts outlets.

''We buy coffee several times a day," Rosenthal says. ''How often do you buy a new phone? It doesn't make a lot of sense."

Rosenthal hopes IMO -- the name stands for Independent Mobile -- will be an alternative to that confusing constellation of independently owned cellphone stores, outlets operated by wireless companies, and big-box retailers like Best Buy. At those locations, service people can be indifferent and undertrained, and it's not possible to fully compare all phones and calling plans.

Rosenthal has designed a wireless retail boutique -- with an interior modeled after the Apple Store -- where shoppers can evaluate up to 80 phones across all major carriers. Using a PC, a sales associate can help a customer navigate through features such as speakerphone,Bluetooth wireless networking, or battery life. Rosenthal says the store will help customers make informed choices.

But don't providers hate the notion of competing with their rivals in the same place?

''Most of them," Rosenthal says, ''think that if they had a chance to be in front of their competitors' customers, they'd win some of that share."

And by explaining how complicated features work, such as downloading games, IMO may help carriers increase customers' average monthly bills.

Rosenthal opened the first IMO store in Columbus, Ohio, last week and expects to open IMO's first Boston-area location at Shopper's World in Framingham by late January. The eventual goal, he says, ''is to be national as quickly as possible."

He is the sort of entrepreneur venture capitalists are most comfortable backing: one with a success or two under his belt. Rosenthal founded Corporate Software in 1982, and built that Norwood company into a billion-dollar-a-year reseller of software to businesses before selling it in 2002 for $89 million.

Highland Capital Partners, based in Lexington, is the firm's only investor so far, with a seed round in 2004, and a larger infusion earlier this year. Rosenthal says it's ''between 5 [million] and 10 million [dollars]."

Highland general partner Jon Auerbach says the next decade in the wireless sector will be more difficult than the go-go period now ending. But if carriers can improve the often-frustrating experience of buying or upgrading a cellphone, then ''that will be one of the growth engines of the wireless sector," he says.

But if there are already too many cellphone retailers today, as Rosenthal believes, IMO will have a tough time cutting through the clutter and proving it can perform better than today's independent storefronts and carrier-owned outlets.

Rosenthal notes Cingular is the one major carrier not in the Columbus IMO store; that's because Cingular has two company-owned locations ''within a couple blocks of where we are."

MediaSquirrel, a Lexington start-up, had hoped to time its launch of an online marketplace that will sell videos for iPods with Apple CEO Steve Jobs's unveiling of the video-capable iPod last month. But as of last week, MediaSquirrel CEO John Jacobs was still hopeful his site would be live sometime this week. ''We needed to work on some last-minute issues," he says.

MediaSquirrel will differ from Apple's own iTunes Music Store in several important ways. First, on Apple's site, only large, established media companies such as Disney and Universal can charge for content such as episodes of ''Lost" and music videos; independent producers are forced to give their videos away. But MediaSquirrel offers to sell the indies' masterpieces.

Moreover, Apple sets the price for a downloaded video at $1.99, while on MediaSquirrel sellers decide how much their video will cost. MediaSquirrel will take a 20 percent cut.

''In the short term, we're focused on delivering videos for the iPod," Jacobs says. ''But over the long term we may sell software and games, too."

MediaSquirrel may compete with another company that aims to establish an eBay-like marketplace for video, Cambridge-based Brightcove Networks. But unlike Brightcove, MediaSquirrel isn't funded by venture capitalists. ''There was a time when the VC community had vision and took risks," Jacobs says. ''I think they're sitting out the early-stage game now."

Jacobs, a veteran of Wang Laboratories, and chief technology officer Robert Lee, formerly of Lotus and Kronos, are funding the start-up.

My concern about the Media-Squirrel business model: Apple doesn't permit anyone else to sell music for iPods, and I wonder if they may eventually create a similar monopoly when it comes to selling videos.

Carl Prindle is one of those people who believe we're in the midst of a Web renaissance, a moment at which companies are finally figuring out how to actually deliver on the carbonated promises of the bubble years. His company, Waltham-based Furniture.com, was an emblematic late-1990s start-up: Backed with more than $100 million in venture capital, the online retailer lost about $900 on every order. The company tried and failed to go public in 2000 and then abruptly declared bankruptcy in November of that year.

Prindle, who had been senior vice president of product development, spent $1 million buying some of the defunct company's assets.

He relaunched Furniture.com in 2002, as an online storefront for traditional furniture retailers. Instead of managing its own inventory and spending wildly to build its own brand, the new Furniture.com would simply serve as an e-commerce storefront, funneling orders to partners such as Levitz Furniture, and taking a small percentage of each transaction. (Prindle says the fee is ''in the teens.")

The old Furniture.com had 250 employees; the new incarnation, just 20.

The company is profitable now, and sales are growing 20 percent a month, Prindle says.

Last week, Furniture.com was named one of the top 50 online retailing sites by Internet Retailer.

Scott Kirsner is a contributing editor at Fast Company. He can be reached at kirsner@pobox.com.