If you've ever investigated various sources for hosted Exchange e-mail or SharePoint sites, or virtual cloud servers, for a small business of under 100 employees or so, you've probably run into a service called 123Together.com. It's titled like it wants to be listed first in the Yellow Pages, but in terms of service quality, it's been limping along with a handful of others looking to gain par against GoDaddy.com.
But 123Together also has a stake in cloud services, with simple virtual servers in the cloud that compete on at least one level with Amazon. Meanwhile, retailer Best Buy is interested in competing with Amazon on any level it can. Last month, it decided it can't compete with Amazon, announcing a plan to dump its Napster service's existing customers onto Rhapsody. Best Buy had just acquired the Napster brand in September 2008.
Today, Best Buy announced a deal to acquire 123Together.com's parent company, mindSHIFT Technologies, for $167 million, apparently in cash. This move will put Best Buy into the hosted services business, which includes floating Web sites and virtual servers for retail customers in the cloud.
123Together.com customers learned of the deal today by way of a letter from the division's president and COO, Mona Abutaleb. Though she said her parent company, mindSHIFT, would continue to operate as a Best Buy division under its current name, the fact that she did not say 123Together would keep its own brand (Best Buy also made no such revelation in its statements this morning) speaks volumes.
"We began a process to seek out a new investor several months ago to continue our growth strategy," Abutaleb wrote. "During our process, it became clear that we were very closely aligned with Best Buy in both corporate vision as well as in our culture of integrity, customer value, and results. Throughout this process, Best Buy has been emphatic about its commitment as a corporate objective to expand its SMB IT services business, and mindSHIFT will be one of the foundations of this strategy."
Best Buy has done some more shifting of its own besides dumping Napster. This morning, as the BBC reported, it's pulling out of its joint venture with U.K. electronics retailing giant Carphone Warehouse. All eleven Best Buy-branded U.K. stores will close, it was reported; while Best Buy will purchase Carphone Warehouse's 25% stake in its own U.S. retail operations for $1.34 billion, according to Bloomberg News.