InPhonic
Encyclopedia
InPhonic Inc was an American
company which sold wireless services and devices online
, both through its own electronic commerce
sites and through private labeled websites it created and managed for online retail
ers. InPhonic was founded by David A. Steinberg
who resigned in 2007 due to poor debt management and decreasing revenues. Its board of directors included former Vice-Presidential candidate Jack Kemp
and technology/marketing guru John Sculley
(of Pepsi Co and Apple Computer
fame).
On November 8, 2007, InPhonic filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filings were made in the U.S. Bankruptcy Court for the District of Delaware. The company's stock was later delisted by NASDAQ. Many of the assets of Inphonic, including its electronic commerce
operations and its Wirefly.com web site, were subsequently sold to private investors who used those assets to launch the company Simplexity in January 2008.
The company was modeled after sites like Expedia
, gathering information from companies into a single site to help customers find deals by comparing services and prices. Wireless carriers did business with InPhonic because acquiring a customer through the company can be less expensive than traditional marketing approaches designed to generate sales at a brick-and-mortar store. InPhonic, in turn, received a commission from carriers for each new account generated, once the customer met a number of criteria. InPhonic helped grow this market for third-party activations to nearly 50% of all newly acquired cell phone subscribers in the U.S.
The company's central online storefront, Wirefly.com, received a number of Internet awards, including Forbes magazine's "Best of the Web" for 2004 and Keynote System's "Best In Overall Customer Experience" in 2005.
In addition to operating Wirefly.com, InPhonic powered the technology platform and fulfillment system of 6,000 other private label cell phone sales Web siteshttp://www.forbes.com/personalfinance/2006/10/11/inphonic-goldmansachs-wireless-pf-guru_in_nh_1011unwiredportfolio_inl.html. In early 2006, the firm claimed that it was the largest third-party online cell phone retailer in the US, accounting for one-third of the market, and that it sold 850,000 cell phones in 2005 alone. In June 2006 the company said that it had completed more than 2.5 million cellphone activations in the past three years.
The company was headquartered in Washington, DC and maintained technology and operations centers in Largo, Maryland
.
The company went public in November 2004. The company raised $108.9 million through its initial public offering. The IPO was InPhonic's second attempt to tap the public markets; the company filed to go public in 2002 but canceled the offering because of stock market conditions at the time.
In November 2006, Goldman Sachs—one of InPhonic’s largest shareholders—made the company a proposal to provide it with $100 million in debt financing, part of which InPhonic used for a large stock buy-back http://www.forbes.com/personalfinance/2006/10/11/inphonic-goldmansachs-wireless-pf-guru_in_nh_1011unwiredportfolio_inl.html?partner=links.
In November 2007 InPhonic filed a Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware. InPhonic, along with its co-debtors, requested that their cases be jointly administered under case number 07-11166. http://bankruptcy.morrisjames.com/2007/11/articles/wireless-service-provider-inphonic-files-chapter-11-petition/. Related to the Chapter 11 petition, InPhonic agreed to sell substantially all of its assets to an affiliate of Philadelphia based private equity firm Versa Capital.http://news.moneycentral.msn.com/ticker/article.aspx?Feed=BW&Date=20071108&ID=7790564&Symbol=INPC In December 2007 the company's stock was delisted by NASDAQ.
InPhonic attributed its bankruptcy filing, in part, to a recent default under a prepetition credit agreement, as well as illiquidity and declining revenues caused by unprofitable marketing activities and an inability to maintain adequate inventory of the most popular wireless devices. InPhonic’s top creditor list reads like a who’s who of the nation’s top technology companies. MSN, Yahoo!, Google, America Online and Verizon all rank among the debtor’s top ten creditors.
In January 2008, Versa Capital announced that InPhonic's assets and infrastructure were being used to launch a new company named Simplexity. This new company is based in Reston, VA and led by CEO Andy Zeinfeld.http://www.reuters.com/article/pressRelease/idUS126905+07-Jan-2008+BW20080107
In April 2007, the FCC settled rebate related charges against InPhonic. The Commission alleged that InPhonic, in connection with its advertised rebate offers, failed to provide promised documents needed to obtain rebates, to send out rebate checks, and to adequately disclose material terms and conditions prior to consumers purchases. The FCC further alleged that InPhonic misled some consumers about the number of wireless bills that had to be submitted with their rebate application and misrepresented that consumers would have a reasonable opportunity to resubmit rebate applications that were deemed incomplete.
InPhonic was ordered to pay consumers who applied for a rebate with the company but were denied a check based on the company’s deceptive and unfair practices.http://www.consumeraffairs.com/news04/2007/04/ftc_rebates.html
InPhonic earlier settled similar charges leveled by the District of Columbia attorney general.
A large number of InPhonic's customers complained about the non-fulfillment of rebates that were promised to customers. Many of these customers were listed as non-secured creditors in the company's Chapter 11 filing in 2007.
, BestBuy, Overstock.com
, Buy.com
and AOL
; industry players like Cognigen Networks and Intelisys; and major U.S. carriers Verizon Wireless
, Cingular, Sprint
, T-Mobile
, Alltel
and others. InPhonic also ran fulfillment for original equipment manufacturer
s like the Motorola
and LG brands.
A deal signed with Disney in April 2006 was the first deal for the company's mobile virtual network enabler (MVNE) division after the company shed its own mobile virtual network operator
(MVNO), Liberty Wireless, in 2005.
In April 2006, InPhonic finalized a partnership with Amazon.com
to become Amazon's first third-party provider of wireless products http://www.ecommercetimes.com/rsstory/50072.html.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
company which sold wireless services and devices online
ONLINE
ONLINE is a magazine for information systems first published in 1977. The publisher Online, Inc. was founded the year before. In May 2002, Information Today, Inc. acquired the assets of Online Inc....
, both through its own electronic commerce
Electronic commerce
Electronic commerce, commonly known as e-commerce, eCommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online...
sites and through private labeled websites it created and managed for online retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
ers. InPhonic was founded by David A. Steinberg
David A. Steinberg
David A. Steinberg is the founder and chief executive officer of CAIVIS Acquisitions, one of several companies that he started. The company seeks to acquire small cap companies and grow them fast....
who resigned in 2007 due to poor debt management and decreasing revenues. Its board of directors included former Vice-Presidential candidate Jack Kemp
Jack Kemp
Jack French Kemp was an American politician and a collegiate and professional football player. A Republican, he served as Housing Secretary in the administration of President George H. W. Bush from 1989 to 1993, having previously served nine terms as a congressman for Western New York's 31st...
and technology/marketing guru John Sculley
John Sculley
John Sculley is an American businessman. Sculley was vice-president and president of PepsiCo , until he became CEO of Apple on April 8, 1983, a position he held until leaving in 1993...
(of Pepsi Co and Apple Computer
Apple Computer
Apple Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad...
fame).
On November 8, 2007, InPhonic filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filings were made in the U.S. Bankruptcy Court for the District of Delaware. The company's stock was later delisted by NASDAQ. Many of the assets of Inphonic, including its electronic commerce
Electronic commerce
Electronic commerce, commonly known as e-commerce, eCommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online...
operations and its Wirefly.com web site, were subsequently sold to private investors who used those assets to launch the company Simplexity in January 2008.
The company was modeled after sites like Expedia
Expedia
Expedia is an Internet-based travel website based in the US with localised sites for 21 countries...
, gathering information from companies into a single site to help customers find deals by comparing services and prices. Wireless carriers did business with InPhonic because acquiring a customer through the company can be less expensive than traditional marketing approaches designed to generate sales at a brick-and-mortar store. InPhonic, in turn, received a commission from carriers for each new account generated, once the customer met a number of criteria. InPhonic helped grow this market for third-party activations to nearly 50% of all newly acquired cell phone subscribers in the U.S.
The company's central online storefront, Wirefly.com, received a number of Internet awards, including Forbes magazine's "Best of the Web" for 2004 and Keynote System's "Best In Overall Customer Experience" in 2005.
In addition to operating Wirefly.com, InPhonic powered the technology platform and fulfillment system of 6,000 other private label cell phone sales Web siteshttp://www.forbes.com/personalfinance/2006/10/11/inphonic-goldmansachs-wireless-pf-guru_in_nh_1011unwiredportfolio_inl.html. In early 2006, the firm claimed that it was the largest third-party online cell phone retailer in the US, accounting for one-third of the market, and that it sold 850,000 cell phones in 2005 alone. In June 2006 the company said that it had completed more than 2.5 million cellphone activations in the past three years.
The company was headquartered in Washington, DC and maintained technology and operations centers in Largo, Maryland
Largo, Maryland
Largo is an unincorporated area and census designated place in Prince George's County, Maryland, in the United States. The population was 8,408 at the 2000 census....
.
Financials
In September 2001, the company closed a $19 million Series D round of capital financing headed by Core Capital Partners. The investment also included new investors McAndrews & Forbes, First Analysis, Spring Capital and Wynnefield Capital. All previous investors—including Sculley Brothers Investments, CMS Financial Services, and Mid Atlantic Venture Funds—participated as well. In 2003, Technology Crossover Ventures invested an additional $56 million in the company.The company went public in November 2004. The company raised $108.9 million through its initial public offering. The IPO was InPhonic's second attempt to tap the public markets; the company filed to go public in 2002 but canceled the offering because of stock market conditions at the time.
In November 2006, Goldman Sachs—one of InPhonic’s largest shareholders—made the company a proposal to provide it with $100 million in debt financing, part of which InPhonic used for a large stock buy-back http://www.forbes.com/personalfinance/2006/10/11/inphonic-goldmansachs-wireless-pf-guru_in_nh_1011unwiredportfolio_inl.html?partner=links.
In November 2007 InPhonic filed a Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware. InPhonic, along with its co-debtors, requested that their cases be jointly administered under case number 07-11166. http://bankruptcy.morrisjames.com/2007/11/articles/wireless-service-provider-inphonic-files-chapter-11-petition/. Related to the Chapter 11 petition, InPhonic agreed to sell substantially all of its assets to an affiliate of Philadelphia based private equity firm Versa Capital.http://news.moneycentral.msn.com/ticker/article.aspx?Feed=BW&Date=20071108&ID=7790564&Symbol=INPC In December 2007 the company's stock was delisted by NASDAQ.
InPhonic attributed its bankruptcy filing, in part, to a recent default under a prepetition credit agreement, as well as illiquidity and declining revenues caused by unprofitable marketing activities and an inability to maintain adequate inventory of the most popular wireless devices. InPhonic’s top creditor list reads like a who’s who of the nation’s top technology companies. MSN, Yahoo!, Google, America Online and Verizon all rank among the debtor’s top ten creditors.
In January 2008, Versa Capital announced that InPhonic's assets and infrastructure were being used to launch a new company named Simplexity. This new company is based in Reston, VA and led by CEO Andy Zeinfeld.http://www.reuters.com/article/pressRelease/idUS126905+07-Jan-2008+BW20080107
Some cell phone sites which InPhonic operated
- A1 Wireless
- ACN Wireless
- Cellular Buys
- Cellular Choices
- Corporate Wireless
- FonCentral
- INTELENET Wireless
- Liberty Wireless
- lowcostcells.com
- Mobile Pro
- Phone Deals
- Simplexity
- Talking on Air
- Wirefly
- Wireless Marketplace
- WorldPerks Wireless Service
Rebates
InPhonic maintained an unsatisfactory rating with the Better Business Bureau serving Washington DC and Eastern Pennsylvania. Over the last 36 months the BBB has processed 126 unresolved consumer complaints regarding selling practices, advertising issues, service issues among other areas of concern.http://www.dc.bbb.org/report.html?national=Y&compid=23004111In April 2007, the FCC settled rebate related charges against InPhonic. The Commission alleged that InPhonic, in connection with its advertised rebate offers, failed to provide promised documents needed to obtain rebates, to send out rebate checks, and to adequately disclose material terms and conditions prior to consumers purchases. The FCC further alleged that InPhonic misled some consumers about the number of wireless bills that had to be submitted with their rebate application and misrepresented that consumers would have a reasonable opportunity to resubmit rebate applications that were deemed incomplete.
InPhonic was ordered to pay consumers who applied for a rebate with the company but were denied a check based on the company’s deceptive and unfair practices.http://www.consumeraffairs.com/news04/2007/04/ftc_rebates.html
InPhonic earlier settled similar charges leveled by the District of Columbia attorney general.
A large number of InPhonic's customers complained about the non-fulfillment of rebates that were promised to customers. Many of these customers were listed as non-secured creditors in the company's Chapter 11 filing in 2007.
Partnerships and affiliates
InPhonic had established relationships with a range of e-commerce partners to provide wireless activation services. Its partners included high-profile brands such as Radio ShackRadio shack
Radio shack is a slang term for a room or structure for housing radio equipment.-History:In the early days of radio, equipment was experimental and home-built. The first radio transmitters used a noisy spark to generate radio waves and were often housed in a garage or shed. When radio was first...
, BestBuy, Overstock.com
Overstock.com
Overstock.com , also known by its shortcut, O.co, is an online retailer headquartered in Cottonwood Heights, Utah, near Salt Lake City. Founded in 1997 by Robert Brazell, under the name D2: Discounts Direct, it was a pioneering online seller of surplus merchandise which, upon its failure in 1999,...
, Buy.com
Buy.com
Buy.com, Incorporated is an online retailer based in Aliso Viejo, California.Buy.com began by selling computers and electronics in 1997 and has since expanded into many other categories...
and AOL
AOL
AOL Inc. is an American global Internet services and media company. AOL is headquartered at 770 Broadway in New York. Founded in 1983 as Control Video Corporation, it has franchised its services to companies in several nations around the world or set up international versions of its services...
; industry players like Cognigen Networks and Intelisys; and major U.S. carriers Verizon Wireless
Verizon Wireless
Cellco Partnership, doing business as Verizon Wireless, is one of the largest mobile network operators in the United States. The network has 107.7 million subscribers as of 2011, making it the largest wireless service provider in America....
, Cingular, Sprint
Sprint Nextel
Sprint Nextel Corporation is an American telecommunications company based in Overland Park, Kansas. The company owns and operates Sprint, the third largest wireless telecommunications network in the United States, with 53.4 million customers, behind Verizon Wireless and AT&T Mobility...
, T-Mobile
T-Mobile
T-Mobile International AG is a German-based holding company for Deutsche Telekom AG's various mobile communications subsidiaries outside Germany. Based in Bonn, Germany, its subsidiaries operate GSM and UMTS-based cellular networks in Europe, the United States, Puerto Rico and the US Virgin Islands...
, Alltel
Alltel
Alltel Corporation is a wireless service provider, primarily based in the United States. Before an acquisition by Verizon Wireless, it served 34 states. After the merger, Alltel continues to serve six states, mostly in rural areas...
and others. InPhonic also ran fulfillment for original equipment manufacturer
Original Equipment Manufacturer
An original equipment manufacturer, or OEM, manufactures products or components that are purchased by a company and retailed under that purchasing company's brand name. OEM refers to the company that originally manufactured the product. When referring to automotive parts, OEM designates a...
s like the Motorola
Motorola
Motorola, Inc. was an American multinational telecommunications company based in Schaumburg, Illinois, which was eventually divided into two independent public companies, Motorola Mobility and Motorola Solutions on January 4, 2011, after losing $4.3 billion from 2007 to 2009...
and LG brands.
A deal signed with Disney in April 2006 was the first deal for the company's mobile virtual network enabler (MVNE) division after the company shed its own mobile virtual network operator
Mobile virtual network operator
A mobile virtual network operator is a company that provides mobile phone services but does not have its own licensed frequency allocation of radio spectrum, nor does it necessarily have all of the infrastructure required to provide mobile telephone service...
(MVNO), Liberty Wireless, in 2005.
In April 2006, InPhonic finalized a partnership with Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
to become Amazon's first third-party provider of wireless products http://www.ecommercetimes.com/rsstory/50072.html.
External links
- BBB Reliability Report of InPhonic
- Cell phone firm sued after Red Tape coverage
- Consumers irked by cell phone rebates on hold
- Washington Post profile of InPhonic
- InPhonic Settles Lawsuit Over Rebate Restrictions, Washington Post, November 7, 2006.
- Order Consolidating Class Actions against InPhonic in District of Columbia
- InPhonic corporate site including links to InPhonic bankruptcy filings