Sprint Nextel Corporation (NYSE: S) continues to be bashed in the business media every other week it seems. The third-largest wireless company in the U.S. has shed hundreds of thousands of customers in the last 18 months as the larger competition has snagged customers with stellar sellers like Apple, Inc.'s (NASDAQ: AAPL) iPhone 3G and other high-end handsets.
Sprint announced 8,000 layoffs this week, adding to the massive employee headcount lost by major corporations in the last three months. With losses in four of the past five quarters, massive layoffs and a shrinking customer base, is Sprint in real trouble? Not really -- it still has over 50 million wireless subscribers. Should it have lobbied to win the contract with Apple for the iPhone? While we'll never know if that was even possible, that one partnership alone could have completely reversed Sprint's fortunes in the last 24 months. The carrier is hoping the Palm Pre can make up for last ground, though. It may, but that one hand of cards can't win the poker tournament.
This BusinessWeek piece explains that Sprint's cash position is good and it's not in immediate need of greenbacks to service its debt. That can't happen forever, though. Sprint is heavily advertising that its family plans -- a way to increase average consumer bills -- is way cheaper than the competition. This is true. Is it enough to grab customers back? Some will come back because of the lure of cheaper bills, but is its been shown before, must-have devices (handset price and monthly plan price be damned) are more powerful. What can Sprint do? It doesn't have anything in this field right now.
It may be too late when the Palm Pre shows up.











Reader Comments (Page 1 of 1)
1-31-2009 @ 4:12PM
JWF said...
James Fisher from Sprint here... Business Week is not the only outlet noting the progress we're making on improving our business. Dow Jones (http://www.smartmoney.com/news/ON/?story=ON-20090126-000519-1505&) and Fortune (http://money.cnn.com/2009/01/30/technology/sprint.nextel.fortune/?postversion=2009013010) have weighed in as well. Certainly, we have challenges, but the signs of progress are undeniable. And, yes, we think the Pre is going to be a major help to turn around our subscriber losses. But that's not all we've got by a long shot -- we are focusing on the high-end data centric customer with devices like the Pre, the mid-level family market with great value pricing plans and devices like the Instinct -- still very popular -- and the prepaid market with Boost Unlimited. This new BU plan with its value pricing has shaken up the whole prepaid marketplace. The new push-to-talk BlackBerry Curve is also popular. Overall, we are focusing offering real value in today's economy and productivity through our devices and data network. Again, I'm not suggesting we don't still have challenges, but we are executing on a well thought-out plan to rebuild the business, and as you've acknowledged, people are starting to notice.
1-31-2009 @ 2:18PM
Dave Small said...
It’s not just Sprint that’s badly broken. It’s the entire cell phone service provider industry worldwide. The products they’re putting forth aren’t really what we need.
I left Spint because we didn’t make enough cell phone calls to hit their monthly minimums. We went with T-Mobile and a pre-paid plan. That was when a cell phone was primarily for phone calls. We saved a bundle that way. My wife and her sister still have those paid-off phones which cost about $100 each to buy. Once a year they purchase some additional minutes. There is no monthly cell phone bill. They both make or receive maybe 5 or 10 cell phone calls per week.
Then the iPhone appeared and I had to have one. When I pick up my iPhone it is usually to run an App rather than to make or receive a phone call. It could be to check the local realtime traffic map, check the weather, play music through my car stereo, use the GPS function with Google Maps, find a restaurant nearby serving Mexican style breakfasts, take a photo, use the calculator, add a calendar item, record a voice note, check my stock prices, check the local movie times what's playing, watch the latest video news clips from ABC, check the wine guide database ratings while making a wine selection at a restaurant, check email while out and about, etc. etc. Phone calls do make the list but no where near the top. Calling this a phone is a bit of a misnomer.
I think everyone would want an iPhone if they really knew what it can do and how easy it is to use. All the other phone manufacturers are rushing to market with something that looks a bit like an iPhone. The Blackberry Storm is a good example. It is completely underwhelming and hugely overpriced. It’s a faint shadow of the real iPhone.
The limiting factor is the cost of the AT&T contract(s). I don't want (and can't afford) to pay Comcast for internet access at home, AT&T for internet access via DSL at my small business office, AT&T for internet access via my iPhone, AT&T for G3 access via my laptop, and another separate AT&T contract for each and every iPhone that a family member might have. I'm hoping that something like WiMax will come along and simplify all of this making 'total connectivity' much more affordable.
I think the smart access provider would start working on a "total coverage package" that would cover home broadband, smartphone, travel wireless for all your laptops and phones. Basically one stop service for connectivity at a discounted price if you cover everything.
However, greed seems to trump smart. They seem more interested in answering the question, "How can we get the most money?" rather than "How can we provide the best value to our customers?"
The most extreme example of that is International Roaming Charges for data. If you enter a foreign country with your smart phone they stick it to you big time. The same thing happens when foreign travelers enter the USA (or any other country for that matter). Those international carriers have gotten together and made it punitive rather than attractive. They're awaiting your arrival in their country so they can screw you over. It's a system of gigantic pot holes and toll booths. That's not what we need or want.
I think a lesser company, perhaps Sprint, might cut their rates in half when traffic drops and they're faced with extinction and huge excess network capacity. Only then will they do the right thing. Cell phone service providers all seem to copy their competitors. None of them think out of the box.
Sprint could not pry me away from my iPhone. The Palm Pre looks like a nice product but they’re not going to be able to duplicate the Apple App Store and they’re facing legal issues. Jon Rubenstein took much of Apple’s intellectual property with him when he moved from Apple to Palm.
Sprint’s best shot in the short term would be to focus on data plans for laptops. They need to sell me an Express Card for my MacBook Pro and offer a data plan for about $20 or $25 per month with unlimited data. I would want to be able to use Skype for phone calls without paying minute charges. I wouldn’t want to see a contract that even mentions any of these words: “Minutes, Kilobytes, or Roaming Charges.”
I think many laptop users are like me. They don’t need 3G connectivity all the time, or even very often, but it would be nice to have once in a while. There are times when my cable modem has an outage, or perhaps I’d like to rent a vacation house that has no WiFi setup.
If they do that their business will take off and pretty soon they’ll be worrying about network overload. That’s a better problem for them to have and what they’re facing now. Lots of customers paying $25 per month is a better scenario than lots of customers jumping ship.
My MacBook Pro laptop has the built-in capacity to become a WiFi host when connected to the internet via an ethernet connection (as in a hotel room). If Sprint could figure out how to let me do that when connected to their 3G network then I’d be just as well off with an iPod Touch instead of an iPhone, and wouldn’t need that expensive AT&T contract. I could make Skype VOIP calls and just use Sprint as a wireless pipe to get me onto the Internet. Now I’d be getting real interested in Sprint.
1-31-2009 @ 8:29PM
JJ said...
to dave small above:
If you would get off the Apple cult of Mac/iPhone you would realize that with Sprint you can make any windows mobile phone a wifi hotspot on any Sprint plan that incudes data to the mobile smart phone as long as you don't abuse it. Windows mobile is 10x more powerful than iPhone and its software, and 10x more powerful than the upcoming Pre.
Sprint is a killer value and has the best handsets there are.
I have a $60 Simply Evertything on Sprint and pay $15 more for a Sprint Airave which gives me unlimited calling form home. I can tether my laptop from my Sprint Phone (an HTC Touch Pro) either by usb cable, bluetooth OR WiFi with no extra charge (again as long as you don't abuse it by doing it every day for hours). Because of my airave I make about 1000 minutes of calls from my home that don't count off my plan even though they are during business hours.
Sprint is the best service there is. It just got hung up with bad problems from the (idiotic) Nextel deal.
Dave, you get hung up on international data roaming. Don't you realize you are better off buying an entire phone overseas than trying to data roam with ATT!
With my Sprint HTC touch Pro, I get my email, the web, and all connections for free on wifi. Free wifi hotspots are common overseas.
Look at your list of what your iphone can do. My Sprint Touch Pro can do absolutely everything and more. You just don't know it from not researching it. You can use the GPS? So can I -- in fact I have Garmin installed and don't need any connection to use GPS worldwide!
ATT and Apple have snowed you. You are asking Sprint to provide what it ALREADY provides for cheaper.
2-01-2009 @ 10:56AM
David Small said...
Why is it that Windows and Windows Mobile users are so defensive about Apple's vastly superior technologies?
There is no possibility that any company could build a legitimate iPhone contender atop Windows Mobile. That would be impossible. Windows Mobile is in no way comparable to OS X.
Most Windows users are still running the years old XP version of Windows because of all the problems with Vista. Now Microsoft is readying Windows 7 which will hopefully be about what Vista should have been. They'll also want you to pay for yet another upgrade. After Windows 7 is released they'll only be 2 or 3 generations behind Apple (which is admittedly good progress for them).
The iPhone and the App Store with some 15,000 apps available and installable with a click or two are an unbeatable combination of functionality and user friendliness.
2-01-2009 @ 2:24PM
Pasc. said...
LOL. iPhone users weep and get all cranky when they asks for a capability and find that WM users have it.
Why is it iphone users don't realize when they list things they want on iphones, which are long available on windows mobile, they look so silly?
My wife and I are sitting in the park catching up with work on our laptops both connected to the net by my single Windows Mobile Sprint phone which is broadcasting its connection via secure wifi to our laptops. we our doing this on my $40 a month Sprint Sero plan which has unlimited data.
With an iPhone on ATT it would cost $150 a month to do the same thing, only the iphone cant even do this becasue it can't broadcast its connection to ATT data service via its wifi. :)
O the way home, we can use google maps, or better yet, if I like Garmin mobile, which I don't pay any monthly fee for, and go for a ride. We can also use Garmin mobile on our Sprint WM phone in Tokyo or Cairo. :)
Alternately I can have unlimited data, unlimited minutes, unlimited Sprint provided Telenav GPS (on a receiver within my phone as good as the top Garmin), unlimited all included for $99 a month on Sprint. :)
Do we have iFart or iBoobs from the iPhone store? No. Instead we a much more sophisticated and powerful operating system that can the very demanding and powerful tasks.
of course we don't have our phones for eyecandy, and we are not interested in paying three times as much for ATT service that has worse coverage.