While Sprint Nextel Corp. (NYSE: S) continues losing hundreds of thousands of customers every quarter, it has actually raised the bar on offering cutting-edge smartphones at the same time. Smartphones, which are slowly but surely replacing the standard cellphone for the typical "always need to be connected" consumer, are helping wireless carriers drum up wireless data revenue to replace the lost voice revenue as customers talk less.At the start of October, Sprint Nextel unveiled its first Google, Inc. (NASDAQ: GOOG) Android-powered smartphone, the HTC Hero, at the $180 price point after rebate. Sprint had waited almost two years to release its first Android handset, and the Hero was (and continues to be) advertised like crazy. Retail partner Best Buy, Inc. (NYSE: BBY) even gave its "Reward Zone" members early access to the handset.
Larger competitor Verizon Wireless, which is currently slamming Apple, Inc. (NASDAQ: AAPL) and AT&T, Inc. (NYSE: T) over the limited capabilities of the iPhone and the spotty 3G coverage AT&T provides, is in the midst of releasing it's first-ever Android phone tomorrow, which it's calling the "Droid", for $199. Next week, Verizon Wireless will release the "Droid Eris" for $99 -- which is basically the exact same handset as Sprint's HTC Hero. Notice the price difference there -- Verizon's version will cut almost half the price off compared to the Sprint version.
What can Sprint do? It has to lower the price of its HTC Hero unit to match. Even though Sprint is well-known now for the cheapest voice and data plans of the "big four" wireless carriers, customers tend to fixate on equipment prices more than an overall long-term cost comparison. So, with Sprint continuing to lose customers to Verizon Wireless and AT&T, will it become more competitive with its same-equipment on-contract? It sure needs to. Otherwise, what is left to help try and attract customers from the competition? Not much.
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Reader Comments (Page 1 of 1)
11-05-2009 @ 2:48PM
JWF said...
James Fisher from Sprint here. You allude to what's really the major point here -- another carrier may offer $80 off the phone, but when the cost of service is hundreds and hundreds of dollars more, that's not deal by a long shot. Also, when the other carrier DOUBLES its Early Termination Fees, as they did today, there's no deal there, either. Smartphones are expensive and there are more of them being sold, so when the price is cut, the money has to come from somewhere. That's why consumers -- and bloggers -- need to increasingly look at the WHOLE price they are being asked to pay. And by the way, Sprint has no plans to raise OUR Early Termination Fees.
11-05-2009 @ 3:05PM
DamienChaos said...
Well said, James. As a consumer not directly affiliated with either company, I can firmly state that service plan pricing is what recently pulled me away from Verizon to Sprint.
I found a "reputable" online magazine article today that compared the Droid/Verizon vs Pre/Sprint vs iPhone/AT&T. Overall, Sprint was still the cheapest even though the writer completely neglected to consider the +$30 cost of Verizon's add-on data plan which would be required with the Droid. As you stated, consumers and journalists alike should highlight this consideration when selecting wireless providers.
When weighing options regarding unlimited data on a multi-phone share plan, the comparison further highlights the financial savings with Sprint. Without question, the bottom line total cost of ownership is what needs to be evaluated. For my two-line needs, $129.99/mo with Sprint versus $189.99/mo with Verizon made the decision extremely simple...even though the purchase of an HTC Touch Pro 2 and Hero/Eris would have been initially less expensive on Verizon.
11-05-2009 @ 3:11PM
numerwan said...
I waited for the longest for the Hero to come to Sprint... Not sure why Sprint didn't keep the original style of the Hero... It was so much sexier... This new one looks like your average every day plastic phone... I ended up not switching because of how much i hated the restyling of the phone...
We'll see what happens... looks like phone companies are starting to pick up the slack on looks and features... Just gotta find a way for these Cell companies to stop butchering them...
11-05-2009 @ 3:42PM
Kyle said...
Verizon recently upped their early termination fee to $350. I wonder if the drop in price could be attributed to greater assurance a customer will fulfill their two year contract?
11-07-2009 @ 3:14PM
Beltway Greg said...
a. First, I travel extensively and carry both a Blackberry and an IPhone. Connectivity problems? No. Cities, be it NYC, Boston, DC, or LA present their own particular problems related to god knows what. Here in DC many areas in Rock Creek Park have limited connectivity because people like to pretend that they're in Yellowstone and they don't want to scar the landscape with towers. You can suffer a heart attack or have your car break down and find yourself stranded just like you would be in Yellowstone.
b. Today I went and checked out the "Droid" in fashionable Bethesda. IPhone killer, no. It felt cheap and the OS despite being in the store seemed to lag. Verizon needs to take Apple's cue and hire people who know what they're talking about. They take your name when you come in and make you wait for a salesperson who is completely devoid of knowledge
c. They I went to the Apple store. The problem? They need more salespeople and it's early November. Methinks I smell another record quarter. The sad thing is that Apple would sell a boatload of IPhones if it was on Verizon. I talked to a few people and they said they'd buy an IPhone in a minute if it was on Verizon. They just do not want to be bothered with switching carriers.
The takeaway? They better sell the heck out of the Droid because once the IPhone comes to Verizon RIMM and Motorola are doomed.