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Sprint's plan of attack
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Sprint Nextel reported its third quarter earnings yesterday, and although the company had its biggest sequential uptick in gross subscriber additions in years, it still lost 545,000 net wireless customer in the quarter, including net losses of 801,000 postpaid customers.
At a time when its two larger rivals, AT&T Mobility and Verizon Wireless, are adding customers at a very strong pace (AT&T added 2 million net adds in the quarter and Verizon added 1.2 million), the thought of more subscriber losses should be troubling for Sprint. I spoke with Sprint CEO Dan Hesse yesterday after the firm's earnings announcement and he was realistic about the task ahead. He acknowledged that Sprint still has a long way to go to get back to positive subscriber growth.
I don't think devices alone will be enough to prompt subscribers to go to Sprint. Although the company has announced two Android phones (the HTC Hero and the Samsung Moment) to its lineup as well as one of the better BlackBerry devices on the market (the Tour), and two devices using the Palm webOS platform (the Pre and the Pixi), Sprint likely won't enjoy the iPhone-style growth of AT&T.
But not all is lost. Hesse has been bold this year, and deserves praise for taking several steps to improve Sprint's overall position in the market. The introduction of Sprint's "Any Mobile, Anytime" plan in early September, which offers unlimited mobile-to-mobile calling to any wireless number on any U.S. wireless carrier at any time, was a smart move. Explained Hesse of the offering: "We said, hey, let's just completely eliminate calling circles and do something even more powerful." It's still too early to tell if the plan is making a difference, but with continued marketing, I think it could lure customers looking for a great value to Sprint.
Hesse's other big bet is on 4G, via Sprint's Clearwire partnership. Sprint has launched mobile WiMAX service in 17 markets as a wholesale partner of Clearwire, and will launch in some large markets--Boston, Houston, New York, San Francisco and Washington, D.C.--next year. Hesse knows the key to success with 4G (aside from just getting the networks up and running) is having compelling devices. Next year, Hesse said Sprint will introduce its first 3G/4G dual-mode smartphones.
If Sprint can tangibly demonstrate the benefits of 4G via a slick smartphone while Verizon Wireless is still rolling out its first LTE markets, it will both give more credence to the claim that Sprint is the leader in 4G and show consumers that Sprint can still be innovative.
As Hesse and the Sprint executive team are learning, it takes a long time to overcome a reputation for poor customer service--and even longer for perception to catch up to reality. Yet Hesse remains confident that his bold moves will pay off. The market will ultimately decide, but if Sprint can combine its innovative and daring price plans with a more robust 4G offering, I think Hesse and Sprint will have plenty of reasons to be confident. For more of my interview with Hesse, click here. --Phil
P.S. Please be sure to check out our Top 25 Most Powerful People in U.S. Wireless 2009 list. Hesse is on there, along with many other top executives.
Comments
Posted by Anonymous | October 30, 2009 - 12:23pm
While some of the news presented in the article is good for Sprint, I remain skeptical that Sprint is going to be able to add customers. Can they really continue to wait or afford to wait until next year to bring a 3G/4G device to market? And will that 4G network be up to snuff. I live in a major metropolitan area in the South, where Sprint has an extensive 3G network and have had nothing but problems with Sprint coverage on my Palm Pre. I have been in constant contact with Sprint in regards to these issues with no resolve. I have since left Sprint for AT&T and as of yet have had no issues with coverage. Let's hope for Sprint's sake that they are able to get their 4G network straight. If not, we will probably be hearing about them needing a bailout.
Posted by Anonymous | October 30, 2009 - 1:04pm
It's not that hard to stop the bleeding. I've been with Sprint for 8 years with no issues. The thing that will help keep customers is allow exsiting costomers to get these very nice phones at the same price as new costomers and roll over (sorry for the AT&T term) remaining contract term to a new contract. Why do you thing AT&T sold so many iphone 3GS opon release. I'm thinging of heading to the Verizon because i want a smart phone now. It sounds to simple and will not cost Sprint a dime, if anything Sprint will profit from it because I'll be switching to higher priced Data Plan. So, Mr. Hesse hope you read this and i get compensated for my idea.
Posted by Anonymous | October 30, 2009 - 1:31pm
Sprint has not even released the Samsung Moment, and the phone is already outdated. Verizon is selling the Android 2.0 just as the Moment (Android 1.5) is being rolled out. How does that happen? Why doesn't Sprint have an Android 2.0?
Posted by Anonymous | October 30, 2009 - 1:38pm
Sprint just plain sucks at everything. What a zombie of a company....
Posted by Anonymous | October 30, 2009 - 2:48pm
I don't think anyone can forget sprints customer service
Posted by Anonymous | October 30, 2009 - 3:02pm
If Sprint truly wants to turn the corner, it will give up the antiquated IDEN network. This network does not support high speed data, and is costing the company millions of dollars to maintain (seperate radios from the CDMA etc.)
Instead Sprint spends nearly 800 million to buy out IPCS. What do they get out of that? The ability to market IDEN in the IPCS territory. Very little more than that. This is a rediculous expenditure for a company that is losing millions of dolalrs and millions of customers. Accept your losses and cut the cord.
CDMA supports direct connect so IDEN no longer has significant value. CDMA supports high speed data and IDEN does not. What are you thinking by spending all of those millions to purchase a partner that is already marketing your products successfully?
This company continues to make bad decisions and to live in the past. IDEN is dead. Bury it. Cut your losses and move on to the future which you are well positioned to do with WIMAX. Quit wasting shareholder money and move forward with a business plan for the 21st century!
Posted by Anonymous | October 30, 2009 - 9:15pm
First off Boost is iDEN and it is the only part of the company that is profitable right now. So getting rid of iDEN would be a HUGE mistake. Secondly the Push to Talk over CDMA will only work in areas that have EVDO otherwise it has no way to work. What Sprint should come out with is a Dual Mode phone that supports iDEN/CDMA that way you have High Speed data that most users want now a days, and the option of having push to talk on CDMA when ever the iDEN network isnt available. Make a dual mode smart phone and it would sell in droves.
Posted by Anonymous | November 2, 2009 - 9:41am
They also continue to screw thier independent dealers the ones that have kept them in business the last few years .They give best buy and radio shack instant rebates and make the independent dealers totally uncompetitive with a 12 week mail in rebate !
Posted by Anonymous | November 23, 2009 - 3:10pm
I agree with anonymous Nov 2 comment about the rebate. I just bought a Hero from Best Buy for $99 and didn't have to deal with a rebate. I feel Sprint should allow the same deals in Sprint Stores that the major retailers have. Doesn't make sense to me that they don't. I bought into Sprint because I'm basically in US Cellular territory and they don't offer 3G and smart phones. AT&T and Verizon also don't serve my area. However, so far I love the phone and the service has been just fine. Hope things turn around for Sprint because they're the only choice for truly advanced phones and 3G in my area.
Posted by Anonymous | February 1, 2010 - 11:57pm
What really hurts Sprint are the Government deals with AT&T and their previous bad reputation. I've turned quite a few of my friends from AT&T and Verizon to Sprint and I am in the military, word gets around fast. Sprint has treated me very well with great customer service and support with a fast internet. I will do the same for them. AT&T has spotty service and just like Verizon, high prices with a slower internet. Their customer support seems to think that they are doing you a favor and codesending
...What!? Keep up the good customer support, good prices and fast system. You will come out ahead Sprint.
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