Sprint (NYSE:S) MVNO FreedomPop today expanded its offerings to include a smartphone and voice calling and texting services. Previously the company centered its strategy on selling wireless data through hotspots and other data-only devices.
FreedomPop will sell the HTC Evo Design for $99.
Specifically, FreedomPop said that it will sell refurbished HTC Evo Design WiMAX smartphones for $99 without a contract. Evo buyers will be able to access the company's signature 500 MB of free data per month, but will also get 500 text messages and 200 anytime voice minutes free every month for life. Users can pay $10.99 per month to upgrade to unlimited calls and texts.
FreedomPop CEO Stephen Stokols explained that the launch represents the next phase in the MVNO's corporate strategy, putting the company in direct competition with service providers like AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ). Stokols said FreedomPop users can save up to $1,000 per year with the company's plans as compared with those from Tier 1 wireless carriers.
Stokols explained that FreedomPop was able to bring the price of the HTC Evo Design below $100 because it purchased used Evos and then refurbished them with FreedomPop's service. He said the company will use a similar strategy to sell other smartphones, including ones with LTE, though Stokols cautioned that LTE smartphones from FreedomPop likely will cost around $200.
Stokols said FreedomPop is targeting sales of 1 million devices in the next 12 months.
Stokols also said that FreedomPop is planning to launch a bring-your-own-device service for Sprint phones, much like other Sprint MVNOs have done. He said the BYOD service will support most Sprint phones and will allow users to access FreedomPop's freemium services.
FreedomPop's voice and texting service runs over a VoIP system that Stokols said the company built itself. He said FreedomPop considered using VoIP services from other vendors--including textPlus, which powers the voice calling services on FreedomPop's iPod touch Sleeve--but he said the company decided it could lower the price of the service by building the technology internally.
Stokols declined to provide specific customer figures and financials for FreedomPop, but said the company counts well over 100,000 customers and revenues growing 20 percent month-over-month. He said that around 55 percent of the company's customer base pays nothing at all, and simply makes use of the MVNO's offer of 500 MB of free data per month. He said the remainder by and large spends money to increase the amount of data they get per month. The company has previously said its business model results in gross margins of over 50 percent.
Finally, Stokols said FreedomPop plans to continue to focus mainly on selling its services through its website, but also plans to expand via a nationwide retail outlet that Stokols declined to name. He also said the company is considering launching a program for third-party dealers, and is currently testing a dealer program.
However, Stokols said that FreedomPop will focus much of its energies on launching its lineup of phones during the next three to six months, which means that the company's plan to sell FreedomPop "sleeves" for iPhones and popular Android smartphones will likely not get underway until next year. FreedomPop's sleeves would function much like a standard smartphone case, but would connect to Sprint's LTE network and would provide users with 500 MB of free data per month via a Wi-Fi connection between their existing smartphone and the FreedomPop sleeve.
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