November 9th, 2009

Sprint to cut 2,000 to 2,500 jobs

Posted by Larry Dignan @ 1:06 pm

Categories: General, Mobile, Sprint, Sprint Nextel

Tags: Job, Sprint Communications, Workforce Management, Recruitment & Selection, Call Centers, Customer Relationship Management (CRM), Human Resources, It Operations, Enterprise Software, Software

Sprint Nextel said it will cut 2,000 to 2,500 positions in the fourth quarter in an effort to save $350 million.

The cuts will be completed by Dec. 31.

According to a statement, Sprint will cut jobs across the company, including its wholesale unit and contractors. The company said the cuts won’t impact customer service, something the Sprint has been trying to improve. Nevertheless, Sprint said call volume has decreased so it has discontinued 27 call centers.

Sprint will take a fourth quarter charge of $60 million to $80 million. The layoff news comes as Sprint will reportedly sink another $1 billion into Clearwire.

Also: Sprint loses money, more subscribers in third quarter

November 9th, 2009

Money pit? Clearwire to get cash infusion

Posted by Larry Dignan @ 3:55 am

Categories: Clearwire, General, Sprint, Sprint Nextel, WiMax

Tags: Clearwire Corp., WiMAX, Wi-Fi, Wireless And Mobility, Larry Dignan

Sprint Nextel and other Clearwire investors are reportedly going to pump another $1.5 billion into the WiMax provider.

According to the Wall Street Journal (Techmeme):

Sprint would invest $1 billion and its Clearwire joint venture partners, a group which includes Comcast Corp., Intel Corp, Time Warner Cable Inc. and Bright House Networks LLC, would kick in another $500 million, said these people. Google Inc., which has been a key joint venture partner, isn’t involved in the latest financing round, these people added.

The announcement is supposed to come this week.

The latest round of funding is necessary if Clearwire’s partners want to keep WiMax alive. WiMax has big backers, but the horse that’s going to carry the technology across the finish line—Clearwire—isn’t exactly a thoroughbred. Meanwhile, Verizon and other big carriers are betting on LTE, a rival technology to WiMax.

At least Clearwire can continue its rollout into major metropolitan areas. Clearwire was betting on a big fourth quarter, but that was a date with disaster from the start.

October 29th, 2009

Sprint loses money, more subscribers in third quarter

Posted by Larry Dignan @ 5:04 am

Categories: Earnings, Economy, Mobile, Sprint, Sprint Nextel, Wired & Wireless

Tags: Sprint Communications, Operational Accounting, Finance, Larry Dignan

Sprint Nextel continues to lose money and subscribers.

The company said Thursday that it reported a third quarter net loss of $478 million, or 17 cents a share. That tally was 3 cents worse than Wall Street expectations. Revenue was $8 billion, down 9 percent from a year ago.

In addition, Sprint lost 135,000 retail subscribers (statement). However, Sprint said that its year-over-year post paid gross additions were a sign the company was headed in the right direction. Sprint has been saying that for a few quarters, but it’s unclear how long the Wall Street patience will last.

The big question: Is this blip something for Sprint to really get excited about?

As for the outlook, Sprint said it expects that subscriber losses should improve in 2009 from 2008. The company also expects sequential subscriber improvement.

By the numbers:

• Post-paid wireless churn in the third quarter was 2.17 percent compared to 2.15 percent a year ago and 2.05 percent in the second quarter. The uptick was due to “seasonality and heightened competition.”
• Prepaid churn—Sprint owns Boost Mobile—was 6.65 percent, down from 8.16 percent a year ago and 6.38 percent in the second quarter.
• Wireless service revenue in the third quarter was $6.3 billion, down 8 percent from a year ago.
• Sprint generated free cash flow of $664 million.
• The company has $5.9 billion in cash, equivalents and investments.

October 19th, 2009

Sprint acquires iPCS; Deal ends legal spat

Posted by Larry Dignan @ 5:50 am

Categories: General, Mobile, Sprint, Sprint Nextel, Wired & Wireless

Tags: Sprint Communications, iPCS, Litigation, Wi-Fi, Wireless And Mobility, Business Operations, Larry Dignan

Sprint Nextel said it will acquire iPCS for $831 million in a move that adds almost 1 million wireless customers and shelves litigation between the two companies.

In a statement Tuesday, Sprint said the $831 million price tag ($24 a share) includes the assumption of $405 million in debt. Sprint added that it expects to save $30 million a year from the deal and boost cash flow in 2010.

IPCS is a midwestern wireless carrier that sells Sprint service.

The deal, expected to close in the fourth quarter, will end litigation between the two companies. IPCS had argued that Sprint’s 2005 purchase of Nextel violated an exclusivity pact in the territories where it operates. Sprint was planning to divest its iDEN network as a result of the lawsuit.

September 14th, 2009

Sprint extends unlimited plan to businesses; Shares jump on acquisition rumors

Posted by Sam Diaz @ 9:30 am

Categories: Enterprise 2.0, Mobile, Sprint Nextel

Tags: Acquisition, Sprint Communications, Mergers & Acquisitions, Pricing, Corporate Law, Marketing Research, Investment, Finance, Marketing, Business Operations

Sprint said today that it’s rolling out new pricing plans for business customers, including the new “Any Mobile, Anytime” offering that it announced for consumers last week.

Called Business Advantage, the new offerings are an extension of Sprint’s aggressive campaign to lure back customers who left following the Nextel acquisition. In a statement, Sprint VP Tim Donahue, highlighted the competitiveness of the pricing plans:

No competitor can match our network assets, best-in-class convergence solutions, expanding 4G footprint, and wide portfolio of business products and devices. Now, when you add in our new Business Advantage plans, especially when combined with the Any Mobile, Anytime feature, no one can beat Sprint on value and competitive pricing. The plans can help businesses cut the cord and save money by purchasing based on the features they most use.

In a post earlier today, I shared the story of how I moved my wife and daughter to Sprint over the weekend, in a move that not only saves us money every month but introduces them to the mobile Web/smartphone world. In that post, I also noted how I first called my current service provider - Verizon - to check on promotions or new pricing plans before moving my wife and daughter to Sprint. The customer service rep asked me directly, “What can Verizon do to keep your business?” My reply was a simple, “Match Sprint’s pricing plan offerings and I’ll stay.” But, of course, she said she couldn’t do that. So we switched.

In recent months, I’ve written about new mobility management services - including a cross-platform offering by Verizon - that helps businesses better manage the hardware, software and service plans for a large enterprise.

Note to other carriers: These Friends and Family or Favorite Five or other calling circle plans designed to save customers money are all fine and good. But nothing counters “unlimited” like another “unlimited” plan. I’m living proof that consumers can be motivated by money-saving service plans. My guess is that business customers might also be motivated by those same types of plans.

Separately, a rumor that T-Mobile parent company Deutsche Telekom is studying a Sprint acquisition has surfaced again, months after it was originally reported. This time, the news comes from the UK newspaper The Telegraph, which says that an offer could come within a few weeks. While such a merger could beef up Sprint and T-Mobile to better compete with giants Verizon and AT&T in the U.S., others have pointed out that such a merger could be a nightmare. Sprint and T-Mobile use different technology.

Shares of Sprint were up more than 11 percent today on the Deutsche Telekom rumors.

September 10th, 2009

Sprint unveils unlimited mobile calling, data, text, MMS for $70

Posted by Andrew Nusca @ 6:28 am

Categories: Mobile, Sprint, Sprint Nextel

Tags: MMS, Mobile, Sprint Communications, Text Messaging/SMS/MMS, 3G, Cellular Phones, Consumer Electronics, Personal Technology, Online Communications, Andrew Nusca

Sprint on Thursday announced its “Everything Data Plan,” which offers unlimited mobile-to-mobile calling to any network, text messages, 3G data, and MMS for $70.

That’s any network, folks: Sprint, Verizon, AT&T, T-Mobile, etc., without using plan minutes

Sprint users will see much in common with its “Simply Unlimited” plan, the difference being the unlimited mobile-to-mobile voice, up from 450 minutes in that plan.

Customers who already have an “Everything Data” plan will be automatically upgraded.

The plan also comes with Sprint TV, GPS navigation, NFL Mobile Live and NASCAR Sprint Cup Mobile.

TechVi, which broke the story, notes that customers will still use plan minutes if roaming on another network when no Sprint coverage is available. In any Sprint coverage area, however, all mobile-to-mobile calls will be free of charge.

The plan fits nicely with a new Palm Pre or Pixi smartphone.

August 13th, 2009

Verizon, T-Mobile lead in wireless customer service; AT&T, Sprint below average

Posted by Larry Dignan @ 6:53 am

Categories: AT&T, General, Sprint, Sprint Nextel, Verizon, Wired & Wireless

Tags: Customer Service, Verizon Communications Inc., T-Mobile, AT&T Corp., Sprint Communications, Product Marketing, Customer Relationship Management (CRM), Marketing, Enterprise Software, Software

J.D. Power and Associates said Thursday that wireless customer service has improved overall as hold times and problem resolution has improved from six months ago. Verizon, T-Mobile and Alltel, which was acquired by Verizon, led the research firm’s customer service rankings.

Overall, customer care performance has improved to 735 on a 1,000 point scale. That’s up 12 points from February. Seventy-six percent of calls to customer service were resolved on first contact, up from 66 percent in February. Hold times also average 5.55 minutes, down from 6.58 minutes in February, according to J.D. Power.

Here’s a look at the rankings:

In general, J.D. Power identified the following customer service trends in wireless:

• A third of contacts are about the cost of service.
• Among customers that contact their carrier two to three times to fix an issue, 17 percent are likely to switch carriers. If a problem is solved in one contact, 10 percent are likely to switch.
• Fifteen percent of contacts are due to calls or text messages from carriers.

July 29th, 2009

Palm's Pre can't offset Sprint's subscriber losses

Posted by Larry Dignan @ 4:43 am

Categories: General, Mobile, Sprint, Sprint Nextel, Wired & Wireless

Tags: Palm Inc., Sprint Communications, Subscriber Loss, Palm Pre, Smart Phones, Consumer Electronics, Personal Technology, Larry Dignan

Sprint called the launch of the Palm Pre a success, but it wasn’t enough to offset a net subscriber loss of 257,000 in the second quarter.

The subscriber loss, which came amid a churn rate of 2.05 percent, illustrates Sprint’s challenge. The company is launching new handsets—Palm Pre, Samsung Instinct s30, HTC Snap and the BlackBerry Tour—but is still having trouble retaining customers.

Meanwhile, Sprint reported a wider-than-expected second quarter loss, a fact that may be worrisome given the carrier’s big bet on the prepaid market, which includes a bunch of subprime customers. On Tuesday, Sprint bought Virgin Mobile for even more prepaid exposure.

Sprint reported a net loss of $384 million, or 13 cents a share, on revenue of $8.1 billion, down 10 percent from a year ago. According to Thomson Reuters, Wall Street was looking for a loss of 2 cents a share.

Sprint CEO Dan Hesse summed up Sprint’s conundrum:

“The widespread visibility surrounding our record-breaking June launch of the Palm Pre handset gave us an unprecedented opportunity to showcase these improvements to customers as a new Sprint…However, we are not satisfied that we lost a quarter of a million customers in the quarter.”

The company said that its poor financial results were due to lower contributions from the post-paid wireless business. That fact raises a question about what Sprint wants to be when it grows up. By focusing on the prepaid business Sprint risks blowing apart its profit margins.

By the numbers:

• Sprint had 48.8 million customers at the end of the second quarter, down from 49.1 million in the first quarter. Of those customers, 34.3 million are post-paid.
• Credit quality of the post paid customer base improved to 85 percent prime. Of course that means 15 percent of the base is subprime credit quality customers.
• Churn in the quarter was 2.05 percent, down from 2.25 percent in the first quarter. In the second quarter a year ago, Sprint’s churn rate was 1.98 percent.
• Boost churn was 6.38 percent in the second quarter, down from 6.86 percent in the first quarter.
• Wholesale and other revenue was down 44 percent from a year ago. That decline is attributed “to subscriber losses from one of our large carrier customers.” There wasn’t a lot of color on Kindle DX and Kindle 2 wholesale subscriptions.

Now there are positives. Sprint lowered its debt, generated good cash flow and can fulfill its debt obligations. However, Sprint only expects that full year subscriber losses should improve in 2009. That’s not growth. Are slowing losses good enough?

July 28th, 2009

Sprint increases bet on prepaid; Buys Virgin Mobile USA

Posted by Larry Dignan @ 6:38 am

Categories: General, Mobile, Sprint, Sprint Nextel, Wired & Wireless

Tags:

Sprint Nextel on Tuesday said it acquired Virgin Mobile USA in a stock swap worth about $483 million. The move is designed to cement its growing position in prepaid calling plan market. Sprint already owns 13.1 percent of Virgin Mobile.

In a statement, Sprint said it plans to put Virgin Mobile and Sprint’s Boost Mobile under one umbrella. Sprint has embraced the prepaid calling market in the downturn. Sprint said the two prepaid brands are complementary and focus on different customer demographics.

Virgin Mobile USA had roughly 5.25 million subscribers through the first quarter with average revenue per user of $20. The operator lost 133,000 net subscribers in the first quarter.

Stifel Nicolaus analyst Christopher King said in a research note:

We view the acquisition as part of a strategy by Sprint Nextel to continue to diversify itself away from the post-pay business, in which it continues to struggle mightily against Verizon Wireless and AT&T Mobility.

Virgin Mobile USA has been a wholesale customer of Sprint Nextel for years, and recently acquired Helio, another pre-paid operator, last year. The transaction more than doubles Sprint’s pre-paid subscriber base, with Sprint ending 1Q09 with 4.3 million direct pre-paid subscribers, but also more than halves Sprint’s wholesale subscriber total, with Sprint reporting 9.4 million wholesale subs as of 1Q09.

King, along with other analysts, noted that Virgin Mobile had been struggling in the prepaid market. What’s unclear is whether Sprint sees itself as primarily competing with AT&T and Verizon or prepaid players like Leap Wireless and Metro PCS in the future.

Virgin Mobile USA CEO Dan Schulman will lead Sprint’s prepaid business when the deal closes. He’ll report to Sprint chief Dan Hesse. Matt Carter, who runs Boost Mobile, will report to Schulman.

Hesse noted that the Virgin Mobile USA purchase positions it better in the prepaid wireless market, which is growing quickly. In recent quarters, Sprint has talked up its Boost Mobile service, which has seen lower churn rates. Sprint reckons that the Virgin Mobile purchase will be cash flow positive before administrative, operational and distribution synergies. Sprint will license the Virgin Mobile USA brand from the Virgin Group for $12.7 million through 2021.

The deal has a few moving parts. Each shareholder of Virgin Mobile USA gets Sprint shares valued at $5.50. Virgin Group, which owns 28.3 percent of Virgin Mobile USA will get $5.12 a common share and $8.50 for preferred shares. SK Telecom, which owns 15.3 percent of Virgin Mobile USA, gets $4.94 per common share and a preferred share rate of $8.50.

And to handle all of that wheeling and dealing Sprint said it will issue between 81.4 million and 104.7 million shares.

July 9th, 2009

Sprint outsources network maintenance and operations to Ericsson

Posted by Larry Dignan @ 10:43 am

Categories: General, Infrastructure, Mobile, Outsourcing, Sprint, Sprint Nextel

Tags: Network Maintenance, Network, Ericsson Inc., Sprint Communications, Networking, Larry Dignan

Sprint on Thursday said it would outsource its network to Ericsson in a seven-year deal valued at $4.5 billion to $5 billion.

The deal (statement, Techmeme) allows Sprint to offload the costs associated with running its network. Sprint will transfer 6,000 employees to Ericsson. Ericsson will now handle all the day-to-day operations, maintenance, climbing cell towers and other items. The transfer of the network and the employees that go with them will happen in by the end of the third quarter.

Steve Elfman, Sprint’s president of network operations and wholesale, said on a conference call that Sprint still owns its network and is responsible for strategic plans and investments. Elfman added that the goal was to improve the quality of the network and deploy next-generation technologies. Sprint will keep its customer service operations.

Sprint didn’t disclose exact numbers on savings. Elfman said Sprint expects to cut cost per labor unit. Sprint will also avoid investment in the tools that Ericsson already has. Economies of scale will enable Sprint-Ericsson to cut costs on software licenses and other expenses. Those savings will be invested in expanding network coverage.

Among other key parts of the deal:

• Sprint chooses technology platforms and vendors;
• Ericsson maintains Sprint’s wireless and wireline networks;
• Ericsson will optimize Sprint’s inventory of network assets;
• Ericsson and Sprint will focus on improving processes;
• No layoffs are anticipated due to the deal and Ericsson will set up shop in Overland, Kansas, Sprint’s headquarters.

In many respects, the Sprint deal is a straightforward outsourcing pact. However, such deals are rare in the wireless world.

Clarification: My U.S.-centric lens got the best of me. These wireless pacts are common abroad. Camille Mendler, an analyst at the Yankee Group, said:

Outside the United States, deals like Sprint and Ericsson’s are commonplace. Since 2002, wireless operators worldwide have spent $29 billion on network-related outsourcing and managed services deals. It just hasn’t happened in the rather backward US market until now.

July 9th, 2009

In an economic downturn, prepaid mobile is big business

Posted by Andrew Nusca @ 3:00 am

Categories: Advertising, Business 2.0, Business Intelligence, Communications, Economy, Innovation, Mobile, Motorola, Retail, Sprint, Sprint Nextel, Telecommunications

Tags: Segment, Mobile, Handset, Boost Mobile, Wireless, Wi-Fi, Wireless And Mobility, Cellular Phones, Consumer Electronics, Personal Technology

Why pay $100 or more each month for a two-year cell phone contract when you can pay $50 and keep yourself off the hook?

At least that’s the thinking behind the latest ad campaign by Boost Mobile, a prepaid, or “no-contract,” mobile service provider whose parent company is none other than Sprint Nextel.

In an economic downturn, consumers are reevaluating the privilege of paying mobile service providers — including Sprint — $50 to $150 (or more) per month for their cell phone. And according to Boost Mobile president Matt Carter, that’s a revolutionary idea worth calling someone about.

ZDNet: How much have sales of prepaid phones increased since the beginning of the economic downturn?

Read the rest of this entry »

July 2nd, 2009

Analyst: Palm Pre supply, demand in balance

Posted by Larry Dignan @ 7:26 am

Categories: General, Mobile, Palm, Smartphones, Sprint, Sprint Nextel, Wired & Wireless

Tags: Palm Inc., Palm Pre, Smart Phones, Consumer Electronics, Personal Technology, Larry Dignan

Palm Pre inventory at its key stores are in balance with demand with roughly 40,000 devices sold a week, according to a J.P. Morgan report.

In a research note, J.P. Morgan analyst Paul Coster wrote:

We have concluded our 3rd round of channel checks for the Pre. The gap between supply and demand has closed at Sprint and BestBuy stores, waitlists are eliminated or down, and most stores now have Pre devices in stock. We believe, since launch, about 270K units will have shipped by the holiday weekend. Demand at Sprint channels seems to be hovering at 40K per week.

Simply put, Palm has weathered its initial inventory crunch and now we’ll get a better picture of ongoing Pre demand. Coster noted that shipments to retailers is less frequent than two weeks ago. Overall though, demand seems constant.

Coster estimates that 210,000 Pre units shipped in June and that an additional 230,000 will be delivered in July and August.

Also see: Palm shares up after reported loss; upbeat about future with Pre, WebOS
Apple thumbs nose at Palm, reports 1 million iPhone 3G S units sold in 3 days

June 16th, 2009

RIM officially announces Tour; Coming to Sprint and Verizon Wireless

Posted by Larry Dignan @ 6:19 am

Categories: General, Mobile, RIM, Research In Motion, Sprint, Sprint Nextel, Verizon

Tags: Research In Motion Ltd., Sprint Communications, Verizon Wireless, 3G, Handhelds, Cellular Phones, Consumer Electronics, Personal Technology, Hardware, Larry Dignan

RIM on Tuesday announced that BlackBerry Tour, a new 3G BlackBerry that will be available initially on Sprint and Verizon Wireless.

The Tour (statement) is a hybrid between the Curve and the Bold. Sprint and Verizon Wireless have both launched Tour preview pages. Verizon Wireless chief Lowell McAdam also gave the Tour a plug at a recent investor conference.

Among the specs:

• The Tour is black and chrome and measures 112mm x 62mm x 14.2mm and 130g.
• 2.44″ display;
• 3.2 MP camera;
• Full HTML browser;
• 256MB flash memory;
• 5 hours of talk time and 14 days of standby time.
• The Tour (model 9630) is expected this summer.

June 8th, 2009

Forget the iPhone: Palm targets RIM, business customers with Pre

Posted by Andrew Nusca @ 7:40 am

Categories: Android, Apple, Mobile, Motorola, Nokia, Palm, Research In Motion, Smartphones, Sprint, Sprint Nextel, Telecommunications

Tags: Apple iPhone, Research In Motion Ltd., Palm Inc., Sprint Communications, Smart Phones, Handhelds, Team Management, Cellular Phones, Consumer Electronics, Personal Technology

Few business customers look to Apple’s iPhone as the solution for the enterprise. Perhaps it’s the device’s popularity with teenagers. Perhaps it’s the device’s pedigree as a media player. Perhaps it’s because RIM exerts such power over the business community with its BlackBerry lineup, and the iPhone seems like it has more flash than substance.

Whatever the reason, the new Palm Pre smartphone (available now on Sprint) is seen as the strongest challenger yet to the iPhone crown. But make no mistake: it’s not the iPhone Palm executives want to dethrone.

It’s the BlackBerry.

In a New York Times report posted this past Friday — on the eve of the Pre’s successful launch — the real objective behind Palm’s launch of its smartphone escaped the lips of company executives.

Read the rest of this entry »

June 8th, 2009

Analysts deem Palm launch a success; Pre inventory replenishment eyed

Posted by Larry Dignan @ 2:14 am

Categories: General, Mobile, Palm, Sprint, Sprint Nextel, Wired & Wireless

Tags: Palm Inc., Sprint Communications, CNet News, Sales Strategy, Balance Sheets, Sales Force Management, Sales, Financial Statements, Financial Accounting, Finance

Updated: Analysts called the Palm Pre launch a success, but supplies were tight.

Piper Jaffray analyst Michael Walkley deemed the initial Pre sales “solid.” And J.P. Morgan analyst Paul Coster reckoned that most Sprint stores he called were sold out. Some reps claimed that the Pre was sold out nationwide. The rub: Stores didn’t carry many Pre devices at launch.

CNet News’ Maggie Reardon reported that Sprint’s flagship Manhattan store had 200 units to launch. A Best Buy at 23rd Street in New York had 40 to 48 phones. Bloomberg put Sprint’s Mission Street store in San Francisco with an inventory of 60 phones. Chicago stores carried 30 to 50 Pres.

Gallery: Here’s what’s inside the Palm Pre

• Palm special report
• Palm Pre weekend: Sprint could steal Palm’s moment

Coster said some Sprint stores expected more Palm Pres to arrive this week, but most reps were unclear. Coster wrote in a research note:

Most Sprint representatives were unclear on when additional Pre units would be delivered, and in what quantity. Some suggested that new units would be delivered this week, with answers ranging from Tuesday (Boston) to Thursday (Los Angeles).

Add it up and the Palm launch was about as expected:

We conclude that the launch of the Palm Pre has probably been successful. Sales in the first two days probably exceed 50,000, which aligns with our expectations, but sales are very probably short of the 146,000 reported for the first generation Apple iPhone, owing to capacity constraints in manufacturing (or imposed by PALM’s balance sheet). We believe the ’soft launch’ is probably proceeding to plan. To be reassured, we need to see Sprint channel inventory replenished this week.

Morgan Keegan analyst Tavis McCourt said:

At least from our point of view, the Pre launch was a success, although supply was clearly limited. We believe a good estimation of Pres sold over the weekend is in the 100k-150k range, but sales probably could have been 2x this with enough supply. As a point of reference, the iPhone 3G sold nearly 1 million in its first weekend with ample supply. We expect supply of Pres to hit Sprint stores this week and for distribution to be more or less fully stocked with inventory by July/August. For the August quarter, we have assumed sell through of 500k Pres and sell-in of 650k, both of which look very reasonable after the first weekend. The next few weeks will be crucial for Palm, as any shortcomings with the OS, if there are any, would be brough to light.

Once Palm rebuilds that Pre inventory we’ll get a better picture for ongoing demand.

Walkley wrote:

By Sunday, our checks indicated the majority of stores had sold out of initial quantities. Overall, we believe sales were slightly less than our initial expectations of 150-200k units selling over the weekend.

June 5th, 2009

Sprint: Pre exclusive longer than 6 months; The squabble over 'or so'

Posted by Larry Dignan @ 11:08 am

Categories: General, Mobile, Palm, Sprint Nextel, Wired & Wireless

Tags: Palm Inc., Sprint Communications, Verizon Wireless, Corporate Communications, Cellular Phones, Marketing, Consumer Electronics, Personal Technology, Larry Dignan

Sprint CEO Dan Hesse has thrown a brushback pitch to Verizon Wireless: Lay off the Pre talk because Sprint’s exclusive with Palm lasts more than six months. 

CNet News’ Maggie Reardon reports:

“They need to check their facts,” Hesse said in an interview at a press event here to launch the Palm Pre. “That just is not the case. Both Palm and Sprint have agreed not to discuss the length of the exclusivity deal. But I can tell you it’s not six months.”

Here’s where things get sticky though. Verizon Wireless CEO Lowell McAdam said last week that the carrier wanted to add the Pre, along with other neat handsets, to its lineup. Here’s what he said exactly (emphasis mine):

“We’re excited about our device pipeline. We’ll offer a steady stream of devices from multiple vendors. Over the next six months or so you’ll see devices like the Palm Pre and a cousin. You’ll see a second generation Storm. You’ll see the Tour as well. You’ll see Motorola back in our portfolio. And yes You’ll see Android devices as well. We’ve had some very good dialogue with Google and will be bringing Android devices in the near future.”

Key words: Or so. What’s the definition of “or so?” That could be 8 months. Maybe 9 months. Hesse’s response was to chatter that Verizon Wireless could have the Pre within 6 months. 

Also see: Gauging the Palm Pre’s success: It’ll take time

So what’s clarified? Not a whole lot. Verizon Wireless says it will get the Pre in six months or so. Sprint says there’s no way Verizon Wireless can have the Pre in six months because it has an exclusive—an unquantified one. The Sprint-Palm agreement could be 7 months and give Hesse plenty of room to shoot down Verizon Wireless talk.

Add it up and both CEOs are probably right. Betcha Sprint doesn’t have an exclusive for a full year?

Roll the video:

May 20th, 2009

Palm's Pre launch: Assessing the risks

Posted by Larry Dignan @ 6:05 am

Categories: Gaming, Mobile, Palm, Sprint Nextel, Wired & Wireless

Tags: Apple iPhone, Palm Inc., Smart Phone, Sprint Communications, Palm Pre, Walkley, Smart Phones, Cellular Phones, Handhelds, Pricing

Palm’s corporate savior—the Pre—arrives June 6 and Sprint and other retailers are expecting a hit. However, there are multiple looming questions ahead.

Here are the items to watch ahead of the Pre’s lift-off (Techmeme). 

Will shortages be a problem? Sprint has said it expects a limited supply of the Pre. Part of this is by design: Shortages can mean more buzz. More importantly, Palm and Sprint are taking a conservative view of consumer demand. 

Read the rest of this entry »

May 19th, 2009

Palm Pre has a date: June 6; Price: $199.99; A 'crossover' device?

Posted by Larry Dignan @ 4:10 am

Categories: General, Palm, Sprint Nextel

Tags: Palm Inc., Palm Pre, Telecom & Utilities, Larry Dignan

Sprint Nextel and Palm have made it official: The Pre is landing June 6. 

The highly anticipated phone will be available in Sprint Stores, Best Buy, Radio Shack and a few Wal-Marts for $199.99 with a two year contract. That price includes a $100 rebate, according to a Sprint statement and Palm blog post. 

In a research note, JP Morgan analyst Paul Coster said that Palm had to go with the $199 price for the Pre. He also expects a Pre launch that slowly builds because Palm’s balance sheet doesn’t support an aggressive launch. Coster wrote:

The $199 price point was absolutely necessary, in our view, to go head to head with RIM and Apple. We believe PALM will execute a “soft launch,” meaning that it will ramp slowly. The balance sheet does not support a very aggressive ramp. We believe less than 500K units will ship in the first month, and there could be reports of stock outs (adding to the buzz).

Simply put, if you want the Pre you’ll need to get one early.

Rumors had been circulating that the Pre’s launch date would come just before the June 8-12 Apple WWDC conference, which will tout the iPhone 3.0 software. As noted by Andrew Nusca, it will be quite the summer for smartphones. 

The Palm home page says it all:

To say there is a lot riding on the Pre launch would be an understatement. For Palm, the Pre represents the future of the company. Palm has been burning cash as it waits for the Pre to launch. Meanwhile, the Pre represents the platform for Palm’s future. Pre’s Web OS is software future Palm devices will be built on. 

Also see: Clash of the Touch Titans; iPhone 3G 3.0 vs. Palm Pre

Image Gallery: Palm Pre device running Palm Web OS

Most popular Pre posts and galleries

For Sprint, the carrier is hoping the Pre is its equivalent of the iPhone, an exclusive device that breeds loyal customers that stay with the carrier. Sprint has the second highest churn rate among major carriers, just behind T-Mobile.

As noted in a Forrester report, Pre is staking out a middle ground between utility and entertainment. Sprint’s statement didn’t discount that notion. The carrier pitched the Pre as being a consolidation device—one smartphone that can do it all. Sprint also called the Pre a “crossover” device.

For those who juggle life circa 2009 – bouncing from conference call to car pool schedule, from doctors’ numbers to doctoral thesis data, from social calendars to social networking – Pre marks a new wireless crossover standard.

The well-known Pre features being touted include:

• Palm’s activity cards approach to organizing tasks;
• The ability to organize data and conversations;
• Combined messaging;
• And universal search.

May 8th, 2009

AT&T and Verizon: Is the smartphone growth train slowing?

Posted by Larry Dignan @ 2:25 am

Categories: AT&T, General, Mobile, Sprint Nextel, Wired & Wireless

Tags: Smart Phone, Verizon Communications Inc., AT&T Corp., Carrier, Wireless, Subscriber Growth, Smart Phones, Wi-Fi, Wireless And Mobility, Consumer Electronics

J.P. Morgan analyst Mike McCormack raised a bit of a ruckus with a downgrade of AT&T and Verizon largely based on “on deteriorating wireless fundamentals, specifically in the higher value postpaid subscriber base of each company.”

For those of us following the wireless sector McCormack’s downgrade of the two wireless giants prompted a few “hmm” moments on Thursday. After all, Verizon and AT&T have been rocks in the downturn. These companies churn out solid earnings, haven’t shown that much wear and are turbocharged by wireless businesses that are humming. 

McCormack’s point is that these wireless businesses are facing slowing growth. He downgraded both companies to a neutral and cut the price targets of the stocks slightly. He’s clearly not predicting a massive decline, but weak growth ahead. 

In sum, McCormack made the following key points:

Subscriber growth is slowing and there will be price competition that will pressure average revenue per user and profit margins. He said in a research note:

With high wireless penetration, more aggressive competition from prepaid, and the struggling economy as a backdrop, wireless subscriber growth at AT&T and Verizon continues to decline. After falling below 10% for the first time in more than five years last quarter, postpaid subscriber growth was 8.8% and 8.7% for AT&T and Verizon, respectively, in 1Q09. While postpaid add growth at AT&T has outperformed declines at Verizon, we believe the company is unlikely to duplicate its past success absent a meaningful product refresh from Apple (which would likely impact margins).

Consumers are focusing on prepaid plans, which benefit carriers like Leap Wireless and Sprint with its Boost Mobile service.

To keep smartphones flying off the shelves AT&T and Verizon will have to offer higher subsidies. Meanwhile, carriers are hostage to chasing the next big device to keep growth going. McCormack notes:

The move to devices driving subscriber behavior is disturbing, in our view, taking the carriers out of the driver’s seat and commoditizing the carrier’s networks.

Let’s take those points one at a time. For starters, subscriber growth is slowing. 

However, McCormack assumes there are no iPhone refreshes ahead when we all know there will be new Apple devices on deck. Those Apple devices also affect Verizon, which in turn will step up its hunt for better smartphones. He does have a point about these refreshes only keeping existing customers around, but there’s little evidence that smartphone growth will fall off a cliff. In fact, smartphone demand was up 4 percent in a horrid first quarter, according to IDC. And AT&T has said that roughly 40 percent of iPhone customers are new to the carrier. 

Unless you believe there’s a big move coming to dumb phones, which may get smarter, there’s enough data lying around to question whether subscriber growth will fall dramatically. 

And then there’s the prepaid plans. McCormack is on to something here. The market for folks that sign contracts does appear saturated. Meanwhile, prepaid plans are simply a better deal for folks that actually want a phone that just texts and makes calls. Sprint’s earnings show that these prepaid plans can be popular, especially in a downturn. The real potential killer: Prepaid plans with smartphones. 

McCormack notes:

As consumers continue to look for ways to trim household spending, we believe more flexible prepaid offerings should garner an increasing share despite the broader coverage and quality concerns. In addition, the headline price points will likely dampen subscriber appetite for the substantially higher-priced offerings at AT&T and Verizon.

And finally, McCormack’s point about price competition is duly noted. The $99 smartphone is the new price point that’ll sell. Good luck, Palm Pre. What happens if the $199 price point is deemed too expensive? What’s unclear is whether the networks are really becoming a commodity. 

Although some of the features on the networks are the same reliability and speed are the differentiators. You just want the network to work reliably. And that means you’ll pay for Verizon Wireless and AT&T relative to others. If all networks suddenly become reliable wireless carriers will be destined to be a commodity. But in my experience that’s just not the case. To be sure, the wireless carriers are officially in the buzz game—you need hot devices—but that doesn’t mean that the actual networks become an afterthought.

May 7th, 2009

Wireless churn wars: T-Mobile lags the pack

Posted by Larry Dignan @ 2:53 am

Categories: AT&T, Earnings, General, Mobile, Sprint Nextel, Verizon, Wired & Wireless

Tags: T-Mobile, Wireless, Wi-Fi, Wireless And Mobility, Larry Dignan

T-Mobile’s prepaid churn rate was 2.3 percent in the first quarter, dropping it to last place among the leading wireless carriers. 

The churn rate, delivered in T-Mobile’s first quarter results, was quite a turnabout compared to a year ago when the wireless carrier came in with a rate of 1.7 percent. 

With all the wireless carrier earnings complete here is a look the churn standings (based on prepaid accounts):

1. Verizon Wireless: 1.14 percent
2. AT&T: 1.2 percent
3. Sprint: 2.25 percent
4. T-Mobile: 2.3 percent

In a statement, T-Mobile said its churn rate increase was “impacted by competitive intensity.” Translation: Any bump that T-Mobile received from devices like the G1 has evaporated. 

T-Mobile still managed to add 415,000 net customers in the quarter. The company argues that it is aggressively rolling out its 3G network and lining up devices to attract more customers. 

Total revenue for T-Mobile was $5.4 billion in the first quarter, up from $5.19 billion a year ago. Net income in the quarter was $322 million, down from $462 million a year ago. Average revenue per user was $48, down from $51 a year ago. 

The company ended the quarter with 33.2 million subscribers.