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Sprint Nextel customers had been waiting for years for the iPhone to come to the carrier. And it finally arrived this fall. But will the iPhone be the only important device Sprint promotes from now on?
Is Sprint a one-trick pony with the iPhone?
Hi Maggie,
I see Verizon Wireless and AT&T releasing new phones like crazy. I’m a Sprint Nextel customer, and I haven’t noticed Sprint announcing the same number of new devices. I know they now have the iPhone and that’s a big deal for them. But I’m not an iPhone fan. My question is when will Sprint offer any newer phones besides the iPhone and the Galaxy S Epic?
Thanks,
Dwayne
Dear Dwayne,
Are you saying that the iPhone 4S isn’t enough for you? That seems hard to believe. (Please, note the sarcasm.)
I don’t have a crystal ball, so I can’t say for certain which, if any, new smartphones Sprint has on its road map. But I don’t expect any high-end Google Android or even Microsoft Windows Phone smartphones from Sprint anytime soon.
The reason is that Sprint has bet big on the iPhone 4S. In fact, it’s staked its whole future on the success of the iPhone. To get the iPhone, Sprint had to promise Apple it would sell a certain volume of iPhones. Because it subsidizes every smartphone it sells to its subscribers, Sprint initially eats the cost of the devices it sells. It eventually makes the money back from the subsidy over the life of a subscriber’s contract.
Josh Miller
In order to get the iPhone, Sprint promised to pay Apple at least $15.5 billion over the next four years for the iPhone, according to Reuters. And it could pay Apple more if it sells more iPhones.
Sprint executives said on the company’s third quarter conference call that they don’t expect the company to make a profit on the iPhone through 2015.
On that call, Dan Hesse, Sprint’s CEO, likened the iPhone to an expensive baseball player who can fill the stands of a high-priced stadium. And he said that the iPhone is worth every penny, because the average iPhone customer is 50 percent more valuable than the average smartphone customer over the life of the relationship.
He said this is driven by the fact that iPhone subscribers use the Sprint network more efficiently and the churn rate for iPhone customers is typically less than for other smartphone users. Whether this is true or not is yet to be seen. Sprint hasn’t even been selling the iPhone 4S for a full quarter yet.
But he is betting that the popularity of the iPhone will draw more new customers who will fill the network, much like baseball fans may fill a stadium to see a star player.
It seems like the strategy may be paying off, at least in its early stages. Chief Financial Officer Joseph Euteneuer said earlier this week at an investor conference that sales of the iPhone have been better than expected. And he said that the company has actually added more new customers than it had originally anticipated.
So what does this mean for Sprint customers who may want something other than the iPhone? As I’ve explained Sprint’s success is tied directly to the success of the iPhone and the iPhone alone. So for the next couple of years, I wouldn’t expect Sprint to push another device harder than it pushes the iPhone.
“To meet their target, they’d effectively have to turn their entire company into an Apple shop,” Sanford Bernstein analyst Craig Moffett told Reuters a couple of months ago when Sprint first made its sales target public.
What this means for other handset makers is that their devices will likely take a back seat to the iPhone in terms of sales and marketing. Carriers are an essential piece of the marketing strategy for any new smartphone, both in terms of money they contribute to the advertising campaigns and in terms of training staff to sell these devices.
So I don’t expect any of the Google Android or Windows Phone manufacturers lining up to sell their hot new devices on Sprint. I think that it’s very unlikely that you will get the same breadth of device selection on Sprint that you could get on AT&T or Verizon Wireless.
Turning 4G smartphones into a mobile hotspot
Dear Maggie,
I’m a Verizon Wireless customer and I’m hoping Santa will bring me a new 4G smartphone for Christmas. I currently have an old phone (not a smartphone) for calls and a broadband Mi-Fi device that I use for my laptop connection. My goal is to eliminate my Mi-Fi and the contract. Instead, I want to use my smartphone to provide a wireless connection for my laptop when other networks are unavailable. I assume a new smartphone will allow me to do this. Which one do you think I should tell Santa to get me?
Thanks for your help!
Mike
Dear Mike,
Any of the 4G smartphones on Verizon Wireless will allow tethering. But you’ll have to get a separate tethering plan for your device. This will cost you $20 for 2GB of data. And that will be in addition to the $30 you are paying for the 2GB of data for your smartphone.
I recently wrote about some of the new 4G smartphones on Verizon in my column. This will give you a good idea of what’s coming:
And here is another Ask Maggie where I discuss Verizon’s 4G line-up.
Tethering via Android allows users to share their mobile broadband 4G LTE data plan on Verizon’s network with other WiFi-enabled gadgets, serving as a mobile router or hotspot for instant data access.
The problem is that tethering uses up your battery quicker than typical 4G and Wi-Fi use on your smartphone. So you may want to have a spare battery or an extended battery handy if you plan to use your smartphone as a modem very often.
That said, if you only need to tether your device ocassionally, then using your smartphone as mobile hotspot may be a good way to go. Verizon’s data plans for smartphone tethering start at $20 for 2 GB of data when added to a smartphone data plan of $29.99 or more. Every GB after the 2 GB is an additional $20.
The least expensive plan that Verizon Wireless offers for Mi-Fi devices is $50 a month for 5GB of data.
But if you plan to use the mobile hot spot for more than 2GB worth of data per month, then I’d suggest that you continue to use your Mi-Fi device and pay for the $50 5GB plan.
Some people may suggest that you root your phone and download a tethering app from the Android Market to bypass Verizon’s tethering fee. But beware of these suggestions. Rooting your phone will void your warranty. And Verizon will no longer be able to offer support for your phone. What’s more, Verizon has been cracking down on people who use these apps to get around their fees.
I hope this advice was helpful. And I hope Santa brings you exactly what you want for Christmas!
Ask Maggie is an advice column that answers readers’ wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie’s advice. If you have a question, I’d love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put “Ask Maggie” in the subject header. You can also follow me on Facebook on my Ask Maggie page.
