The deal has been characterized by Sprint’s CEO Dan Hesse as a gamble, but a necessary one to woo customers back to the brand. He cites the absence of the iPhone from the company’s selection of wireless devices as the leading cause for subscriber attrition.
Suffering from declining sales, a trend Sprint only just put the brakes on in fiscal 2010, the number three US mobile service provider has lost money in each of the past four years. Sprint’s stock has also taken a pounding during that period, dropping 80% since the iPhone hit the market in mid-2007. AT&T was the first carrier to offer the device, but the company lost the distinction of being the only US carrier to offer the phone earlier this year when the phone also became available from top US carrier Verizon Wireless.
For Apple, which announced the new version of the iPhone today, expanding its list of carrier partners in the US could help firm up the company’s position against Android. Google’s mobile platform has rapidly grown to be the top smartphone OS since its release in late 2008, surpassing not only Apple, but stalwarts like Nokia (which recently ditched Symbian for Microsoft‘s Windows Phone) and Research in Motion as well.
There’s no need to rehash all the new features of the forthcoming iPhone 4S here, but essentially Apple has beefed up the device’s processors, storage capacity and camera. It also claims to have fixed the infamous antenna design flaw, while boosting data throughput and battery life. As far as iOS 5, the new version of its mobile software, Apple is touting improvements to the messaging, email, notifications, reminders, and Web browsing.
Despite the allure of shiny new Apple products, this question looms for Sprint: Will the company be able to continue providing those beloved unlimited data plans to smartphone users given the considerable financial burden it will take on by subsidizing the cost of the iPhone to entice new customers? If not, the company will lose one of the key differentiators of its brand. AT&T and Verizon both threw in the towel and began charging customers for data usage over a monthly threshold after the free-for-all approach crushed their networks under the weight of compulsive Facebooking, sports highlight replaying and adorable kitten video sharing.
If the iPhone turns out to be a hit for Sprint, the company might find itself in a similar situation, but with how things look for the company at the moment, that may not be the worst problem to have.