New iPhone-like Devices Can Stem Further Sprint Losses

| About: Sprint Corporation (S)

Sprint (NYSE:S) competes with AT&T (NYSE:T) and Verizon (NYSE:VZ) in the mobile phone subscription plans business, and with TracFone, MetroPCS and Leap in the prepaid plans business. The company has lost subscribers over the years owing to its deteriorating customer service and brand image, and a comparatively weak mobile phone lineup.

However, a hit device like Apple’s (NASDAQ:AAPL) iPhone and a wider array of competitive smartphones can help revert Sprint’s subscriber losses.

AT&T and Verizon Have Lured Sprint’s Customers With Better Device Offerings

Sprint has lost customers in recent years partly due to a weak mobile phone lineup. Customers have left Sprint for AT&T and Verizon who have consistently offered better smartphones. The choice of handsets is becoming a key factor in choosing the service provider today.

For example, AT&T reaped tremendous success from the iPhone and it’s no surprise that several customers have left Sprint for this blockbuster device. Since iPhone’s launch in 2007, AT&T has grabbed about 3% additional share in the US wireless market. Verizon’s success has been driven by BlackBerry devices like the Storm and some of the latest Android-based devices, such as Motorola’s (MOT) Droid, gaining traction.

In comparison, Sprint has historically lacked hit devices in its mobile portfolio. Although it gained some traction in the past from Blackberry Curve (RIMM), the phone’s popularity could not match with that of Verizon’s Blackberry Storm. Moreover, Sprint’s HTC devices like Touch Diamond and Touch Pro could not sustain the initial enthusiasm generated.

New Sprint Devices Creating Demand

Sprint has launched exclusive LG devices and Motorola smartphones like i1 and Brute. The recently launched HTC EVO 4G that uses Android 2.1 is the first 3G/4G smartphone to enter the US market. The company is said to be running short on HTC EVO phones due to higher than expected demand. On the prepaid side, Sprint’s two new CDMA handsets and the first BlackBerry under the ‘Boost Mobile’ brand have created significant traction.

As a result, the penetration of smartphone users among Sprint’s subscriber base is increasing. Smartphones or touch screen handsets constituted about 57% of Sprint’s CDMA gross subscriber additions / upgrades in the first quarter of 2010.

Sprint Market Share Could Rebound

We know that Sprint has had a comparatively weaker lineup in the past and that the company is making efforts to have a better mobile portfolio. With the launch of new BlackBerry and Android-based devices this year, Sprint is certainly trying to beef up its phone offerings. It is also witnessing a reduction in subscriber losses.

Sprint’s key advantage is its attractive data plans, particularly in the prepaid business. The mobile plans coupled with compelling device offerings should help the company in getting back its customers. That said, the company will need to continue improving its customer service and brand image that have taken some beating in the past.

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