Sprint-Nextel (S) has long been the little brother in the communications world the last few years, but there is some hope on the horizon. Sprint announced that this summer it would be introducing a new phone called the HTC EVO 4G LTE. Beyond just a new phone, this product claims to be the first HD voice enabled cell phone in the United States. We all hate fuzzy calls and producing a product that makes conversations more clear would be an attractive feature.
If this is true, then the HTC phone could create a wedge in the cell phone world and bring Sprint along with it. Sprint has been waiting for a groundbreaking product to go along with its unlimited data package. If Sprint can pair this so called groundbreaking phone with its plan, it could climb up the ranks. The degree of improvement this phone can make is yet to be seen though as it has yet to hit consumer's ears. Sprint will start pre-selling the phone on May 7th and distribute it in the next few months following.
Sprint is hoping that this move will put it on the cutting edge of cell phone innovation. It has been lagging behind with a stock value hovering around $3. At this price it may be a tremendous investment if the phone is going to be as groundbreaking as Sprint claims. Just as important as the phone's innovation, will be going to be how Sprint markets it in the next two months. The key is going to be how Sprint convinces clients to buy the EVO over the other range of phones.
The problem for Sprint is that it is working its way from the back. It has to compete with the bigger names. Unfortunately for Sprint, AT&T Inc. (T) is releasing a new phone this weekend. AT&T's website claims that this phone is its biggest product introduction ever. Figuring that AT&T also released the iPhone, this seems like a bit stretch. However, at only $99 the Nokia Lumia 900 does provide a cost effective option to the iPhone. The Lumia uses a new interface program that is supposed to merge your social network on to one navigable screen. AT&T is hoping this phone can compete with the likes of the iPhone and Galaxies currently on its shelves. Although the new features of the Lumia are nice, the $99 price tag is even more enticing.
This next week will show how popular the phone will be. I would keep an eye on AT&T's stock value in the coming days. I would encourage you to watch the sales of the Lumia next week. It will be released Easter Sunday and so it may miss the initial uptick in buys over its opening weekend. So if the sales for Lumia are low, then there is a bigger market for the EVO coming up this summer. Once again, at around $3 per share this is not a tremendous price to roll the dice on if you have faith in the new EVO.
One company that is not introducing a new product is Vodafone (VOD). Vodafone has decided not to have Verizon (VZ) release any new phones at the moment but, instead, the company is expanding its services. Its focus appears to be on improving its current services to its customers. I personally like this move from a corporation standpoint but I would not expect any big fluctuations in stock value. Having one of its competitors staying still for the time being will help Sprint in its attempt to shake the market a bit with EVO.
Though, Vodafone isn't nearly the biggest army in the battle. Sprint, as always, will have to worry about the influence of its largest competitor. Apple (AAPL) has seen its stock soar recently, and over the last few years. It shows no signs of slowing down either with iPhone and iPad sales still bringing in a hefty profit. This is not anything new, and still represents a major burden that Sprint, and any phone retailer debuting a new line, has to deal with. Apple, simply, is always competing.
Looking Sprint's competitors, it's hard to see where Sprint is going to be able to break through. The EVO needs to be as groundbreaking as Sprint claims, and the company needs to be prepared to support the phone with a great deal of might. Call quality is the crème de la crème for cell phone users and improving that by a dramatic amount will bring in more customers. So, if the EVO is successful, it could be huge. If it's only a minor change, don't expect a herd of new buyers.
The issue is whether this phone and Sprint's network are capable of such a task. Even if this phone meets all of the expectations Sprint is going to have to meet the network needs of this phone. Looking at coverage data over the country Sprint has decent bandwidth on its network across the country, but AT&T and Verizon are in the lead. Sprint's roll out plan for the EVO has to be bigger than just the phone and focus on providing HD quality phone calls nationwide. If Sprint is able to manage both these tasks, then, at around $3 per share, it could be a steal.
With the present low value of Sprint's stock, I see little risk in investing more in Sprint. If the phone is a success or if good reviews start peaking up in early May, then the stock will rise accordingly. Later down the road, if the phone is any sort of success, you could see a hefty return on your investment. However, if the initial consumer reports are bad, then dump the stock and run to the safety of the bigger players. Either way, a lot more clarification will come in the next few weeks, so keep a sharp eye on it.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
