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Can Sprint Recover From This Fumble?

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Sprint Nextel (NYSE: S  ) is betting the house on the first-mover advantage of having a 4G wireless network before everyone else. The network is humming along from coast to coast in partnership with Clearwire (Nasdaq: CLWR  ) , reaching 43 metropolitan areas today, with more to come this year. Verizon (NYSE: VZ  ) is only testing its 4G network in a handful of markets today, and AT&T (NYSE: T  ) is even further behind. So it's a shame that Sprint's potential business moat is being bridged by a lack of 4G-capable hardware.

Despite a nationwide marketing campaign, Sprint offers only one 4G-connected handset today: the HTC EVO 4G. That Android-powered smartphone joins its Verizon-bound cousin, the Droid Incredible, in leaning on Samsung for supplying the touchscreen hardware. But Samsung seems to reserve the lion's share of screens for itself these days, leaving but a trickle of supply for HTC and others.

LG Display (NYSE: LPL  ) , Sony (NYSE: SNE  ) , and Toshiba feed touchscreens to Apple (Nasdaq: AAPL  ) and other mass-market handset makers. Unfortunately, the EVO 4G appears to be handcuffed to Samsung's technology. There are no reports of multi-vendor sourcing for this crucial part. That's why only 300,000 or so EVO 4Gs have left HTC's factories to date, pushing retail availability back to dates unknown and Sprint up the creek without a paddle.

A second 4G phone is coming Sprint's way now, and this one is a Samsung original. That should guarantee steady access to screens, though we're talking chronically volume-limited OLED displays this time. But aside from having 4G radios and a slide-out keyboard, essentially the same model is rolling out to every major network in North America. All told, I don't think that's enough of a difference maker.

Sprint is betting big on the 4G advantage, but the stars are not aligning for huge success here. The network needs to order up 4G handsets from a few more vendors to relieve that choking bottleneck, and make sure that they don't all draw crucial parts from the same single-component manufacturer. That's not easy to do for a company with shrinking annual revenue, negative earnings, and thus a limited budget for marketing and supplier concessions.

Has Sprint fumbled the 4G advantage beyond recovery or is the ball still in play? Discuss in the comments box below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Sprint Nextel is a Motley Fool Inside Value recommendation. Apple is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (4) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 12, 2010, at 3:59 PM, kitikatism wrote:

    Sprint sold 300k the first they said it sold in the first 3 days as much as the palm pre and the instint did together in their first 3 days. In which, both sold over 100k in those first 3 days.

  • Report this Comment On July 12, 2010, at 4:25 PM, Aryabod wrote:

    There is a shortage, however HTC is producing 15,000 handsets everyday, which amouts to roughly 450,000/months. Not too bad by any standard. It beats Apple's iPhone in that it didn't get black listed by the Consumer Reports.

    The only fault on the Evo appears to be battery usage. Well what did you expect from a small battery and a device that uses 4 radios, 3G, 4G, WiFi and Bluetooth plus a 4.3" screen? Daaaaaaaaaaaa! Only a simpleton using an iPhone would insinuate a problem with the battery. At least you swap your batteries when the need arises. Two batteries and a charging dock will cost you no more than $10 from this vendor:

  • Report this Comment On July 12, 2010, at 5:06 PM, hellomojo wrote:

    yeah..they have fumbled. Even if they get a decent phone in there lineup by Christmas they cannot compete with the Big 2 (ATT and Verizon). And it seem inevitable that the iPhone is going to at Verizon before long which will take a large percentage of the anti-ATT'ers that might otherswise have considered Sprint if there phone lineup was better. Of course I guess it is possible they could sign with Apple and get the iPhone before Verizon and have a moment in the sun.

    @Aryabod - really!! You think that HTC producing (not selling) 450,000 handsets a month beats Apple which is selling almost 3 million units a month? Odd math skills you have there.. Also..did you read the consumer reports review? Most features they said were best they had ever seen...and altho they said "they could not recommend the phone" they said the antenna issue was an issue fix. Personally I have the phone and have never had any issues with it.

  • Report this Comment On July 29, 2010, at 5:14 PM, dennis3d wrote:

    while the EVO is nice, the Samsung Epic might even sell better. While Sprint does not have the i-phone I bet they are trying to get it. The key to 4G is Spectrum and Sprint has 4 times as much Spectrum as the others. Now if they can roll out towers fast enough they might have the first mover advantage.

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