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Is Sprint Changing Its iPhone Perspective?

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Once upon a time, Sprint Nextel (NYSE: S  ) CEO Dan Hesse, after watching the movie Moneyball, likened the iPhone to a superstar baseball player able to “draw the crowd and fill the seats in [the team’s] high-fixed-cost stadium. iPhone has an expensive contract but he’s worth every penny.”

That contract was expensive all right; Sprint committed to buy from Apple (NASDAQ: AAPL  ) $15 billion worth of iPhones over four years. But because Hesse felt “…the number one reason new customers don’t try Sprint has been no iPhone,” that money seemed like a mandatory cost of doing business.

Unfortunately for Sprint, as well as for AT&T and Verizon, the iPhone subsidies mobile carriers must pay to entice subscribers into signing long-term contracts just keep eating away at their profits. The more phones subsidized, the thinner the margins.

Now, in a much quieter voice announcing a program aimed at Sprint’s wholesale customers, the Mobile Virtual Network Operators, or MVNOs, which re-sell Sprint’s network services under their own brands, it seems Sprint is sidling up to Google’s (NASDAQ: GOOGL  ) Android.

The company issued a statement today, recognizing Android’s popularity by citing research from mobile industry analyst firm Strategy Analytics saying that "70 percent of the world smartphone market share belonged at the end of 2012 to Android."

It also brought up research firm comScore's U.S. smartphone market share numbers, "which showed Android leading in market share with 53.4 percent of the total smartphone market."

What Sprint says it will do for the MVNOs is offer them volume pricing on a selection of de-branded "marquee" Android handsets.

"The Android operating system provides such incredible flexibility and supply chain economy of scale that … [we] can now extend a … new branding opportunity to our wholesale customers," said Bill Esrey, vice president of Emerging & Wholesale Solutions at Sprint.

This is quite an extraordinary reflection on the importance of Android made by the company that had put the iPhone on such a high pedestal.

Read/Post Comments (7) | 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 March 20, 2013, at 8:53 PM, TruthBToldByMe wrote:

    The carriers are a whiney bunch aren't they? Carriers get their money back on IPhone subsidies in less than 5 months on a 2 year contract because IPhone buyers are better informed and have more disposable income. The Android platform is so fragmented each OEM has it's own flavor to try and distinguish itself from the rest. The only Android winner is Samsung and the market share numbers you so easily throw out to minimize IOS are all bogus and speculation since no Android OEM not even Samsung reveals actual sales. The only relevant numbers come from the carriers themselves and they show 70% IPhone sales to 20% all other Android OEM's. I suggest you do a little more research and get to the real meat of the issue. I look forward to your article on Samsung moving to the Tizen OS after they dump Google's Android because they copied Apple in every way and finally were forced to pay for their actions.

  • Report this Comment On March 20, 2013, at 9:24 PM, Jjkiam wrote:

    Yes everyone completely ignors the FACT that Iphone customers make the carriers FAR more money over the course of their contracts than any other phone maker they do business with. This is the same BS that is so prevalent today. All the negative spin on how the carriers are going to try to end the subsidies and Apple will implode to 200 a share as a result is just more fuel to the media fire that Apple is OVER and none of their current customers will buy their products in the future. Except of course all the statistics that show Apple having the highest customer retention rates of any phone company in history. By September all this will change as the reality of a company which is STILL innovating and making superior products with an ecosystem that grows even far more compelling becomes obvious.

  • Report this Comment On March 20, 2013, at 10:35 PM, greenember wrote:

    "Except of course all the statistics that show Apple having the highest customer retention rates of any phone company in history."

    iPhone has high retention rates....what else did you expect? Until recently, your only other choice was an Android. With real alternatives moving in with the 920 and the Z10, it will be interesting to see how those numbers hold up

  • Report this Comment On March 20, 2013, at 10:58 PM, Jjkiam wrote:

    Do you really believe that a meaningful number of Iphone users are suddenly going to switch to a Lumia or BB10 ? This is wishful thinking and has no basis in anyone's projections. The new BB isn't coming until April and almost All the reviews have been close but no cigar. Keep hating and watch what happens when Apple once again raises the bar. Let alone all the tablet users that continue to drive the IOS platform which btw Nokia and BB are not able to appeal to. Oh yeah and the fact that apple also has stores where people can go and get help for their gear from the Genius Bar or call Apple Care and get great customer service. Oh and all the enterprise adoption of Apple products that has been eating BB's lunch for over a year.

  • Report this Comment On March 21, 2013, at 12:31 AM, Mathp wrote:

    It irks me to know that I've followed the fool for so long and I never hear anything new from this service! Everybody and their dog knows that Apple drives far greater consumption of carrier cellular and data services than any other phone by far, and this pays off in spades for the carriers, or they would not continue courting Apple. To see the Fool continue to rerun old news looking for eyeballs instead of informing their subscribers of impending catalysts for or against various investments drives me crazy!

  • Report this Comment On March 21, 2013, at 12:33 AM, Mathp wrote:

    And furthermore, I'm tired of all these headlines that ask "is this or that going to happen" when I'm looking to the Fool to step up and say what they think will happen and why! Then man up and own your opinions!

  • Report this Comment On March 21, 2013, at 9:29 AM, XMFDRadovsky wrote:

    Those laudatory comments about Android came right from Sprint's announcement. I didn't make them up.

    Thanks for the comments, everybody.


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