A recent policy change at Yahoo! Japan may be key in answering those questions.
Market share above all
In Japan, there's a price war between online marketplaces run by Yahoo! Japan and Rakuten. Both sites allow users to list items, but now, it will be free to list things on Yahoo! compared to Rakuten's fee of roughly 10% of sales. Rakuten has been growing share much faster than Yahoo!, a 17% increase in volume for Rakuten compared to only 4% for Yahoo! last quarter, so the move will hopefully stem falling market share and help drive traffic and advertising revenue. Since the change in policy on Oct. 7, Yahoo! has received 26,000 applications for new marketplace accounts. This is substantial, as there are only 20,000 stores on Yahoo! currently.
What's the connection to Sprint? Son's SoftBank owns 43% of Yahoo! Japan, with U.S.-based Yahoo! owning 35%. And now, SoftBank owns 80% of Sprint.
Margins to fall
The change at Yahoo! Japan caused its share price to fall 10% during the week, with Rakuten's share's falling 19%. Even though this will hurt profits in the short term, management obviously believes this will be better for the future of the company in the long term. And it's that kind of thinking that will help Sprint regain wireless market share, while eroding margins across the industry.
Verizon's wireless segment operating margin, less depreciation, sits around 22%, AT&T's at 38%, and Sprint's at 18%. Those healthy margins are all at risk if Sprint enters into a pricing or feature war. And, just like with the Japanese online marketplace, share prices are not priced for any such downward trend in earning potential.
One such change to grab more customers is allowing those who pay for their devices in installments to upgrade every 12 months, instead of the previous two years. Sprint also announced its unlimited talk, text, and data plan with a guarantee for life this summer, capitalizing on the recent data caps and discontinuation of such unlimited plans from the major carriers.
Looking long term
Like at Yahoo! Japan, Sprint may very well take short-term financial suffering if it can win customers with more features or lower prices. And while there are more barriers to switching cellular providers than online marketplaces and strength of networks matter, if the trends at Sprint turnaround, expect revitalized interest in its stock and falling margins at competitors to match Sprint's offerings.
Not the only cell phone fight
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