Will Apple's iPhone 6 Save Sprint?

Sprint's new network is lightning-fast, but Apple's current iPhones can't take advantage of it.

Aug 16, 2014 at 3:30PM

Sprint's (NYSE:S) future is anything but certain: though it remains the nation's third-largest wireless provider, it continues to bleed subscribers, shedding 181,000 last quarter. Its planned acquisition of T-Mobile might've helped, but it now seems highly unlikely, and Sprint's longtime CEO, Dan Hesse, was recently replaced by an outsider -- Marcelo Claure.

Amidst these shakeups, the one factor that could help turn Sprint around may be outside of its control. Apple's (NASDAQ:AAPL) iPhone 6, expected to debut next month, could have a major effect on Sprint's business.

Sprint's one advantage
In terms of call quality, reliability and coverage, Sprint's network often ranks near the bottom. While its rivals make bold claims as to the size and speed of their networks, Sprint has no illusions about being number one. In the past, it has urged its subscribers to "pardon [the] dust" as it makes much-needed improvements to its network.

Yet, Sprint does have one advantage its rivals can't match: spectrum. Its 2008 acquisition of Nextel has been widely recognized as a colossal failure, but it left Sprint with a treasure-trove of valuable spectrum, one that was further bolstered by last year's acquisition of Clearwire.

Sprint has found a way to utilize its spectrum holdings in the form of Sprint Spark -- a unique form of LTE that relies on different bands of its wireless spectrum to deliver impressive speeds. Sprint claims that Spark is capable of reliably achieving download speeds of 50-60Mbps, making it faster than its rivals' traditional LTE networks.

In need of a tri-band iPhone
But not every smartphone is capable of tapping into Sprint's new network. To take advantage of the speed offered by Spark, Sprint subscribers need a tri-band handset.

For Android users, that's not a problem, as nearly every Android flagship (including the Galaxy S5, the G3, the One M8, and the Nexus 5) is compatible with Sprint Spark. Fans of Apple's iPhone, however, are completely out of luck, as Apple has not yet released a tri-band iPhone. Sprint has remained mum on the possibility, with management declining to comment.

From Sprint's perspective, the importance of a tri-band iPhone cannot be overstated. Although Android smartphones sell in greater numbers than Apple's iPhone, Apple's share of the market in the U.S. is massive -- near 40%.

Where loyalties lie
That 40% of the market is notoriously loyal -- more loyal to Apple than to their wireless carriers. Surveys of smartphone owners have put Apple's customer retention around 80-90%; in contrast, U.S. wireless subscribers tend to switch carriers as often as every two years.

In other words, it seems more likely that Sprint's subscribers would switch to a different network before they'd switch to a different phone, a factor that obviously limits the appeal of Sprint Spark. If a customer loyal to Apple's iPhone can't take advantage of the best feature of Sprint's network, it seems unlikely that they'd switch to (or stay with) Sprint.

But the iPhone 6 could give Sprint a boost
Of course, should Apple choose to release  a tri-band iPhone 6, it could give Sprint a boost. Capitalizing on the hype surrounding Apple's next flagship, Sprint could target buyers of the much-anticipated handset, offering them unprecedented download speeds.

To be clear, Sprint Spark is not ubiquitous -- right now, it is only available in 24 cities. Sprint plans further roll outs, but even if it hits its goals, Sprint Spark will cover less than one-third of the country by the end of the year.

But the struggling wireless giant needs every advantage it can get. Spark is Sprint's biggest advantage, but until Apple gets on board, the appeal of Sprint's lightning-fast network will be limited.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information