Will Apple's iPhone 6 Save Sprint?

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.

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  • Report this Comment On August 17, 2014, at 9:21 AM, MShamis wrote:

    Sprint has definitely been on rocky ground lately…I hope for their sake that the iPhone 6 will save them, but I’m not taking the risk to find out if one phone launch can revive a falling stock.

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