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.
Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. 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.
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