I had written this piece at the beginning of 2009 and put it on another site. However, given recent industry comments about Sprint`s new low cost plan I felt it warranted to reprint it on my own site with some additional comments. It appears that Dan Hesse may have just gotten the attention of Verizon and AT&T.
Can Sprint carve out an edge in the marketplace? The real question people should be asking is: Who is Sprint’s customer?
A question people should be asking is: Who is Sprint’s customer?
Another question people should be asking is: Does Sprint have enough time to stop the downward spiral?
I think the answer to the second question is: Yes. However, the answer is Yes, only if the financial markets give Dan Hesse time and money to stabilize and reposition the company.
As for the first question: Who is Sprint’s customer? We believe we need to first answer the question: What is Sprint?
The financial markets need to look at Sprint as a telecom company. Telecom companies are infrastructure businesses. If the Street wants to view Sprint as a speculative technology venture, Sprint will fail. It is a matter of expectations.
As I have noted in past postings, Sprint needs to focus on generating revenue first and foremost. Adding more and more customers to its base is an easy metric to demonstrate success. However, reversing a customer blood letting is harder than you can imagine. If you are going to reverse customer losses you need to understand why you are losing customers.
One of the obvious reasons for losing customers have been Sprint’s poor customer service. If you read various blogs, you can see mixed reviews regarding Sprint’s customer service initiative. Sprint’s new handset the Instinct and now the upcoming Pre are a sign of the carrier’s attempt to provide the company a flagship device that it can rally its services around. However, the handset is not as important as the carrier’s mission and core business.
What is Sprint’s mission? What is Sprint’s business? What is Sprint? Is Sprint a carrier for the mass markets?
Boost was not designed to service higher paying customers. Boost had always been designed to service that market segment that lives day-to-day by cash. We use to call this market segment the lower end customer base. We use to call this segment the pre-paid segment. However, given the current recession, I would not count out Boost. Telecom consumers need wireless but that does not mean these consumers are going to spend piles of money on media entertainment at this time. Now more than ever, basic voice communications is necessary. Boost may be able to generate the numbers needed to help Sprint Nextel. Boost may be an indication where the Sprint Nextel company is moving.
From my perspective, Sprint appears to be positioning itself as “the low cost wireless solution”. There is nothing wrong with that position. In fact I have said that Sprint Nextel’s recent pricing actions are taking the fight to it competitors. But who are Sprint Nextel’s competitors?
Given its size, Sprint’s competitors appear to be AT&T Mobility, Verizon Wireless, and T-Mobile. Given its recent pricing activities, Sprint appears to be taking Leap and MetroPCS head on while forcing Verizon Wireless and AT&T Mobility to examine reducing its pricing structure.
Pricing moves alone will not revive Sprint. However, Dan Hesse appears to be making all the right moves. The pricing action Hesse has undertaken is a sign the company is positioning itself and remaking itself. The pricing move Hesse has made does not need to force Verizon Wireless or AT&T Mobility to reduce their pric