http://online.wsj.com/article/SB10001424052970203405504576603053795839250.html?mod=WSJ_Tech_RightMostPopular
Now let me get this straight, Apple has been cutting deals like this since the day it started selling to AT&T and now this is a story because Sprint is in the middle?
I think this is great news for Sprint. I am not impressed with the Journal’s sudden news breaking story about Apple’s handset deals. I think the kids say “DUH!!! Where have you been?”
This is why I have never liked vendor controlled deals like this ever. Thanks to AT&T, the carrier is now no longer in charge of the deal. Well, that is all water under the bridge. I am now fairly certain that all other handset vendors will be shifting the deal control into the hands of the vendor. What will shift control back to the carriers are the content deals the carriers will strike. However, let us get back to Sprint.
The reality is that this is a major accomplishment on the part of Sprint. Yes, the company may take a few years seeing a high return on the handset. Sprint had to do this. I agree that Sprint had to resist making the move until the time was right; and well the time was right. Apple is not stupid either. Apple has to get the volume commitments because they need to be able to reliably report to Wall Street analysts the company can predict a reliable revenue stream annually. The way the handset business has always worked, at least until Apple showed up 4 years ago, was that the vendors could only make a financial projection and quantities projection from year to year. The handset business is a tough business. Apple knows it will not be controlling the handset space, hence it needs to be able to create a contractual environment that provides its shareholders comfort. Besides, look at what happened when the iPhone 4S was released – oh yawn. Apple is not stupid the management knows that eventually all KINGS and QUEENS get toppled.
What Sprint needs to do is to start developing a content strategy that enables it to increase its ARPU.
I have no idea what Sprint’s content strategy is, but one thing is for sure it needs one. I doubt Dan Hesse is sitting on his behind doing nothing.
Sprint needs to worry less about adding subscribers and needs to worry more about ARPU. Adding subs has to be a close second to worrying about ARPU.
I think Dan Hesse and the Sprint team have done a great job saving the company from the brink of disaster. For investors, they need to understand the telecom business has been about constant competition since the Telecom Act of 1996. So the appearance of turmoil is normal. I want investors to know that Dan Hesse has accomplished a great feat. The deal with Apple would have been worse Sprint last year when AT&T was sitting on top of the world with the T-Mobile deal. Sprint can now set aside worries about the next hot cell phone and they can start concentrating on ARPU.
Cell phone users tend to change out handsets every year if not more often. To hit a 30 Million number for the iPhone is easy if you do it over 4 years. So the number is not a big deal. Sprint needs to leverage the iPhone to spur other handset makers into making better handsets.