x PhoneArena is hiring! Reviewer in the USA

Did Sprint catch the lifeline with the iPhone 4S or does that lifeline come from a sinking ship?

Posted: , posted by Victor H.

Tags :

Did Sprint catch the lifeline with the iPhone 4S or does that lifeline come from a sinking ship?
Sprint has seen better times. The carrier’s stock has gone down and down, and down, and it seems that every time it hits a deeper bottom. Actually, shares of the carrier plunged just after the iPhone 4S announcement. That initial negative market reaction has subsided by the end of the day and the stock of the Now Network climbed back a bit, but question remains: is the iPhone 4S the much needed lifeline for the nation’s third-largest carrier and its 50+ million subscribers?

A couple of weeks ago, we looked into the case of why Sprint stock could be a turnaround stock and the iPhone was the number one swing factor. But first of all, let’s clarify that Sprint is getting not only the iPhone 4S on October 14th, but the iPhone 4 8GB model for $99, which means more diversity and choice for subscribers. On the downside, though, rumors claimed that the carrier has bet the farm, dishing some $20 billion to Apple, trying to secure enough orders to get the iPhone on the Now Network.

The iPhone 4S and Sprint post-paid subsriptions

Did Sprint catch the lifeline with the iPhone 4S or does that lifeline come from a sinking ship?
We don’t know if that’s true, but in either case Sprint has finally gotten the iPhone, the number one reason for customers leaving the carrier in Dan Hesse’s own words. Not just any customers - post-paid subscriptions, the most profitable ones, are declining rapidly, especially looking at the last reported second quarter, and this trimester things are expected to have gotten worse. Captain Hesse plans to patch that leak with the iPhone. Ironically, though, he might have picked the wrong one and here’s why.

The iPhone 4S is an interesting device, but it’s disappointing when matched with the high hopes and plentiful rumors. It’s disappointing even when matched with the single biggest hope of a bigger screen. Betting the house on the 4S is hence risky business. It probably would sell well for Apple as the company is offering it on a wide range of carriers including ones that will offer it for the first time like KDDI in Japan. 

Sprint's iPhone 4S vs Sprint's Android army

But will it sell well for Sprint? There are plenty of customers that would have loved to switch to iOS earlier, but now Sprint’s Android portfolio is stronger than ever - there is the Samsung Epic 4G Touch, a version of the Galaxy S II, there is the 4G-enabled Motorola PHOTON 4G and there’s the HTC EVO 3D, all with more pure silicon horsepower than the iPhone 4S.

Image courtesy of Thisismynext.
That’s the main gamble for Sprint (especially, if it indeed has bet the house on the 4S) and much less for Apple. Both probably realize that what they offer in terms of hardware only brings Apple on par with current Androids and that’s at best. 

At worse - Apple is slightly behind as the 4S lacks 4G, a big screen and any redesign that would give it a wow factor. Finally, at worst, the iPhone is out of the smartphone league in a week, if Apple sticks to their (nearly) yearly iPhone release routine and Samsung along with Google push HD screens and solid update to Android with the Nexus Prime.

Sprint's gamble with the iPhone 4S is bigger than Apple's

But here’s what’s interesting - while for Sprint this is a risk, Apple sits comfortably on a pile of cash and outstanding user satisfaction. It sits on 93% of big corporations considering adopting the iPhone. It sits on user loyalty. In a way, that’s similar to RIM of old times. Arguably, just like RIM did in the last couple of years (not counting last quarter when it all collapsed), Apple can afford to technologically lag slightly behind for a year while still increasing its sales on those loyalty factors alone. New iPhone adopters (read, a lot of Sprint users) and 3GS users whose contracts start expiring around this time will be tempted to switch directly to the iPhone 4S, which gives Apple a strong base.

But finally, we should also account for software. Apple has cemented its ecosystem with iOS 5; the addition of iCloud and Siri is truly novel. This could tip the scales for buyers and turn the iPhone 4S into a lifeline for Sprint, but had the carrier offered it a year earlier, it could have been already saved.

28 Comments
  • Options
    Close





Want to comment? Please login or register.

Latest stories