Sprint is hemorrhaging customers and money- Palm is scared stiff
The economy has hit U.S. wireless carriers hard and Sprint maybe hardest of all. They released their financial information this week and it’s looking bleak for the carrier. There is no way to put a positive spin on losing over $1 billion and 1.3 million customers. This could spell the beginning of the end for Sprint as a wireless carrier.
Sprint’s negative outlook must be making Palm shake in its boots, probably more than anyone. Palm has hitched their last wagon, the Palm Pre smartphone, to the Sprint network in the U.S. They cannot be feeling good at all to be tied to Sprint for a year, given Sprint’s financial picture. It’s going to be hard for Sprint to attract customers to jump ship from other carriers to their leaking network. Palm must surely realize that and I suspect many late-night board meetings are discussing it.
The Palm Pre has captured the attention of a lot of folks, Kevin especially, and the beleaguered company certainly doesn’t need the sinking of Sprint piled on its back. Let’s hope Palm didn’t hitch that wagon to a lame horse.
I might have left my iPhone 3G to go after a Palm Pre, but never while its on CDMA and branded under Sprint. So, if Sprint was banking on people switching over from other carriers by having initial exclusivity on the Pre, both parties should be concerned that it may be a bust, especially if the Pre has some sort of flaw or hindrance from making it the ultimate mobile device.
I get the loyalty thing going on between Sprint and Palm. Sprint has been good to Palm, when they probably didn’t even deserve it.
However, why Palm wouldn’t start looking out for number one, in this case, is beyond me. Palm, itself, has been on life support for some time now. Hooking up with a carrier that’s been dying an even slower death just doesn’t make much sense.
I have to think they’d be in a lot better position had they locked in with a larger, more stable, carrier. I really hope this doesn’t come back to bite them. I’m really pulling for Palm.
I know several folks that work at a Sprint Call Center. Morale is very bad. Their call center software they have to use is horrendous. They were hired as “tech support” but are really just salesman (they even have sales quotas). Next time you have to call Sprint customer service just remember that these people have to put up with a very bad working environment dumped on them by extremely poor management. I know most of the Baby Bell customer service is not good, but Sprint has to be one of the worst IMO.
I had a very nice experience with Sprint. Their network here in S. Florida is excellent. I made a switch to T-Mobile for the G1 and their service is horrendous. Dropped calls all over the place.
I’m very interested in the Pre and potentially coming back to Sprint soon.
Also, I found that Sprint customer service has improved vastly. They now offer all their contact info upfront and work hard at solving your issues. That wasnt the case when I started with them but, I think, they’ve gotten the message.
The wife and I are in with Sprint under the SERO plan (got in before they ended it, I believe). While there were some issues out of the gate, Sprint customer service was quite helpful with it. There service is quite good where we are on the SF Bay Peninsula other than actually in our apartment, where dropped calls are an issue. Overall, we’ve been much more pleased with Sprint than we were with Verizon.
> They released their financial information this week and
> it’s looking bleak for the carrier. There is no way to
> put a positive spin on losing over $1 billion and 1.3
> million customers. This could spell the beginning of the
> end for Sprint as a wireless carrier.
Really? I don’t follow (or invest in) Sprint, but I did read that Sprint’s stock price jumped after the recent earnings announcement. You can see it here:
http://finance.yahoo.com/echarts?s=S#symbol=S;range=5d
So it seems a lot of investors were somehow able to put a positive spin on the results…
Also, I am not sure if I am alone in this, but the title of this blog post (Palm is scared stiff) is rather annoying as you don’t seem to have any evidence for this, yet you state it as a fact. These sensationalistic titles seem to be a new and recent here on this site… or maybe I just didn’t notice it before. But it sure doesn’t look good to me (but then, it’s your site…. oh, wait…)
Wow. I hope Sprint recovers; I’ve had great experiences with them, and if Verizon is the ONLY cdma service… that’s not a monopoly, but they can’t roam with anyone. I’d rather go with T-Mobile.
I’ve been with Sprint and Verizon and T-Mobile and it’s not that different anywhere. I’m not under contract right now and the Pre looks interesting enough that I will probaly switch to Sprint to get it.
I’m on Verizon, but I’m loving what I’ve seen of the Pre so far. I think Palm has been reinvigorated, so I can see them moving quick to get the GSM version out overseas. And since Sprint and Verizon both work on CDMA, the changes to the radio would be minimal. Hopefully they wrote the terms of the agreement loose enough to get Palm out of the exclusivity if things turn really sour. Or, Sprint could be reinvigorated with the Pre making these announcements a bump in the road. Time to wait and see.
James Fisher from Sprint here. “Bleak”? “The beginning of the end”? Your post is pretty over the top, I’d say. Here are the facts: We paid $2 billion in debt in the second half of 2008, we ended the year with $3.7 billion in the bank, and we have enough cash on hand TODAY to pay all debt due at least through 2010. Virtually every major analyst covering our earnings announcement yesterday acknowledged that liquidity isn’t a current issue. So that’s that. Now, as for what we have in store for customers in 2009, yes, the Pre is the kind of device that’s going to generate a lot of activity and interest, and we’re excited about it. But our success also will be because we’ve worked to fix the problems in our business. Our networks are operating at their best-ever metrics and every customer care metric improved notably in 2008 — and it’s not just us saying this. All of these improvements have been documented by third party tests and studies. Do we still have challenges — you bet. But we are making real, measurable progress to rebuild our business, and upon closer look there’s ample real proof of that.
@James Fisher: Glad to hear that, James. I’m a Sprint fan myself, but staying with AT&T for iPhone. Hopefully Pre will be out soon and do well in the market.
Could not agree more James. I’ve been with Sprint since 1997. In C.Illinois nothing beats the Sprint network. I traveled from Chicago to Denver along I-80 and never once lost a signal. Furthermore, I’ve never had a bad experience with a customer service rep, either on the phone or in the store. I could not be happier with Sprint and cannot wait to get my hands on the Pre.
Thanks for jumping in here James Fisher. I don’t feel this post is over the top as it is strictly responding to the financial picture from Sprint’s own press release about the 2008 financial picture. Yes Sprint took a lot of charge-offs and paid down debt but still posted a $2.7 billion net loss for 2008. That’s not rosy no matter how you paint that picture. Having a lot of cash in the bank is great for any company but not the only gauge used to determine the total financial picture of said company. The major factor affecting future operations of Sprint are the loss of the 1.6 million subscribers that Sprint has indicated. Even at an average of $50/ month per subscriber that indicates that Sprint faces a reduction of $80 million monthly or $960 million annually. That is major bad news no matter how you spin it. I hope Sprint makes it through this but the points made in this post are all valid IMHO.
Oops, further research shows I need to correct my comment above. Sprint lost 4.6 million subscribers in all of 2008. That is a reduction of $230 million per month or $2.7 billion annually. That is staggering no matter how you look at it.
What about the Kindle 2? From the marketing on Amazon, the Kindle “utilizes Amazon Whispernet to provide U.S wireless coverage via Sprint’s 3G high-speed data network”. Hope this does not prove to be problematic for the future of the improved Kindle.
Is James Fisher a real person from Sprint?
I am in fact a real live person, a spokesperson for Sprint — James Fisher
i still don’t understand why these phone making companies insist on bundling their hardware with a particular carrier. it’s absolutely retarded.
Whether the author is right or not about Sprint’s “bleak” outlook (which it’s pretty clear he is – things aren’t looking good for them), he’s still making unforgivably wild assumptions about Palm. You can’t make up a title like “Palm is Scared Stiff” without offering up actual evidence. That’s just irresponsible.
Palm may not actually be all that scared. A year of exclusivity with Sprint may actually do Palm some good and I can offer some evidence as to why.
First, it’s only a year. It’s not a five year exclusivity agreement like Apple has with AT&T. Apple has been able to count on people abandoning their carriers to join up with AT&T because AT&T has the marketing bucks and customer service chops to make the switch worthwhile for most people. Sprint, however, knows they can’t generate the same kind of draw and they’re counting on the majority of the Palm Pre sales to come from their current customer base. The evidence for this? Their newly launched Customer Loyalty program for high-paying customers. It’s pretty clear that Sprint’s tactic is to get the Pre into the hands of current customers. Is the fact that most people aren’t willing to switch to Sprint for the Palm Pre enough to make Palm scared stiff? Unlikely. We know from Palm’s presentation at CES that the Pre is only the first of a family of new devices that will be built on the WebOS and there’s a very good chance that those other devices will NOT have an exclusivity deal with Sprint.
Also, the Pre may be highly anticipated and everything, but Palm does not want to repeat the mistake Motorola made with the Razor a few years back, which is to devalue the product through market saturation. There have been reports lately in tech news about slowing mobile phone sales that aren’t necessarily due to the slowing economy (though I’m sure the economy is a factor). In reality, the slowdown is because the mobile phone market is so absolutely saturated. In fact, in Europe, there are more mobile phones than there are people. This type of saturation doesn’t negatively affect carriers since it only benefits them when everyone owns a mobile phone. It does, however, create a problem for companies like Palm and RIM and even Apple: The only way they can sell more devices in a saturated market is for you to ditch your current device and upgrade to theirs.
So why does this information translate into Palm not being “scared stiff”? Because they’ve spun Apple’s exclusivity gimmick in such a way that it encourages in-carrier upgrades to their device rather than cross-carrier migration. It will more-than-likely work to Palm’s benefit since high-anticipation, initial scarcity, customers perceiving value, and a short-lived exclusivity agreement with a single carrier all translates into more consistent sales over a longer period of time, rather than a short and massive burst of sales and then a huge decline. And longer more consistent sales of WebOS devices means better adoption (and then subsequent saturation) within the market.
Think about it. If you’re with Verizon or AT&T and you hear that it’s only a year before you can get your hands on the Pre (or, in all likelyhood, even sooner before another WebOS device becomes available on your network), you look at the year-long exclusivity agreement and shrug your shoulders and say to yourself, “Meh. I can wait.”
That’s even more true during a time when everyone is suffering financially; rather than deal with disconnect fees and pro-rated fees and new customer fees and setup fees and the hassle of porting your phone number to a new carrier, wouldn’t you rather just be rewarded for your loyalty to your carrier by being given a cheap and simple way to upgrade to a newer, more exciting device? And all in exchange for a longer term agreement with your carrier? Sure you would. Sprint gets that. In fact, retaining customers has been Dan Hesse’s outspoken priority since he came on board with Sprint. Obviously getting new customers is nice, but not if you’re hemorrhaging the old ones, which is something ALL the carriers are going to start worrying about if times get so tough that customers start looking for ways to cut their personal budgets and begin eliminating their mobile phones.
Again, just to recap: Palm wants consistent sales over a longer period of time and the only way to achieve that in an already saturated market is to create scarcity and high levels of anticipation. Palm does NOT want to massively introduce a new mobile platform and an innovative new device to an already saturated market and risk “flash” saturation. And Sprint happens to be in enough trouble that they could really benefit from some customer loyalty and longer agreements with their customers. I honestly don’t think Palm is “scared stiff”. I think, for Palm anyways, everything’s going according to plan.
@Tyler – nice well thought out post.
I’ll just add to the other statements about the silly title of the blog – which apparently is getting the desired affect of causing people to come here.
It’s a cheap shot – and casts a shadow over the rest of your statements. It doesn’t matter that you make good points about Sprint – as you can see, most people are more irritated that you opened with a statement based completely on conjecture, but stating it like you knew something you don’t. Honestly, from reading the about page (I’ve never heard of you) I’m sorta of surprised you’d resort to something like this – you seem to have enough experience to know the comments were coming. Which, of course, futher’s my initial reaction that it was deliberate – which is a good reason to never bother with your blog again.
I seriously doubt coming into this Palm thought ‘Gee, Sprint is doing SO well let’s go with them’. They had their reason, be it from previous relationships or great deal from Sprint or perhaps some strategy you haven’t thought of.
Bottom line is I don’t think Palm is being taken by surprise.
It’s moot anyway. You talk like it’s an iPhone sort of deal, which it isn’t. I absolutely will not do business with AT&T – thus Apple will NEVER have me as an iPhone customer no matter how awesome people think it is. Apples loss as I am not the only one. Sprint haters can simply wait til the end of the year – most of them are going to already be tied up in contracts anyway.
For the record, I have been with Sprint over 9 years, mostly at this point due to my corporate discount, and I’ve been using Palm PDAs/Palm phones since they came out. I should also say neither Verizon nor T-Mobile have particularly shown me any reason to jump ship.
@JamesFisher – okay, just checking. I am rooting for the pre to be a big hit on Sprint and for Sprint to do well.
The comment about Palm being scared stiff was just made to drive traffic and comments to the site and it worked well.
I have Qwest in Seattle, which is basically Sprint.
Qwest wants me to leave Sprint and go to Verizon because they left Sprint for Verizon (I have no idea why, do you).
I have been fine with Sprint/Qwest so far and like the new features that an Instinct or Pre would give me on Sprint at a lower cost than Verizon but I am about out of patience with Sprint and Pre.
If Verizon came up with a good offer and a good phone I might just sign up if I don’t get word soon on how long I have to wait for Sprint and Pre to get it together.
Hurry it up guys or you’re gonna lose us.
Very disappointed at the shoddy sensationalist journalism in this article. I thought you guys were above that crap.
I had Sprint for 10 years before switching to ATT and the iphone. I live in a marginal area and on the main road to and from the highway there were several spots that Sprint would drop, but ATT does not drop at all. I did call Sprint every couple of months in the last 5 years about the dead spots but they never improved at all. That and the iphone were the main reasons I split for ATT.
I must say though that Sprint was always good to me. Their customer service was always excellent, and they always worked hard to keep me happy EXCEPT in the issue of the dead zones, which is why ultimately I moved on. Loyalty is one thing, but losing business because of dropped calls is another.
I also mention my 10 year stint with Sprint because the vast majority of that stint was spent in hardware hell. Sprint was always known to have no “cool” phones for a very very long time. Only in the past couple of years has this changed. But the lack of a SIM card is a large negative IMO. On ATT I can use my bulky iphone during the business day, and switch to something more svelte for the nightlife.
Also Sprint what’s up with charging for call forwarding? With the lack of SIM card I had to use my 2nd line, but got charged for call forwarding to it.
I currently have an iPhone 3G with AT&T and will be making the jump to Spring for the Pre. AT&T has THE worst coverage in my area. I literally have been using the iPhone for about a year and can’t even get service at my house. The phone is great for games and all, but the Pre is better. Sprints network in my area is top notch and our business uses it and their customer support is A++. I can’t wait till the Pre comes out and I can go back to Sprint..
I am currently a Sprint customer and have been for over 10 years. The service and reception has approved dramatically in the last few years. There are negatives and positives with every carrier. The main reason I stay with Sprint is their plans and pricing. Why does that not seem to be an issue for anyone in this vile economy? I am an Apple fan, but the iphone plans are $30-$60 a month more that the comparable Sprint plans. If the Pre turns out to be everything it seems to be, you will get the most technologically advanced phone on the market for well below any other carriers plan. That seems like a “no brainer” to me. I’d love an iphone, but not for $30-$60 dollars a month more.