Sprint Nextel Corporation's exclusive Palm Pre launch is an opportunity for the company to reinvent itself, giving the third-place carrier a chance to promote its customer service, its network and, most importantly, its WiMax 4G services.
It almost doesn't matter that Sprint's Pre sales have been brisk but unspectacular and that the carrier's Palm Pre exclusivity agreement ends in a few months.
"This is helping overcome the perceptions of us that are out there," said Tim Donahue, Sprint's vice president of marketing. "The Pre has created excitement around the company, and it does have a halo effect. Nobody ever has the 'exclusive device of the year' every year, but this gives us the credibility of being leading edge."
That's a leading edge Sprint sorely needs as it struggles with a legacy of high churn and a troubled merger. Apple and AT&T may have struck a longer exclusivity deal with the iPhone, which has been in effect since June 2007, but industry observers note that no carrier could have struck such a long-term exclusivity agreement with Palm.
"Apple didn't have a complex web of relationships with carriers all around the world, and [Apple] was able to pretty much dictate terms," said Stephen Blum, president of telecommunications consultancy Tellus Venture Associates. "That's a one-off situation; you just don't see that in the marketplace of a mature industry very often."
The Palm Pre deal will be a triumph only if Sprint can build on the momentum it produces. An exclusive device is just par for the course of being a Tier 1 carrier, Blum said, as Verizon's Storm and T-Mobile's G1 have shown.
"[The exclusive device] is an important tool, but like anything else, somebody can get out there and have, for a few months, a prominent and valuable competitive advantage, and then everybody else will catch up," he said. "It stops being a market-share grab and simply becomes a defensive play, and then just table stakes."
Sprint's Palm Pre launch alone will not turn the company around, Donahue said. But he insisted the device was just one conversation starter to get people talking about a "broadened, renewed portfolio," one that will follow up with other hot devices like the BlackBerry Tour and Sprint's service features, like the widely touted savings that Sprint claims customers receive versus comparable plans from AT&T and Verizon.
Sprint's WiMax 4G's more long-term potential (or 4G WiMax?)
But closely tied in with Sprint's positioning of the Palm Pre as a "next generation" device is the tagline that it's also providing the first next-generation 4G network, WiMax, which has already commercially launched in Baltimore and will be rolling out to more cities before the end of the year.
While the Pre is a strictly 3G phone, Sprint is promoting it and WiMax as leading-edge technologies. This creates a conversation in which Sprint can market itself.
"Clearwire [WiMax] is definitely going to be setting Sprint apart from the rest of the pack in terms of 4G services and the kinds of things they can do, particularly if the WiMax 4G ecosystem Intel is promising develops," Blum said.
AT&T and Verizon's own 4G LTE networks are on the horizon, so Sprint's first-to-market advantage could be negligible. But the WiMax 4G environment should be a more open one, less focused on driving the service provider's agenda and more oriented toward open connectivity on a wide range of compatible devices.
"LTE, with what the carriers are doing, is going to be very much a continued walled-garden services approach," Blum said. "The WiMax ecosystem that Intel promises and that Clearwire has backed and made their pitch on is a more open environment where you don't necessarily have to use devices sold through the carrier, or just access services that the carrier is willing to provide. That is potentially a breakout rebranding opportunity."