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Can Pre Exclusivity Turn Around Sprint?

Sprint (NYSE: S) Nextel CEO Dan Hesse spoke to SFGate, mostly about customer service and churn, but the last question was about how important Palm (NSDQ: PALM) Pre is to Sprint, and I think that answer ties everything in together. Said Hesse: “In today’s market, iconic devices, no question, they move the needle, they grab attention. And we’re very excited about the Palm Pre. I will give (BlackBerry manufacturer) Research In Motion credit for creating a great business phone and the iPhone, I give it credit for being a great consumer device. This is the first one I believe that really crosses both. It’s an outstanding business device and it’s also a whole life consumer device. It’s a combination of a superb touch screen with a physical keypad, which is, for a heavy e-mailer and texter, a must. We think it’s going to be a very successful device.” Despite improvements in customer service and network quality Sprint is still losing customers, and Hesse notes that the economic downturn is likely to hit hard because Sprint has a large base of business customers. The aim of the Palm Pre is to attract new customers with the gee-whiz phone, and being Palm it’s likely to appeal to Sprint’s business customers.

Sprint definitely plans a big push for the handset, since its exclusivity is for far less time than (for example) AT&T’s with the iPhone—probably six months according to the Kansas City Business Journal. Mike Gikas, associate editor of mobile electronics for Consumer Reports, told the paper that the Pre could be a game changer if it performs as well as it did in the demo but that “in our surveys, [Sprint] just doesn’t do well”. Which goes back to Hesse talking about an iconic device grabbing attention—he’s hoping people will switch to get the Pre in the same way people switched to get the iPhone. Forrester analyst Charles Golvin gave hope to this, pointing out that Palm has a loyal user base and “a certain segment of the market is enamored with the iPhone but would prefer a physical keypad”.

Sprint is tying in its loyalty program to gadgets, of which the Pre is the premier one. The rewards program gives early upgrades to new handsets at a heavily subsidized price after one year instead of two, and also gives customers a first look at new products and services reports Information Week. That could mean that “Sprint Premier” members will be among the first to get the chance to buy the Pre. As usual rumours of various launch dates have abounded, the most recent being March 15—although ComputerWorld notes that date is actually the end-of-life for the Palm 755p, which it says the Pre is replacing, and the launch date for the Pre is likely to be a few months later. This is based on a memo obtained by BoyGeniusReport.

In terms of content and application, Palm Infocenter notes that unofficial Palm Pre “DevCamps” are already being planned.

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Feb 6, 2009 3:07 PM ET
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Posted In: Gadgets, Companies, SprintNextel, pre

  • I think it's a nice change to see a company give more back to its loyal customers. Too many times have I seen ads that give big discounts to "New Customers" only to hike the rates up after a few months.
    Sprint is my carrier of choice and even more so now that I can upgrade my phone once a year.
    I will definitely be upgrading to the Palm Pre. There will be an incredible amount of software available for this device, a lot of which will be free.

    FYI - Wimax has already launched, and should have substantial coverage by the end of the year - leaving all the competitors in the dust. Even the "old" Sprint EVDO Rev A connection cards are faster then any new "3g" card from competitors. I foresee a Palm Pre "2" or something similar launching a year or so after this one with a Wimax chip; and since I will be part of the Sprint Premier program, I will be eligible for upgrade again =))
    If you want a fast data network and cutting edge phones, the only way to go is with Sprint.

  • ummmm no

    Two things:

    1. "..exclusivity is for far less time than (for example) AT&T’s with the iPhone—probably six months…"  GO to know I'll only have to wait 6 month to get the device with a "real" carrier.  Can you hear me now Verizon?????

    2. "...That could mean that “Sprint Premier” members will be among the first to get the chance to buy the Pre…"  So how does this reel in new customers if they will have to wait in line behind existing customers (especially with only a 6 month exclusivity )?????

    Nice try try Sprint.

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