Sprint Looks to Power Gadgets Beyond Cellphones

verizonrocks · EVDO Junkie Joined: 12 Dec 2008 Posts: 155

MARCH 24, 2009

Sprint Looks to Power Gadgets Beyond Cellphones
As Core Business Slumps, Wireless Carrier Aims to Use Its Network for Dashboard Computers, GPS Devices

By AMOL SHARMA and ROGER CHENG

Unable to sign up enough new cellphone subscribers, Sprint Nextel Corp. is betting it can outflank rivals by renting the excess capacity on its network to makers of consumer gadgets.

Sprint, which has spent billions rolling out a high-speed data network, already handles wireless book downloads for Amazon.com Inc.'s popular Kindle reader, though Sprint's involvement is largely hidden from the public.

The Overland Park, Kan., company is now talking with companies such as GPS device maker Garmin Ltd., Eastman Kodak Co. and SanDisk Corp., which makes storage devices, about delivering wireless Internet service for their products, according to a person familiar with the matter.

In these deals, Sprint will rent out its network and generally collect fees from manufacturers based on how much data is transmitted to the devices. Although wholesale subscribers provide less revenue than retail subscribers, Sprint doesn't have to worry about expenses for billing and customer service.

In the case of the Kindle, Sprint is getting paid by Amazon based on the amount of usage -- how many books are downloaded.
[sprint gadgets] Ford Motor Company

Ford is putting computers in some 2009 vehicles that will use Sprint's wireless network.

While still a small market, wholesale services are a critical part of Sprint's future, says Chief Executive Dan Hesse. "We'll get the lion's share of new products that need a cellular connection," Mr. Hesse said in a recent interview.

There are drawbacks and challenges to the wholesale strategy, however. Sprint, for example, isn't mentioned in the Kindle's marketing and isn't allowed to tout its participation. Amazon officials would like "to have their brand and their brand only," Mr. Hesse said. Amazon handles all the customer service and billing.

Wholesale currently makes up about 3% of Sprint's revenue and 16% of its total subscriber base of 49.3 million. While Sprint's overall subscribers have declined nearly four million since 2006, its number of wholesale subscribers has risen 27% to 8.1 million in the same period.

Much of that business has come from providing cellphone service through small wireless resellers like Virgin Mobile USA. Now, Sprint is targeting the use of its cellular network for a wider array of products.

Analysts say wireless wholesaling generates lower revenue than retail sales but carriers can hold down costs and maintain good profit margins. "They don't have to bear costs like customer acquisition, billing or customer service," said Jim Andrew, a wireless industry consultant.

But creating devices with wireless connections can be a complex task for manufacturers that don't have such experience. "For every five companies that come in and say 'I've got this great idea,' only about one actually gets done," said Jim Patterson, Sprint's president of wholesale services.
[sprint network]

In some partnerships, Sprint does have a higher profile. Under an agreement with Ford Motor Co., which will put dashboard computers in some 2009 pickup trucks and vans, vehicle owners will be asked to sign up for Sprint wireless Internet service and will receive a monthly Sprint bill.

Sprint's wireless rivals are also looking to expand beyond cellphones. AT&T Inc. created a special "emerging devices" unit last fall that is working on such ideas as a location-tracking wristwatch that could help keep track of the whereabouts of pets or even Alzheimer's patients.

Glen Lurie, president of the new AT&T unit, has a particular focus on "netbooks," small computing devices with batteries that can run all day and offer wireless Web access.

Verizon Wireless is pushing wholesale business through its new "open" network initiative. Verizon has certified and connected 35 devices, including a truck monitoring device and a tracking device for prisoners.

The company, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, also is in talks with several makers of Kindle-like e-book readers to connect their devices, said Tony Lewis, head of Verizon's open development initiative.

"While Sprint was the first one out there with the Kindle, everyone is eyeing this opportunity," said Charles Golvin, an analyst at Forrester Research.

Sprint is hoping it will have an edge, in part because of its vast reservoir of radio spectrum, which Mr. Hesse says will give it the ability to provide more bandwidth than competitors. "When we encourage the real bandwidth hogs to go wireless, [competitors] won't have the spectrum," Mr. Hesse said.

Some potential applications -- such as wireless-enabled video players and camcorders -- require too much bandwidth for the networks Sprint and other carriers currently have and will have to wait for the rollout of fourth-generation networks.

Sprint will rely on its partnership with wireless provider Clearwire Corp., which plans to roll out "4G" service to 120 million people by 2010.

Patrick Comack, an analyst at Zachary Investment Research, said Sprint's track record on wholesale cellphone deals raises some red flags about its future in the new world of consumer electronics.

Walt Disney Co.'s ESPN Mobile and Disney Mobile, both Sprint resellers, shut down their cellphone services after failing to gain traction. "Their wholesale history is awful," Mr. Comack said.

A Sprint spokeswoman said the carrier's partners are only successful if they have a powerful brand, a solid distribution strategy and the ability to "manage the daily challenges of offering wireless service."

http://online.wsj.com/article/SB123785070580819121.html?ru=yahoo&mod=yahoo_hs

nickjacket · Posted: Tue Mar 24, 2009 11:42 am Post subject:

"Sprint is hoping it will have an edge, in part because of its vast reservoir of radio spectrum..."

I disagree with that statement because radio spectrum alone makes not an IP throughput promise true. I still get throughput bottlenecks at precisely 8am,9am,12noon and 4-6pm so I don't think it's a lack of Pilot Node availability.
Ask most rural 3G users about what company has laid the most spectrum track and they'll say that Verizon is the only carrier available in many places.
It's unfortunate that Verizons corporate funding that had swallowed up many 1800mHz market auctions now determines the fate of wholesale account bandwidth.
I'm a Sprint customer and I've always liked the company that try's harder (Avis) like with 4G. It's not like Sprint's spending but that they're investing - they already know it works.

A year ago I called Consumer Cellular and begged them to give me contract free 3G data, brokered from any carrier they could find but was told "not yet".
By the time my 3G Sprint contract is up, 4G will have rolled out I hope.