Posted by Greg Mills
The AT&T merger with T-Mobile is apparently not going to happen. The failure of the AT&T merger, was to some extent due to the shrilled objection of Sprint. Now rumors are that merger talks have begun between Sprint and T-Mobile. Sprint wants it both way, AT&T merging with T-Mobile would be anticompetitive while T-Mobile merging with Sprint wouldn’t be? The net effect on consumers is the issue to be determined as to market competitiveness, the gold standard for anti-monopoly disputes.
Having been “merged” by my Nextel account, a few years back, into being a reluctant Sprint customer, I can advise T-Mobile customer to riot in the streets to prevent being swallowed up by Sprint. My cellular satisfaction level went from A to F overnight when my customer service calls to buiness friendly Nextel were suddenly and rudely intercepted by the Sprint Customer Abuse department. My calls then began with the cheerful slogan, “Sprint, together with Nextel”.
I have been blogging since early fall that Apple ought to simply takeover Sprint, decapitate the management team and create “Apple Mobile” using the network assets. It would cost roughly US $50 Billion to build a new national cellular network from scratch, with serious complications in obtaining the required radio spectrum.
Sprint has been run into the ground by inept management and is now worth roughly US $8 Billion, down from as much as ten times that much in her glory days. With over US $75 Billion cash in the bank, strategically Apple could buy Sprint and fix the laggard company with the net profit alone from iPhones Sprint has contracted for. Market confidence is as low for Sprint as it is high for Apple.
Should “Apple buys Sprint” rumors come out, Sprint stock could double over night. I Expect something dramatic to happen soon, as Sprint is in very deep dung, so to speak financially. Sprint famously committed to buy US 30 Billion dollars worth of iPhone in the next 4 years. That is more than ambitious as Sprint is already upside-down and desperate for cash.
Not having iPhone until recently hurt Sprint in the churn factor where people take their business elsewhere when their contract gives up. I went out to dinner at a fine restaurant to celebrate my Sprint contract expiring a few years back and bought an iPhone from AT&T. Customer service, an area where Apple excels was such a mess at Sprint in those days there are people who still vomit when they see the Sprint logo.
Apple buying Sprint and keeping it Sprint wouldn’t be the best approach. The name has to be changed to “Apple Mobility” or the like to reflect the change in management culture that will then take place. Rebranding Sprint would bury the hatchet for a lot of victims and give the innocent hardware a fresh start. The problem isn’t crappy hardware, it is crappy management.
From Apple’s point of view, we know Steve Jobs was interested in owning a cellular network to support the “move to mobile” that he pushed. The virtual network concept isn’t nearly as helpful to combining all the pieces as owning a cellular network and being able to simply make broad management decision that would leverage Apple’s hardware to its best advantage.
Prototypes have leaked out with 3G radios built into MacBook Air and MacBook Pro computers. WIth the success of iPad 3G, the notion of offering versions of all mobile Apple devices that would run on a national cellular network must certainly be something discussed at the highest levels at Apple. As it stands now, each device requires a separate cellular network account. If Apple Mobile were offer a family plan for data across all my Apple devices, that would make sense, my iPhone, iPad and MacBook could all share an allotment of data when I am away from WiFi.
All of this also would make the Apple “Cloud” more powerful. Rather than only syncing up via WiFi, what if the Apple Cloud was a merger of both WiFi and Cellular data? What if I could subscribe to “Apple Mobility” and with one account buy all my mobile connection services? Apple would be hard pressed to do that with current business models.
Apple holds its card very close to the vest but hints and previous actions tend to be a strong indicator of what is to come. When Apple gave AT&T the exclusive on iPhone Steve Jobs insisted that iPhone customers have a special unlimited data element in their contracts that almost broke AT&T due to the tendency for Apple devices to actually be used a lot. The massive profits AT&T saw from iPhone came with an awful lot of whining about the “data hogs” who sported Apple devices.
The iPad is similar in that 3G iPads are used for browsing the internet much more than the junk tablets the other manufactures sell. AT&T recently moved to end the unlimited data plans and in many cases shot themselves in the foot. I used to pay $30 a month for unlimited data for my iPad. AT&T pushed to go to a limited data plan for $15 per month.
Like a lot of other users who didn’t stream gigs of movies over the network, I saw my bill at AT&T drop to half the previous amount. When I used the entire data allotment the first month, instead of buying another 300 Megs, I just shut off the 3G radio for three days, until the new month of data began. AT&T may have shut down the data hogs but the 90% of us who used cellular data carefully saved a bundle.
I have both an iPhone and an iPad, but I am unlikely to use both at the same time unless I get a phone call while using iPad. If MacBooks also came with cellular radios and all Apple mobile devices synced up with the Cloud consolidating all my data under one cellular account makes perfect sense. I would tend to use a very small amount of data on iPhone with the bulk of my mobile browsing done on iPad. If my MacBook Pro were also connected to my cellular account, it would be great on a trip but still not my main access to mobile internet services.
As the newer 4G radio services come out accross the board, the faster data speeds would make consoladating customer accounts for all their devices even more profitable for cellular networks. Building customer loyalty due to helpful business policies is something Apple could teach the cellular industry. Apple could take over Sprint and take it from being third in size to being the largest network in the US, simply by bringing what makes Apple loyalty unsurpassed in the world.
In a recent quarterly disclosure to analysts Apple management stated that strategic purchases with the Apple nest egg would take place in due course The timing couldn’t be better for Apple to get into the cellular network business. Apple ought to simply acquire Sprint and put its management team out of its misery. That is Greg’s Bite