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Sprint CEO Defends Company's Decision To Bet It All On the iPhone 187

Posted by samzenpus
from the put-it-all-on-different dept.
zacharye writes "Sprint chief executive Dan Hesse is being watched closely by the company's board of directors, but the CEO has to answer to investors and subscribers as well. Last year in October, Hesse revealed that the company is placing a massive $15.5 billion bet on Apple's iPhone, and in a recent interview, Hesse defended the move, which has been criticized by a number of industry watchers. From the article: '“Subsidies are heavy for the iPhone. This is the reason why a high percentage of new customers is important,” Hesse said during the interview. “But iPhone customers have a lower level of churn and they actually use less data on average than a high-end 4G Android device. So from a cost point of view and a customer lifetime value perspective, they’re more profitable than the average smartphone customer.”'"
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Sprint CEO Defends Company's Decision To Bet It All On the iPhone

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  • Apple Customers (Score:3, Insightful)

    by ifiwereasculptor (1870574) on Wednesday March 21, 2012 @09:58PM (#39436319)

    They pay more and use less? What a shocker! Who would have thought?

    • Re:Apple Customers (Score:5, Insightful)

      by jmd_akbar (1777312) on Wednesday March 21, 2012 @10:00PM (#39436339)

      They pay more and use less? What a shocker! Who would have thought?

      Steve Jobs.

    • Re:Apple Customers (Score:4, Informative)

      by ArhcAngel (247594) on Wednesday March 21, 2012 @10:09PM (#39436401)
      Well it might have been true before the 4S but not so much NOW [bloomberg.com]
      • Re:Apple Customers (Score:4, Interesting)

        by CharlyFoxtrot (1607527) on Wednesday March 21, 2012 @10:26PM (#39436559)

        Android has voice dictation too hasn't it ? Plus it has to serve up all those mobile ads, so it might still use more data though not to the user's benefit [bbc.co.uk].

        • Re: (Score:3, Interesting)

          by MisterMidi (1119653)
          Yes, but AFAIK Android's voice dictation is done on the phone so it doesn't use any bandwidth. Making the ads even more of a problem. This is partly due to stupid users (the same kind that get their PCs infected) and partly to Google. If they'd offer other payment methods than credit cards a lot more people would buy ad free apps. But then again, maybe it's more profitable to Google to serve ads instead of selling apps...
          • Well, since I switched to a Galaxy, my background data transfer has about doubled over my previous phone (a Shine Plus). Since I barely use any data at all, and none of my apps serve up ads, that extra transfer has to come from somewhere.

            I'm actually conducting an experiment this week, to see if my usage goes down when I stop using voice dictation.

            That being said, we're talking about a difference of only a few hundred kilobytes per day... I'm still not even close to exceeding my monthly cap, which is itself

          • by swillden (191260)

            Yes, but AFAIK Android's voice dictation is done on the phone

            No, it isn't. It's done in the cloud. If you don't have data service, voice dictation doesn't work.

          • by AmiMoJo (196126)

            Google doesn't serve in-app ads to third party apps. There are other companies that do, but Google doesn't. Most in-app advertising does not generate any revenue for Google at all, they make money from the sale of apps and by driving people to their other services. It is similar to the way Google search works - the banner ads on linked web sites usually don't make money for Google.

        • by chrb (1083577)

          Plus it has to serve up all those mobile ads

          You write as if the iPhone is immune to advertising. It isn't. When It Comes to Mobile Advertising, iPhone Still the Biggest Target [allthingsd.com] Average iAd size has been estimated at 5MB: [tumblr.com] "Assuming 5MB per iAd, this means that, under AT&T’s new data plan, the user has to pay to watch an ad. Either 40 cents or 6 cents depending on the package."

          so it might still use more data though not to the user's benefit

          That study didn't include iPhone, but obviously iPhone apps with adverts are also going to consume more energy.

          • Firstly the article you linked is about ads served in the browser, I was talking about ad-supported apps. On Android apps are (I understand) predominantly ad-supported, while on iOS they are the exception rather than the rule. As to iAd, it's just not so popular when compared to competing sevices like Admob. Its ads do tend to be bigger (the few I've seen focus on video, like traditional tv ads) but I'd be very surprised if Apple wasn't caching these and downloading them in advance while connected to WiFi o

      • Re:Apple Customers (Score:4, Interesting)

        by schnikies79 (788746) on Wednesday March 21, 2012 @10:35PM (#39436635)

        I have a 4S and use the same amount of data as I did with my 3G, which isn't much at all. Less than a gig per month.

        I do use Siri as well, mostly when driving.

    • Re:Apple Customers (Score:5, Informative)

      by larry bagina (561269) on Wednesday March 21, 2012 @10:09PM (#39436403) Journal
      Maybe they use less data because iPhone apps aren't constantly uploading their gps coordinates and downloading ads [microsoft.com]. If you look at mobile web traffic [padgadget.com], iOS beats android. Even when you factor out the iPad.
      • Why would you factor out the iPad when comparing iOS to Android?

      • Maybe they use less data because iPhone apps aren't constantly uploading their gps coordinates and downloading ads. If you look at mobile web traffic, iOS beats android. Even when you factor out the iPad.

        Which in turn goes to GP's comment that iPhone customers pay more -- in this case, they pay more for apps. Any user that switches (in either direction) can attest to the fact that many apps in Appstore are paid where their Android Market equivalent would be ad-supported.

        That in turn goes to developer interest [huffingtonpost.com] in the iPhone over Android.

        • by perpenso (1613749)

          Any user that switches (in either direction) can attest to the fact that many apps in Appstore are paid where their Android Market equivalent would be ad-supported.

          Or simply not exist under Android.

          To imply that a particular app is "paid" under iOS and "ad supported" under Android seems misleading. I suppose you are using the term "equivalent" very loosely. If so I think your point may still be misleading. For any given paid app under iOS you will most likely find "equivalent" ad supported apps also under iOS.

      • This is bullshit. (Score:5, Insightful)

        by acid06 (917409) on Wednesday March 21, 2012 @11:22PM (#39436959)

        If you wany an apples to apples comparison, you should, at the very least, compare mobile web traffic from iOS to mobile web traffic from high-end 4G Android device - which is what the CEO was talking. And no one seems to ever announce this sort of data.

        Stop with the fanboism. Seriously.

        • by Anonymous Coward

          iPhones aren't 4G though... so it's not Apples to apples.

    • Re: (Score:3, Interesting)

      by cpu6502 (1960974)

      It is a bit surprising. (But so too was the stat that the number of iPhone users (UK) in debt are about double that of Android users.) Maybe these persons don't buy the phone for actual use, but for the same reason I spent money on a watch that I didn't need -- it looks good on my wrist.

    • Re:Apple Customers (Score:5, Interesting)

      by Anthony Mouse (1927662) on Wednesday March 21, 2012 @10:13PM (#39436437)

      They pay more and use less? What a shocker! Who would have thought?

      It's not even that. What he's saying is that 4G Android users use more data than iPhone (i.e. 3G) users do (shocking!) since iPhone is currently still 3G/"3.5"G, and the Android users are more likely to demand the newest gadgets (i.e. "higher churn"). Which is naturally worse for the phone company who wants you to buy whatever phone, keep it forever, and never use the speed you're paying for while still continuing to pay for it.

      The problem is that newer, 4G iPhones are likely to attract exactly the same crowd. So unless Sprint's new business model is to keep selling obsolete iPhones forever, they had probably better get a new plan.

      • by gl4ss (559668)

        plan? do you think a company that thinks that in order to get iphones it had to commit to 15 billion(!!!!!!!!!) worth of purchases has a _plan_ ? fuck no. they have no business model. their business model for this period is "let's dump 15 billion on apple! they'll make us rich!! YEEHAAAAA!!!". they don't know what they're buying and what they're buying they could have bought anyhow.

        the reasoning for why it's smart to bet 15 billion on iphone just came afterwards, like implying that iphone users like to pay

    • by drnb (2434720)

      They pay more and use less? What a shocker! Who would have thought?

      You are correct. Apple customer are probably not using as much bandwidth. They are probably less likely to watch YouTube videos of kids in squirrel costumes dancing.

    • by mcgrew (92797) *

      Can someone explain to me why the parent comment is modded "troll"? No, never mind; any time anyone says anything negative about any damned company, no matter how truthful and even insightful the comment, some stupid little fanboy will call it a troll.

      I agree with the parent, at least on the "price" part, which is indisputable; Apple gear is high priced. Price is the single reason I have no iThings. As to the "use less", my daughter has one computing device, her iPhone, while I'll be listening to the radio

  • by pchan- (118053) on Wednesday March 21, 2012 @10:03PM (#39436353) Journal

    They are also more attractive and have great personalities

  • by Anonymous Coward

    Soon as my contract is up I'm going back to a flip phone. Had an iPhone since they first came out, bought the 3gs, bought the 4, smart enough to realize the 4s was just more of the same, but with even more useless junk (Siri). Haven't touch my iPad in 2 weeks. It's too much and I've been working in tech since the early 90s, all I want now is simplicity.

    • Re: (Score:3, Interesting)

      by grelmar (1823402)
      You know, I'm looking forward to my contract running out so I can dump my iPhone for a "dumb" phone, but for different reasons - and for a phone I'm not sure I can get.

      I just want a basic feature phone with a long battery life, that has a 4G antennae and bluetooth in it so I can use it to tether whatever real computing device I want at need. 95% of the "smart" features on my phone I don't use anymore, because they've been replaced by the same features on my larger screened Android tablet, and I also tethe
      • by swb (14022)

        What kind of battery life do you expect from a 4G feature phone that's pumping 4G data over bluetooth?

        My guess is the iPhone is probably as battery efficient at acting as a portable hotspot as a feature phone is.

        • by wazza (16772)

          Perhaps he's considering doing what I do when I tether my laptop to my phone - using WiFi tethering, but plugging the phone into a USB port on the laptop to keep it going.

          You know, since there's a computer with USB ports always there when you're tethering to a computer.

      • by demonlapin (527802) on Wednesday March 21, 2012 @11:01PM (#39436819) Homepage Journal
        Yeah, the 4G antenna and radio and the Bluetooth radio are pretty much going to massacre your battery life if you use them. Nobody is going to make that phone. Buy a flip phone and a data device. Or buy an Android phone, or an Android tablet with a data plan.
    • I'm the opposite. Everything is much simpler now because everything has been brought together and accessed through a single device [devost.net]. Much easier to cope with. Of course you need to have some constraint and say "no" when the next social-whatever bandwagon comes around so you don't drown in irrelevant shit.

    • by tsotha (720379)
      I would do that as well, except I can't give up navigation software. Got me out of too many jams.
  • WiMax and LTE (Score:5, Insightful)

    by Monoman (8745) on Wednesday March 21, 2012 @10:18PM (#39436489) Homepage

    Can he defend their WiMax flub? Can he defend contracting with a company that has a non-existant LTE solution?

    • Re:WiMax and LTE (Score:5, Informative)

      by briankwest (1905914) on Wednesday March 21, 2012 @11:03PM (#39436837)
      You do realize they had to deploy WiMax because they would have lost the spectrum if they had not. At the time wimax was the only technology they could have went with. /b
      • by Monoman (8745)

        You do realize they sold many WiMax phones with the understanding that they would build out the WiMax network. They did very little WiMax expansion. Was that the plan all along or poor planning? Either way the customers lose and some will leave Sprint.

    • Re:WiMax and LTE (Score:5, Insightful)

      by hemp (36945) on Wednesday March 21, 2012 @11:32PM (#39437031) Homepage Journal

      What's the attraction to LTE when you have a 2GB datacap?

      • Re:WiMax and LTE (Score:4, Informative)

        by asm2750 (1124425) on Wednesday March 21, 2012 @11:40PM (#39437077)
        I would mod up if I had points. LTE is a joke when you have data caps. There is no reason for it.
      • My data cap is higher than 2GB, not sure what it is (might actually be unlimited, Verizion is nicer to business customer and my employer pays for the phone). However I don't use much, 1-2GB at most for most months since I prefer computers for my web surfing.

        However when I do use it, the LTE load times are really nice. Stuff loads FAST. So when I'm in a store and I need a price check on something, I can get it in a hurry, I'm not waiting around forever for pages to load, even when they are non-mobile pages.

        N

        • by gl4ss (559668)

          you think shit doesn't load fast on a proper "3.5g" 10mbps link?

          unlimited 3(.5)g is fun. for torrenting all day long(because I'm on the suckiest oper in finland, I get a slowdown at 20 gigs).

          doing fast long transfers is the point for lte. and that by using extra freqs you'll have more bandwidth to sell and could give users more bandwidth to use.. but that's not good for business.

      • by wytcld (179112)

        And if you want the fastest LTE, Clearwire - Sprint's WiMAX provider - still has a lot of higher frequency spectrum that it's beginning its LTE buildout on. Higher frequency (than the other LTE nets) makes for less range from tower, but it also makes for much greater bandwidth.

        This all comes down to a race against a cash crunch that's facing both Clearwire and Sprint (and Sprint's building its own LTE, not just planning to rent Clearwire's - and it has lower, wider-coverage frequencies to spare for that due

      • by basotl (808388)
        My Sprint plan is still unlimited... for now.
  • Sprint Board revolt (Score:5, Interesting)

    by Guppy (12314) on Wednesday March 21, 2012 @10:49PM (#39436735)

    The SprintUsers site had an interesting commentary regarding a recent WSJ article on Hesse:

    http://www.sprintusers.com/could-hesse-lose-his-job [sprintusers.com]

    Today’s Wall Street Journal has a rare, insider-rich piece targeting Hesse. A betting man would say his own board of directors had a lot to do with the story. No, no one on the board is quoted directly. But the picture the WSJ paints is certainly a flattering one of an engaged, hands-on board. They are served well by this story.

    You don’t see this sort of knifing when an exec is secure in his job. It usually means board members are trying to distance themselves from a CEO’s plans gone wrong so they don’t get personally sued by shareholders. Or they’re getting ready to fire him.

    Just last month, Sprint made an abortive attempt at a merger with MetroPCS, which was championed by Hesse but ultimately shot-down by the board. I have a feeling the company is going to experience a coup d'etat any day now. Well, whatever -- as long as my legacy SERO plan keeps working.

    • by tsotha (720379)
      Meh. If the board really wanted to get rid of him they could just fire him without going through a whispering campaign. He may have the support of the vast majority of the board with only one or two disgruntled holdouts.
      • Yeah, but if you want to get rid of the guy and make sure Wall Street thinks it's a good idea (i.e. not have your stock price tank after firing him), subtle jabs at his competence are the way to go.

  • by Dracos (107777) on Wednesday March 21, 2012 @10:52PM (#39436761)

    Ignore everything he says to justify iPhone on Sprint, what Sprint really wants is to get in on the Apple party.

    As a Sprint customer with an Android 4G phone (but no 4G service in my area, and I pay $10/month for it), I really would rather that they spend that pile of money on building out their network. Sure, they're going to roll out LTE over the next couple years, but my phone isn't LTE. Dammit. And my city will be among the last to get Sprint LTE.

    • by Osgeld (1900440)

      so, you got yourself into a contract where you pay for a non existent product, I like your way of thinking

      • by Guppy (12314)

        Unfortunately, if you don't want to pay the extra fee, you're pretty much limited to a handful of 3G-only smartphones (Marquee, Arrive, and some old models). Sprint will refuse to activate a 4G-capable phone for you, regardless of the network status in your market.

    • I had a plain old cell phone for years on Sprint, and never liked the phoney "regulatory recapture" fees. Nor did I want to start paying $100 a month just to have a smartphone. Their network, in places I tend to be, is good though. So I dropped Sprint and went to Ting, where you pay for your phone up front (no subsidy), but then for voice/text/data pay by actual usage, with nothing extra for the WiMAX flavor of 4G, or for using the phone as a wi-fi hub to tether other devices. Since I'm not a huge mobile da

  • Canceled Sprint (Score:4, Informative)

    by dustman81 (1134599) on Wednesday March 21, 2012 @11:05PM (#39436855)
    I recently canceled Sprint and paid the ETF to do so. That's after having Sprint for nearly 10 years. I got an iPhone 4S with Straight Talk ( MVNO that uses AT&T's network). Why? Because I wanted a data service that works. With Sprint, I was frequently on 1X. Even when I was on 3G, the speeds were crap. Sprint bit off more than they can chew with the iPhone. WiMax was a bust. Nextel customers are leaving in droves and their Network Vision plan may well be the final nail in the coffin.
    • Same here, though I went to the T-mobile $30 5gigs plan and didn't pay an ETF. Fuck Sprint. First they add that nonsense $10 charge on. Then they changed the employee discount program to be more expensive with multiple lines. They also seem to just give the customer a huge "F U" and tack like $6 or more of random fees and shit on your bill.

      My $30 is (almost) $30. No fees. No overages. I theoretically pay a few bucks sales tax, but I found a place to get the T-mobile cards for like $29 for a $30 card

  • I bought my 4G phone almost 2 years ago and have yet to see any 4G service. Yet all the other carries seem to have it...

    • I bought my 4G phone almost 2 years ago and have yet to see any 4G service. Yet all the other carries seem to have it...

      Who's your provider? I would say come over to T-Mobile (they'll let you just buy a SIM and drop it in) but I don't think your spectrum will match.

  • this is why i left (Score:3, Interesting)

    by corvax (941506) on Wednesday March 21, 2012 @11:46PM (#39437109)
    Same as others have already posted long time sprint user paid the early termination fee. Tired of waiting for them to get their act together. Bad decisions constantly....... Never using the money to upgrade their network properly. Funny thing is he talks about 4g that most people can't get on sprint and the iPhone isn't even 4g so its a bad comparison shows he is a fool. Get out while you can its a sinking ship...
  • I love it when some suit mouths off to customers about how profitable they are. guys - you're great... for my wallet!

    I wonder how much Sprint makes selling the customer list - after all, someone who chokes down Apple's margins is likely to buy other stuff that's well-marketed.

    • That's one of the reason companies like Apple users: They tend to have more money than sense. Ok maybe that's unfair, but there are a lot of them who are in to being trendy, and are willing to spend a premium on that. That's why they buy Apple products. Apple is cool right now, as cool as it gets, and they'll spend the premium to have that.

      That is a wonderful market to sell to. You don't want a bunch of miserly customers who want to nickle and dime everything and spend as little as they can. My parents had

  • and how poorly their service works in some places Sprint truly is planning to be the next AT&T.

    Seriously, WiMax coverage seems to work specifically in upscale neighborhoods and dense metro areas with practically none outside of there. Heck, I live in a reasonably nice area, but WiMax stops right at NASA Parkway and doesn't go much South of there. Up North it works in the main parts of Kingwood, but not the outskirts.

    Their 3G coverage is similarly sparse. The fact I actually saw a Sprint store in Bato

  • iPhone users use less data on average because many of them don't even need a data plan. But they must pay for one. A "high-end 4G Android device", on the other hand, is more likely to be chosen by the spec-optimizing, lives-on-the-internet, gonna-use-everything-I-paid for geek crowd.

  • I left sprint because they had no decent phones. I ended up going to AT&T for an iPhone but I was looking at Palm and Windows devices at the time. Sprint customer service was rude and they didn't seem to care to keep us. We're were planning on doing a big upgrade on our plans too.

    Getting decent phones was a problem for them a few years ago. Their customer service was worse and if you didn't live in the right area the network was also a problem. I happened to live in a good sprint zone. Making a de

  • by trevelyon (892253) on Thursday March 22, 2012 @08:20AM (#39439069)
    Not sure about anyone else but they will be loosing me as a customer.

    Sprint just raised prices mid-contract (only $5/mo but it could have been $1000 from the terms of the contract). When I called to get clarification they pointed me to the clause in the contract that says this: "We may change any part of the Agreement at any time, including, but not limited to, rates, charges, how we calculate charges, discounts, coverage, technologies used to provide services, or your terms of Service." They then will give you 30 days from the time of first notice (which is made on page 4 of the bill 30 days before the price is raised so by the time you see the price change you are already passed the 30 days) to drop Sprint if you wish. Of course that means sending back the $200 phone I paid for and getting nothing in return (no return charge and no phone). Basically this says is I am stuck with the agreement but really get nothing from it. They can change the price, length of contract, anything at any time and if I make changes then I get an early termination fee.

    The long and short is I am stuck with Sprint but will be moving away from them upon contract end and will never go back. I don't like to do business with companies that operate like this. I read the contract before but somehow must have missed this gem of a clause. I won't make that mistake again. It may be just me but any company that would ask the customers to sign something like this is no company I want to be doing business with. For the customer you are basically agreeing to pay an unknown amount if you quite (they can change that too you know) for an unknown amount of time at an unknown price. The simple fact that they have not raised you monthly rate to $1000/month and extended you term to 10 years with a $5000 ETF does not mean they legally can not. To sign something like this is simply foolish IMO. A mistake I do not intend to repeat.

    The fact that this price raise might be to cover new iphone subsidies just adds insult to injury. Next time I will buy my phone outright and use only prepaid services. The terms of service for all carriers are much too long to even bother with. Just another way that U.S. business is at a disadvantage compared to many other countries.
  • They should have given more love and better advertising to the Pre. I moved from ATT to Sprint just to get one. And at the time, I would never have even known it existed had a friend not told me about it.

    Also,
    Sprint is the only carrier I know of that charges per minute to forward calls. When at home, I used to forward to my vonage line so people could get in touch with me. That was a wakeup on the first bill from sprint!

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