Short Microsoft FY 4Q16 Earnings and Hololens

I got a chance to talk about Microsoft following their FY 4Q16 earnings call on the CCTV America Global Business program.  I picked up on some highlights, one really positive and one negative. The short term positive story is that their cloud business is doing very well, specifically Azure. 

Azure has the most momentum of their reporting segments with the following points: 

•  Eight straight quarters of triple digit revenue growth
• A modified run rate of $12B in FY 2017. It was $10B in FY 2016, catching up to Amazon AWS (the industry leader). 
• Projected $20B run rate by FY 2018. (No pressure on the Microsoft Azure sales force, right?) 

The other highlight, albeit negative (and may be inconsequential to the overall revenue picture) was that their handset business revenue dropped>70%. This wasn't a surprise as they've been on the march to unload their handset hardware business and 'rationalize' the associated workforce.  It's interesting as Microsoft's stated strategy is "Mobile First, Cloud First" in that order.  Traditionalists wonder if you have no handset to further the Windows 10 smartphone OS, how can the company really say Mobile First?  Of course they've moved office into smartphones on iOS and Android, embracing competitors but conceding to the reality that marketshare rules and they need to stay relevant there. I guess that small mobility component counts, right?  There are rumors that new smartphone hardware will come in 2017 but any longer will be a nail in the mobile Windows 10 OS's coffin.

Hololens

Though CCTA Business America focused on the Hololens story in relation to the wildly popular Pokemon Go, the takeaway for me is that the Augmented Reality category has been embraced by the consumer. While the host, Rachelle Akuffo pointed out the similarities to the discontinued Google Glass, in restrospect similar but different animals.  Glass was kind of enabling computing and having that experience on the lens. It may be the stretch would be Oculus Rift, DayDream or any other AR/VR product they're working on.

To be fair, VR and AR are still in its infancy. If one looks at how Microsoft is positioning Hololens, the company is presenting more business and scientific (e.g., NASA) applicability rather than what we immediately think of as gaming.  It's an exciting area to watch.

    

Verizon's July Rate Plan Changes Really Threaten AT&T's High-Value Subscribers

The Verizon changes that became effective on July 7th were leaked many days ahead of the launch. The media's, bloggers' and mobile industry junkies' discussion and focus has been on price increases at the S, M, L XL and XXL bucket levels.  As with many carrier plan actions, the Verizon message is that there is much more data (in light of strong data consumption trends) for the new price points. The graphic below shows the plans - old on top and the new on bottom.

For industry watchers, it's clear that competitors Sprint and T-Mobile continue to enjoy price advantage. The logical conclusion is that Verizon has no chance to win back former customers or draw from Sprint and T-Mobile with this action.

What? A price increase? What's Verizon smoking? 

Rather, Verizon's plan move was to attack AT&T to gain high-value customers AND retain its own.  It's no secret that AT&T and Verizon has been very vocal about not playing for the 'price-sensitive' customers and has concentrated on customers who yield greater revenue per account.  This means the target segment is large data consumers, small and medium business accounts.

Within this July price action, the more interesting movement happens at the XL and greater data levels.  The bottom line here is that Verizon increased the data value gap and reduced price points against AT&T.

Let's break the action out into two chunks, the mid-range and the high-end.  In the mid-range where I suspect a lot of bread and butter family plan battling happens, Verizon wins.  Verizon was already winning at the $100 price point, providing 18GB whereas AT&T offered 15GB.  However, the new move presented a less expensive $90 - 16GB level.  The same story is at the next data contention area; the value gap is most pronounced against AT&T's $140-20GB plan.  With a lower $110-24GB combination, Verizon should win the AT&T switcher.

At the high-end, it's pretty apparent that Verizon has a dramatic price and data value gap and the upper hand in selling to data hungry consumers and business data pooling accounts.  Verizon wins dramatically in price as the same data levels.

What's next?  Given this discrepancy, AT&T needs to respond in some fashion or risk losing these high-value users.  Verizon should be turning up the marketing within business sales channels now that their sales reps are armed with pretty good products - messaging price - data value and network.

Talking About Sprint Since Marcelo Claure's On-Boarding

Dan Meyer from RCR Wireless and I discuss Sprint's CY1Q16 results but revisit where Sprint is since Marcelo Claure has taken over as CEO.  We look at his priorities when he took over in August 2014 in the areas of:

• The executive team - who is in, who left, how the company is organizing
• Network - CapEx
• Cost containment including leasing companies, layoffs and $2.5B savings target
• Stabilizing revenue, the postpaid subscriber base and being the Value carrier

In the back half of the video, we talk about Glenlivet 12.

Handset Promos - BOGO from the US carriers + Scotch Second Take

In early 1Q16, the US carrier community pushed Buy One Get One (Free or 1/2 price) BOGOs hard in an effort to retain existing subscribers with an upsell of an additional line.  In parallel with this effort was the availability of the Samsung Galaxy S7, announced in February at Mobile World Congress.

Secondarily, it has to be that Samsung continues its marketing push to retain its loyal Galaxy customers to push them to the next iteration, whether they're Galaxy S4, S5 or S6 customers.

All these BOGOs are yet continuous carrier efforts to trot out the latest hardware. But BOGOs are not new and have been used for years. Unfortunately, the era of contract free plans and equipment financing have cut into upgrade rates.  In the old days, additional upgrades help retain/lock customers longer with low subsidized values. Given the sobering price tag of new devices and long term financing (24-30 months), that desire to upgrade has trended downward as more subscribers are keeping their handsets longer. Don't get me wrong, the early adopters will always have a place but the mainstream upgrade trend is slowing.  Caveat: We'll see how the public en masse embraces the next generation of iPhone (7).



For those scotch watchers, Dan Meyer and I talk a bit about the scotches we're currently drinking for the webcast here. We are self-admitted newbies and don't go in-depth as dedicated scotch YouTubers do but we share our likes and other scotch thoughts.

A Quick Take: Sprint's Retail Expansion w/Euro Company - Dixons Carphone

Sprint announced a joint venture with UK company Dixons Carphone Connected World Services (CWS) division to expand its retail footprint up to 500 stores.  

This follows the initial foray announced July 2015 where 20 test stores were to be opened. 
Particularly notable in the distribution of 'skin in the game" was the following:

Sprint stores will operate similarly to the third-party retailers who operate Sprint-branded wireless stores across the U.S. Sprint will own and staff the stores while CWS will manage them. CWS will also apply its expertise and best practices across all of Sprint’s sales channels.

Fast forward almost eight months and ostensibly the partnership was successful enough that warranted further stores - up to 500 nationally. However, no time table to meet the number was communicated. 

Quick Take:

Pros

• This is about increasing the gross additions to offset subscriber defections that happen to all carriers. The more gross adds to offset defections yields a better churn metric. Simplistically , this will help the net addition and corporate turnaround story that Softbank and Sprint has been promising. 
• Sprint further expands on its retail footprint following a deal with General Wireless in which Sprint was the lead brand and operating 1,435 to 1,700 stores. As Sprint of the RadioShack announcement in Feb 2015, the company had about 1,100 company owned retail stores. At the high range, Sprint will have about 3.300 stores. 
• Sprint limits its risk and the cost of expansion as it is spread to Dixons which supposedly may have a hand it implementation on top of whatever monetary agreement there may be.
• Presumably, this may help prepaid distribution since each retail store can also push prepaid brands Boost Mobile and Virgin Mobile (if they ever delineate each's niche and value).
• Not that we're tracking Dixons from the US, it gives that company another U.S. foothold after a joint venture with Best Buy for Best Buy Mobile and Geeksquad.  As in this iteration, the partner operates the stores and provides the personnel.

Cons

• For such a decent and impactful announcement, there was no mirror release on Dixons Carphone Media Centre/News Release site.  Doesn't the US expansion of a line of business warrant notice, particularly to he UK financial and mainstream press?

• There is the 'out' language in the press release of 'up to 500' stores - no promises. There could be less, not realizing the full purported distribution impact. 
• Sprint cost cutting may not be over. Any insider knows (regardless of carrier) that cost cutting/containment is constant. If things get bad, the 500 expansion number could be a pipe dream. A indicator could be the RadioShack partnership store traffic and sales metrics. 
• T-Mobile has more Un-carrier announcements planned for '16. At this point, Sprint is competing with T-Mobile for the attacking large Verizon postpaid base.  A strong T-Mobile offering could impinge on Sprint's recovery momentum (albeit very small for now).
• Honestly, this is an upside story. The heavy lifting of what to sell and get customers into the store has partially been answered with the successor of the long running 'Cut Your Bill in Half' promotion. 

4Q15 US Carrier Wrap Up - Some of what to Look at in '16 - Scotch

In early February,  Dan Meyer from RCR Wireless talk about what happened with results for 4Q15.  Who won in prepaid and postpaid and the details of the U.S. operators AT&T, Sprint, T-Mobile and Verizon Wireless.

We talk a bit about network, handset and price promotion trends and some things to look out for in 2016.  

At the end, we talk briefly with some toe in the water comments about single-malt scotch and hiding it from guests.

2015 Holiday Promos & 2016 US Carrier Outlook

Talking with Dan Meyer from RCR Wireless about holiday promotions and 2016 carrier outlook.

In Defense of Sprint's $20 1 GB/Unlimited Entry Plan

There has been much negative reporting and commentary about Sprint's new rollout of the $20 starter 1 GB/Unlimited plan with 2G speeds after 1GB is used up.  Essentially, they're getting rid of an overage tax.  Rather than a negative take as reported by the Verge, BGR, Droid Life and Android Authority (all tech blogs) on the unattractiveness and that Sprint was "fooling" customers.  To be sure, FierceWireless also picked up on the negative groundswell in their piece.  When I tweeted about the negative plan, the Twittersphere also weighed in.

@billho888 @evankirstel Consumers hate fine print that's perceived as 'gotcha' or trickery.

— Brett Murphy (@PowerMan4Evr) October 30, 2015

@billho888 and why shouldnt they? it is a bit of a joke..

— MJB (@WigglesPalmer) October 30, 2015

@billho888 They should be. 2G is over 20 years old. Maybe they can match the plan to this phone https://t.co/iQXZgkQnyu

— Chris Dalton (@ChiDalton) October 30, 2015

I'm not pro-Sprint or anti-Sprint historically, I try to have an even balance and call it as I see it.  I see it differently and can understand what Sprint is trying to do. Let's look at the wireless landscape today. 100% wireless penetration has been reached. That is, theoretically those who want a wireless phone/device have already got them.

TARGET AUDIENCE

Of the big four carriers, Verizon and AT&T have the lion's share of the coveted 'prime' and high-value postpaid users. Both are protecting their bases as best as they can and invariably, some high-value subs and low value subs leave for competitors.   It's been well documented that Verizon and AT&T have said that they'll let some of their subscriber base go to protect profitability.  I interpret those as mainly (not totally) as price sensitive and lower ARPU/ARPA/ABPU customers. Add to that in most every carrier, there are the feature phone users.  Every carrier wants to migrate those feature phone users to smartphones because they know that when new data capabilities are used, more get consumed and eventually, the customer upgrades to higher data levels. Verizon and AT&T have been losing those feature phone and entry data customers for many quarters. So for Sprint, they see that as opportunity.

My point here is that the new entry plan is not targeted to existing users who have been data use veterans but for subscribers who have not really tasted data, don't have a smartphone yet, price-sensitive, all or a combination.  Note the Sprint price comparison is against competitors' entry plans.  This is where I think the tech bloggers are missing the point as they're techies and are all data vets.

2G?!

The other point of contention is that the vitriol concerning 2G. Yes, it is slow in today's LTE world. In today's environment, we even get upset when we're on 3G (EV-DO or HSPA). But the targeted sub may or may not care. MetroPCS before T-Mobile bought them out operated on LTE and a 1x fall back (MetroPCS never went to 3G) and yet they still promoted an 'unlimited' marketing message.  If subs did care, they'd jump to another competitive offering (likely in prepaid) or upgrade their data plan level (that's the point).

But why 2G and not 3G (EV-DO)?  My view on Sprint's thinking is that you don't want to have these entry/lower ARPU bearing customers contending for data on the 3G network that some of the higher ARPU bearing customers are using. That would be worse, alienating those customers and providing an overall bad user experience all around =-> churn.

Will it be successful? Ultimately, as a plan is designed, it comes down to sales and marketing execution in convincing the target segment that it's the best value/deal out there for what they're looking at.  Obviously, this plan is readied for the heavily promotion laden and competitive 4Q holiday season.  We'll see if competitors react.

Three Win-Win Wireless Network Features

Published at FierceWIreless

Ho's Perspective: 3 network win-win features Verizon, AT&T, T-Mobile and Sprint are using 

October 22, 2015 | By William Ho

The wireless network, as we bring it up in everyday conversation, is often about coverage and capacity. Much has been written about LTE networks becoming the revenue growth engine for the industry, the need to deploy complementary equipment such as Distributed Antenna Systems and small cells to meet data demand, and carriers' expanding geographic and population coverage.

Still, many companies are looking to move beyond the standard network buildouts. AT&T is moving aggressively as the industry pioneer toward Software Defined Networking and Network Functions Virtualization with benefits of scalability and flexibility both operationally and from the cost, product and service viewpoint. Verizon is also following suit and while Sprint and T-Mobile US have not formally committed themselves, it's a logical industry path. Beyond these macro network topics, there are network features that are synergistic for both provider and user.

Here are three network features that are in various states of deployment and development that I believe are ultimately win-wins for both mobile carriers and users:

1. Carrier Aggregation (CA) is an LTE Advanced feature that allows mobile carriers to meld disparate spectrum for wider channels, thereby supporting greater download speeds and network capacity. This network feature has been for the most part taken for granted as almost every carrier is "doing it." A check on the 3GPP specifications show a myriad of global carrier aggregation FDD, TDD, intra- and interband combinations. While some carriers can delay this feature by having wide contiguous spectrum (e.g., T-Mobile's 15-20 MHz band in some areas), other carriers are already implementing two times carrier aggregation (e.g., Sprint's two-carrier CA in the 2.5 GHz band, AT&T is doing 700+AWS, Verizon is doing 700+AWS). Yet in the near future, carriers will be embarking on three-carrier CA. Sprint and AT&T have both signaled that this is going to happen. Cynically, one can view it being ammunition for the speed arms race playing out in marketing messages and media coverage.

Beyond marketing, having faster download speeds addicts users so they invariably consume more data. Rarely do users complain that their mobile broadband experience is too fast. Quite the opposite, there is the sense of annoyance that network speeds aren't fast enough. Clearly, this plays in the hands of carriers offering greater data buckets and simplistically the overt path to drive service revenues. As download speeds increase beyond tens of Mbps to hundreds, carriers can potentially offer speed tier services based upon price point or brand. On the fixed wireline side, AT&T, Verizon, Comcast and others offer service based on speed tiers, so the concept is well understood by the marketplace. In the mobile space, a variety of factors prevent offering a minimum download guarantee but the industry can flip the concept in limiting a maximum speed. This is already happening in the prepaid space as AT&T's Cricket users are limited at 8 Mbps in a way to differentiate and protect the AT&T postpaid experience. Creating reliable download speed bands potentially allow for carrier plan varieties and ultimately user choice. That is, a subscriber who wants lesser speed can pay less. Moving the thinking into the wireless fixed access realm, the opportunity exists to mirror standard fixed wireline offerings. Ultimately, carrier aggregation can provide choice.    

2. "Twinning," for lack of an industry term, is the current ability to link multiple (compatible) devices to a primary mobile number. AT&T's Chris Penrose, senior vice president of Internet of Things (IoT), used the expression at several industry analyst events, including CES and the 2014 and 2015 AT&T Industry Analyst conferences. Sure enough, the formal service announcement became "NumberSync." Immediately many people pointed to Apple's Continuity feature for similarities, but while it is an Apple ecosystem benefit, NumberSync and the idea of twinning is platform agnostic as the network plays a major role. With AT&T's announcement, T-Mobile and Sprint also said they were working on something similar. Though Verizon is mum, it's likely that an offering will eventually come as it appears to be an industry no-brainer, especially when driving IoT adoption.

It makes sense that AT&T is first to pioneer the feature as its connected devices bet has spanned several years with many partners. The need to use Bluetooth or Wi-Fi to tether the device to a smartphone, especially in wearables (think watch/fitness band) has limited those devices' mass appeal as both need to be carried. Now, with the network aware that there are many connected devices to the same mobile number, this could help boost wearable interest and adoption. Though the low hanging fruit are wearables and tablet use cases, connected home and automobile are the next frontiers in the consumer space. Certainly the bill of materials in attaching a cellular modem package to a wearable may be a short-term challenge but as the industry scales, pricing invariably will drop.

From the subscriber view, it's adding a "line" or device on their data share plans without extra fee. From the carrier view, every IoT attachment increases service ARPU and customer stickiness, and loyalty increases, which positively impacts churn. Twinning is an exciting first step for more innovation in the connected device arena that will surely play out with numerous announcements at the 2016 Consumer Electronics Show.    

3. The idea of unlicensed LTE has been thrown around for several years, spearheaded by Qualcomm. Operating LTE in unlicensed spectrum (initially 5 GHz) appears to be a natural progression for the efficient mobile technology. At the heart of the matter is to increase the mobile user experience in terms of download speeds. In areas where mobile speeds may suffer (e.g, indoor malls), unlicensed band availability may help offer the user a consistent, similar, or faster mobile experience. Yet the topic is not without controversy and spawns confusion as there are several approaches in various stages of development and favored by different parties (LTE-U, LAA, LWA, MuLTEfire). On top of which, providers including cable companies with substantial Wi-Fi business model interests operating on the same unlicensed bands are wary of resource contention and ultimately being shut out. Though the controversy has played out in FCC filings and tech publications, all industry players would not want regulatory edicts, nor does the FCC want that either.

Verizon and T-Mobile have signaled their desire in seeing unlicensed LTE operation in 2016, albeit possibly with different approaches. Verizon as a founding member of the LTE-U Forum has strong interest in LTE-U whereas T-Mobile is looking at LAA. While collaboration is underway at the 3GPP and IEEE, future operations of LTE in unlicensed spectrum has united the wireless sector. EVOLVE, an industry consortium of small, larger carriers, interested manufacturers and their respective trade associations, is preparing for a lobbying and marketing push. At this stage LTE on unlicensed spectrum is fluid as all interested stakeholders attempt to influence the outcome. Though this is a global topic, the near-term battleground is in the U.S.

Despite the controversy, a solution will come about to the (expected seamless) benefit to the mobile user. Different carriers will bring different variants to market. From the carrier view, operations in unlicensed bands should be seamless and potentially obviate any negative views on coverage, speed and capacity. Moreover, data is partially offloaded from the LTE network. A seamless, fast, and consistent mobile experience is now expected by most users and will be a factor in churn.

These three network features will continue to be implemented and some will be seamless but regardless, we'll all need the latest and greatest hardware and software to enjoy these benefits. That's not so bad, right?

Verizon 3Q15 Results and Unlimited Data Trending

Dan Meyer and I talk about Verizon's 3Q15 highlights and takeaways. Also we talk about unlimited data moves from carriers.

Direct 2 You's Progress and Execution

Since Sprint's Direct 2 You announcement, the market availability has been increasing. We should expect that given this is a big bet and instrumental in countering churn and perhaps new customer acquisition.

Here's a timeline:

• April 14 - Direct 2 You announcement
• May 18 - Initial markets: Kansas City, Chicago, Miami
• June 29 - San Francisco, New York, Los Angeles, and Denver
• July 13 - Dallas, Detroit, Tampa, Washington DC

Additional markets have also been telegraphed for the summer:

• Atlanta, Boston, Houston, Minneapolis, Orlando, Philadelphia, Phoenix, San Antonio, Seattle and St. Louis

Given it's already mid-July, the end of summer is technically September 22 and there are 10 markets left to announce if they meet their summer commitments, news releases technically can come in mid-August and mid-September.  But from a macro view it'd be helpful to help CY 3Q15 churn statistics.

Beyond these large markets, there has to be additional planned going into the fourth quarter holiday selling season. This will test this concierge concept, especially if one of the value propositions is stress relief. 

If Sprint executes, Direct 2 You will be in 21 markets in parallel with approximately 4,500 points of postpaid distribution, thanks to the RadioShack deal.  The elements are there for improving churn and customer acquisition in a perfect world.   However, with T-Mobile's recent strong plan and North America roaming offers, it won't be so simple. 

Finally for cars people:

Anyone notice that the Fiat 500 is Direct 2 You's new face, replacing the Ford Focus?


OLD

NEW

Bullet Point Analysis: Jump! on Demand - more than just device leasing

WHAT IS IT?

Jump! on Demand is T-Mobile’s variation on Sprint’s device leasing idea that started with the iPhone (i.e., iPhone for Life).  The lease term is for 18 months and users may trade-up up to three times (or upgrade to different smartphones [“superphones”]) in a year.  An enterprising customer can milk six upgrades within this term at months 1, 2, 3 and then in months 13, 14 and 15 (or variations).  

Jump! on Demand’s availability begins on June 28, 2015 and to kick the program off, a limited time promotion of an iPhone 6 (16 GB) at $15/month will be the go-to market poster child.  While this shares the Jump! moniker (Un-carrier 2.0), there isn’t any direct connection aside from the theme of quick device upgradability.

ANALYSIS

From a macro view, just copying Sprint’s leasing scheme isn’t enough based upon T-Mobile’s in your face/pro consumer market positioning. The big consumer benefits are:

• 18 month term vs. the Sprint norm of 24 months
• Ability to swap smartphones.  Customers may swap three times in a year (12 months) at AND a maximum of six times in 18 months.
• When a customer upgrades or swaps a smartphone, they receive a new, not refurbished, smartphone. 

WHAT’S IN IT FOR T-MOBILE?

• Customer retention: Every carrier’s base have those early adopters who want the latest and greatest.  Jump! on Demand appeals to that base with up to six swaps in the short 18 month lease term.   This in essence furthers these customers’ device addiction.  Additionally, the Jump! on Demand’s device portfolio contains the most desirable flagship ‘superphones’  (for now, i.e., iPhone 6, iPhone 6 Plus, Galaxy S6, Galaxy Note 4, LG G4).
• New customer acquisition: Any way to get a flagship device for cheap will draw attention. Coupled with plan promotions and lower pricing against the big two carriers, Jump! on Demand is a big and important weapon in the T-Mobile marketing arsenal. 
• Overall net additions: In the Q1 earnings call, T-Mobile increased their postpaid net add guidance from 2.2/3.2M to 3/3.5M. Note also that they added 1.1M postpaid customers in 1Q15 and that they intended to ‘front load’ the adds.  Of course front load could mean three quarters instead of the first half of ’15.
• Better vendor pricing leverage:  Though the price may be a wash from the customer facing view, large carriers with more scale look to limit their device acquisition costs. If a carrier can drive more volume, lower per unit price usually bears fruit, which helps in the whole profit picture.

WHICH COMPANIES WILL FEEL THE MOST IMPACT?

·      In the following order:

1.     Sprint – because the company is an alternative value leader against T-Mobile and those customers who are drawn to the once unique leasing scheme has been topped.  This also moves the focus for specifically those “Cut Your Bill in Half” Verizon and AT&T customers onto T-Mobile.  If the decision makers are device centric and price sensitive, then T-Mobile will be a prime consideration.

2.     Verizon Wireless – T-Mobile is specifically gunning for Verizon because that’s where the majority of the industry’s postpaid users are.  The Never Settle for Verizon campaign (a Test Drive [Un-carrier 5.0) on steroids) kicked off on May 5^th with a trial period from May 13th to the 31^st was extended until June 27.  Extending a switching campaign usually means that it is working.   

3.     AT&T – T-Mobile has historically targeted AT&T back in the same GSM technology days. I place AT&T last since of the big two, Verizon is the bigger fish in terms of postpaid base. Moreover, AT&T’s retention efforts have paid off tremendously in uber low churn metrics.  The aggressive $0 Next messaging has also been widely by AT&T as a key component of customer retention.

• Apple stands to gain in terms of T-Mobile volume based upon specifically the $15/month promotion.  Normally $27.08/month, T-Mobile’s $12.08 discounting is akin to a subsidy but T-Mobile PR cringed at that word.  Regardless of whether it’s filed as a marketing cost, the discounting is real.  Perhaps like in a car leasing analogy, a lower monthly price may be had with assigning a higher residual at lease end.
• Samsung, LG and possibly HTC may likely see more flagship device volume movement since Jump! on Demand calls for new and not refurbished devices. Logically, if there is the possibility of long term device swapping, more units should be in the pipeline. However, the iPhone promotion may increase the volume gap in Apple’s favor.
• Refurb and secondary market companies will sell increase business volumes. Though it’s logical that ‘used’ devices will feed the insurance side and some will find its way into MetroPCS, the secondary market whether domestic or international will see some benefit.

COMPETITIVE RESPONSE?

• There are now two national players offering leasing. AT&T and Verizon may hold off but they cannot ignore this device payment approach. The concept is simple and by all accounts from Sprint’s initial success, customers like it.  T-Mobile adopting the approach validates the concept in the marketplace.  AT&T and Verizon will have to respond and it has to be before Q4.  If not, they will be even more vulnerable.
• Sprint will need to modify its leasing approach, at a minimum expanding the term options, also before Q4. Matching the number of times to upgrade also needs careful consideration and figuring out a positive business case. Sprint has already stated that they can get favorable device pricing given SoftBank's global buying power.  Sprint needs to have a plan in place if it is to keep its positive net add momentum of which device leasing plays a crucial role. 
• Aside from national players, regional players may or may not join. Large regional carrier US Cellular joined the equipment installation plan fray.  For that carrier, an EIP is now competitive tablestakes against competitors, and a component of returning to positive postpaid net adds (after a couple of years in the negative territory).   

Can't Knock Sprint for Trying Hard, Now Direct 2 You

WHAT IS IT?

Direct 2 You is the company's latest action at building differentiation to stand apart against competitors.

 In a In a nutshell, it's concierge and personalized direct to the customer fulfillment of a previously placed order for customers who are upgrading.  Though it's positioned as a national program, only Kansas City, Chicago and Miami were announced.  As part of the announcement, Sprint notes a fleet of 5,000 branded cars and job creation numbers of 5,000.ANALYSISThere is no doubt that Sprint is trying out a lot of ideas to get itself out of the hole. CEO Claure deserves much of the credit in lighting a fire and compounding a sense of employee urgency in the company's restoration journey. Direct 2 You comes at the heels of the free unlimited international data (albeit 2G & only 15 countries)/text roaming announcement and RadioShack distribution deal in which immediately after the bankruptcy decision,  Sprint soon opened some sales doors.  Intertwined was a very 'political' announcement in a important spotlight market, Chicago where infrastructure investment and job creation (300) led the headlines. Here are some Direct 2 You pros:

• The effort is for only upgrades, which means that this is a customer retention effort. There is no minimum bill spend on attaining this concierge service.  Rewarding and cementing loyalty directly impacts churn. While 'Cut Your Bill in Half' and RadioShack store distribution expansion is about acquiring gross adds, Sprint needs better ways to fight against T-Mobile's switching momentum.
• The markets are important and 'friendly.' Starting off in the home HQ market, it gives Sprint some political capital for local job creation, rather than the very visible downsizing in recent past. Chicago as a market has been long discussed as a revitalization of the company story even in the Hesse era. Continuing that on top of meeting public commitments to re-elected Mayor Emanuel only makes sense. Finally, Miami is Claure's old home and obviously heavily Hispanic (a segment Sprint is heavily courting).  
• The effort is through an outsourced partnership, one that has a long history of residential/office fulfillment. There are no Sprint employees in the mix but ostensibly, the job creation is non-direct and there should not be any Sprint CapEx spend.
• Direct 2 You fulfillment is on the customer's schedule, seven days a week during business hours, and subject to where the customer decides to meet.  If customers cannot work around doing fulfillment around this flexibility, there's something wrong.  
• Sprint is working with a delivery zone structure where the representative can be dispatched productively according to meeting customers' time requirements. Further, there's linkage to Sprint systems and additional devices in case there is a customer's change of heart in a device.
• Finally, the fleet of 5,000 Sprint branded vehicles serve to further the company's brand awareness, much like everyone knows a Best Buy Geek Squad car or telephone or cable company truck.

Yet some cons and questions bug me:

• How much does this cost and how will this effort hit the bottom line? Clearly, it's a retention effort that hits the marketing and cost of goods sold line. This may be a wildcard from the financial standpoint but will market goodwill (e.g., Sprint for Chicago) pay off in terms of business and government accounts?
• Sprint says that in the delivery zone concept, it may not be economically feasible to meet a customer who may be outside a delivery zone. Financially, it makes sense but there may be the odd ball cases of high-value customers outside of those zones. Of course, marketing and public perception will be tested once those cases have media focus.
• Is this a beta effort? How long will the commitment be there? Yes, it's national but unlike T-Mobile that can paint itself in a corner with an Un-Carrier X.0 moniker, Sprint can get out if it gets too expensive and suffer ridicule. I supposed this could be a double-edge sword.

Competitive response may not be forthcoming as the big two of AT&T and Verizon Wireless does not have to do anything as they're still in the driver's seat.  T-Mobile has always prided itself as a leader of innovative things (i.e. Un-Carrier) and they have market momentum.  It's likely that competitors will paint this effort as a desperation gambit.  For Sprint, to its credit, they're trying things and cannot be faulted for that. But what's the cost and anticipated churn impact? We'll have to wait to see in calendar year 3Q and 4Q15 to see, won't we?