Will iPhone 4S Help Sprint Race Ahead?

It’s no news that Sprint — the nation’s third-largest wireless carrier — has slowed to a crawl in the past few years. According to Bloomberg Businessweek, the company has reported losses for 15 consecutive quarters, and 855,000 customers left its network last year.

But now, the company has a new weapon in its arsenal: the latest iPhone — or iPhone 4S — which was unveiled by Apple during a press conference yesterday. On October 14, Sprint will begin selling the device, which includes a faster processor, improved camera and new voice-prompt technology. What’s more, Sprint will likely offer the phone with unlimited data plans in the hopes that it can gain market share from its two competitors, Verizon and AT&T, both of which will also carry the latest version, Bloomberg notes.

Earlier this year, AT&T lost its contract as the sole carrier for the device when Verizon began offering it. After acquiring the iPhone, Verizon saw its subscriber total jump by 906,000 between January and March — more than twice the number during the same period in 2010. Could Sprint have similar good fortune?

Apparently, the company is betting on it — and betting big. According to the Wall Street Journal, Sprint has ordered 30.5 million units — an estimated commitment of $20 billion over the next four years.

However, Wharton legal studies and business ethics professor Kevin Werbach isn’t convinced that, in the case of Sprint, the iPhone will be a panacea. “The iPhone was a big boost for Verizon because customers already preferred [Verizon] to AT&T, and they wanted the Apple device,” he notes. “There isn’t a huge contingent of customers who inherently prefer Sprint; that has been [the company’s] challenge.”

According to the Journal, at the end of the second quarter, Verizon had 106 million wireless subscribers, AT&T had almost 99 million and Sprint was far behind with 52 million — many of whom were not on annual contracts. “Being able to offer the iPhone is just table stakes,” Werbach says. “It doesn’t distinguish Sprint in the marketplace.”  

Unlimited data is a smart move, he adds, “but that alone won’t convince the mass of customers to switch from AT&T or Verizon. Customers don’t entirely understand the data caps and usage charges the other carriers are adopting, and their initial response is likely to be cutting usage rather than switching carriers. Most customers are locked in for two years, anyway.”

Wharton marketing professor Eric Bradlow suggests that the company could see a benefit, at least initially. “Sprint’s bet on the iPhone makes a lot of sense in the short term, because currently iPhone has the best applications, widest distribution and best word-of-mouth.” But there are other variables to consider. Apple’s operating system still doesn’t support Adobe’s Flash Player program, Bradlow notes, which is needed for opening PDFs and viewing many popular websites. He adds that Google’s Android platform has an edge because it is more open-source. “A question remains about which operating system will be dominant in the long run.”

But whether or not Apple remains the leader in the smartphone market is perhaps beside the point, according to Werbach. Ultimately, he says, “Sprint will have to do something significantly more radical to avoid being squeezed by the two bigger players.”

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