Monday, March 26, 2007

Sprint Offers Customers Music Convergence

Sprint Nextel Logo

Until now music listeners that purchase their music on-line have been confined to playing their music on PC and portable music players or their mobile phones, not both...until now. One day before CTIA begins, Sprint announced Monday that it will reduce the price of music purchased through the Sprint Music Store to 99 cents starting in early April; the same as on iTunes or the Real Music Store. Their price reduction from $2.49 along with the ability to play songs on any WMA compatible device or cell phone has the potential of driving a significant number of purchases to Sprint.

The new Sprint Music Manager, provided through a deal with Smith Micro Software Inc. (NASDAQ:SMSI), transfers songs from a PC to phones like Samsung's UpStage through a USB cable. If this announcement sounds familiar, it is because it is.

Sprint's announcement is obviously a competitive move against AT&T/Cinglular (T) with the iPhone and iTunes. The buzz around the iPhone is as high as its price and Sprint is looking for a way to take some of the sting from their buzz. At least they hope that it may slow down the amount subscribers leaving the carrier, but it will be enough to reduce the churn to 2% that Gary Forsee predicts for this year.

Sprint is challenged to put together an ecosystem that is as easy to use and rich in content like iTunes. They have done a mighty job assembling players such as Groove, mSpot, SIRIUS, and Real to provide content, and the addition of the Sprint Music Manager provides the user interface on the PC. Hopefully they will load it full of music, audio, and video content that allows seamless transfer from the computer to the phone. Their ecosystem can offer a viable alternative to iTunes and keep more money in their coffers instead of having to split with Apple like AT&T.

Sprint is thinking in the right direction with Monday's announcement. They just need to simplify their plans. Subscribers and even customer service representatives are confused on the naming and variety of plans offered for data and music. They need to take a page from the Helio play book and make the plans simple to understand.

This move will help them preserve their customer base but it is not enough to attract new subscribers en mass unless they add video, podcasts, and other compelling programming through an easy to use interface whether on the PC or phone.

Disclaimer: This author has in the past and potentially in the future held positions in Sprint (S).

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