Sprint steps up prepaid game: Android fuels commodity devices

Sprint steps up prepaid game: Android fuels commodity devices

Summary: Sprint's move to take a phone like the Triumph to Virgin Mobile highlights how a lot of the wireless action will be in the prepaid market. Here's why prepaid is a hot market.

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What happens to prepaid growth---and contract declines---when devices connected to inexpensive plans become competitive with their pricier cousins?

We're closer to answering that question today than we were just last week.

Sprint and its Virgin Mobile unit on Thursday debuted the Triumph, an Android 2.2 device that doesn't look like a cheapo phone. Rachel King summed up the primary issue in her quick impressions of the Triumph:

The Triumph was the real treat if there was one today. If I walked into a Sprint store and saw this handheld without a “prepaid” label stamped onto the product sheet, I would assume it’s a full-fledged, regular contracted smartphone. And in a way, it really is just a regular 3G smartphone. Motorola (and Sprint via its Virgin Mobile brand) are developing a bridge between subsidized and prepaid smartphones by bringing some decent options to the bottom category.

In many respects, the Virgin Mobile Triumph outshined the pricier Sprint Photon 4G. Amazing what a $25 a month Web, messaging and talk plan can do. The Triumph isn't the first Android prepaid device around. Virgin Mobile has a few, Cricket features a $329 Samsung Indulge and MetroPC has a $299 Indulge and a handful of other Android phones.

Sprint's move to take a phone like the Triumph to Virgin Mobile highlights how a lot of the wireless action will be in the prepaid market. Here are three reasons why:

  • Prepaid services will represent growth to the wireless industry. The wireless market has become saturated and the prepaid market brings more consumers under the tent to eventually be migrated to higher priced plans.
  • A working class iPhone may make the prepaid market much more exciting to consumers.
  • People don't have the money to continue to boost average revenue per user at wireless carriers and value plans will dominate. Bernstein analyst Craig Moffett has highlighted the serious disconnect between carriers' plan to squeeze more revenue out of customers and the consumers' ability to pay.

Take those three factors and combine them with a mobile operating system---Android---that can power high-end and low-end devices and carriers may have to move down market in a hurry to keep their subscriber growth.

Also:

Topics: Telcos, Mobility, Networking, Wi-Fi

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67 comments
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  • In a couple of years ....

    these phones will go for as low as $149 or even $99. This is how Android will start to dominate the mobile market and Apple will revert to a high end niche status, unless willing to open up its ecosystem and lower its margins.
    Economister
    • In a few years?

      @Economister Android is the OS of crapware. That price will be hit in about 3 months. In a few years, the same or similar model will be selling for $25 at the local gas stations .... and nobody will be buying them.
      wackoae
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @wackoae you really have no clue do you? not even pretending to be intelligent...just going with the flow and hoping for the best. Hope you job doesn't involve anything beyond scrubbing toilets for a few for the lives you would endanger if you were to do something more substantive like digging ditches or cleaning up dead animals off the road.
        grimalin
    • RE: Sprint steps up prepaid game: Android fuels commodity devices

      @Economister The Virgin Mobile Optimus V already sells for $149 on sale at some places. Combined with $25 a month for data, text and 300 talk minutes, that's the best smartphone deal available.

      I've been using the Intercept through VM, which is a bit clunky. Looking forward to the Triumph when it goes on sale.
      K B
    • RE: Sprint steps up prepaid game: Android fuels commodity devices

      @Economister This makes no sense. People who already want the iPhone but can't afford one will buy one BECAUSE IT'S CHEAPER. When are all you Android jockeys going to get it?

      No one cares about Android outside the blogosphere, and it has no reputation except "malware".
      I defy you to name one cell phone maker or software firm that will cause mentally normal (ie. not Apple-bashing) customers to say, "I'm leaving Apple so I can go buy their thing and put all my data on it, because I trust them".
      jryanp
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @jryanp I had an iphone and I left it because it was sooo boring. I asked my friends what to buy instead and they told me to buy an Android phone. I then got the Nexus S, and man, that phone for me equals a 100 iphones
        dobba821992
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @jryanp
        Spoken like a true loyal Jobs-worshiping Apple fanboy. Hold the banner high for those magical devices!!
        NTrain
      • This does not make sense for you but...

        @jryanp

        makes perfect sense to me and my family. My second son loves iPhone and he stays with AT&T. My other family members after playing quite a bit with his iPhone decided to go with Evo 4G (got two Android upgrades since we switched family plan from AT&T to Sprint).

        Sorry to upset you but each member of my family plan has Evo 4G, yes - five(5) Evo on the plan. And everybody is happy. :-)

        About "BECAUSE IT'S CHEAPER" - Evo 4G price that I payed was $199.99 per unit hence I do not see how it is any cheaper than iPhone. :-O

        All this is said for you, young man, so that you can understand that everybody is different. And this is great! Buy iPhone or WP7 if that is what you need - no objections and name calling from me and my family. ;-)
        Solid Water
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @jryanp
        I'm still running my T-Mobile G1 (stock, not rooted) that I bought the first day it was on sale to the public. It has a high-capacity battery upgrade and it's been dunked in a lake and dropped too many times to count, but still works great for what I need. Over a 3G connection, I can spin up Amazon EC2 AMIs and then connect via RDP/SSH/SCP to build, upgrade, or manage my cloud servers, databases, and content. I can also do this without the tedium of using an on-screen keyboard, since it has a physical 5-row QWERTY keyboard, which still works perfectly after much use.

        I have yet to experience any malware on Android, since I don't download the type of garbage that contains it. Besides, idiots who do that don't just own Android devices -- read the latest on OSX malware.

        Anyone who has technical content creation and management needs will choose the power of a Linux-based OS (and physical keyboard) over a restricted and controlled OS with a flashy (minus the Flash) UI intended to dazzle the average consumer into forgetting what they paid (and will continue to pay) for their toy.

        I haven't found a need to upgrade, since my G1 does everything I need for it to do as a mobile computing device. Apple has a creepy way of motivating their user base to continually buy new hardware, so enjoy your perpetual chase for devices which suffer immediate perceived obsolescence.
        Bit-Smacker
    • RE: Sprint steps up prepaid game: Android fuels commodity devices

      @Economister <br><br>Race to the bottom is nothing but a short term strategy. It will result in razor thin margins for OEMs, more corners being cut, more crapware being stuffed on phones to recoup lost revenues, bad service and cheapening of the brand. <br><br>Happens in every market. Look at the "PC" market, Apple remains strong today (with a 28% growth year over year) while others are seeing continued low sales (-3.2%). You couldn't pay me to buy another Dell, HP again after the horrible experience I've had with their PCs in the past. Netbook market same thing after a race to the bottom where is it today? MP3 player market same. And now the phone and tablet market. Good luck.
      dave95.
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @dave95. My experience with HP drove me to Toshiba for my laptop needs. When I was working in the computer industry, I used to recommend HP laptops almost exclusively, no matter what the end user need. And I used to recommend HP desktops quite a bit. Now, especially with their shitty outlook towards customer service, I *might* recommend an HP printer for someone on a budget.
        digital riverrat
  • Best move Sprint can make

    With T-Mo likely to be bought by AT&T (unless a sudden outbreak of responsibility and ethics occurs within the DoJ), Sprint's best competitive edge against Ma Bell and Verizon is to leverage their prepaid services. It's the only real way for them to compete - get customers that can't afford the cost of a Verizon or AT&T contract.

    Joey
    voyager529
    • RE: Sprint steps up prepaid game: Android fuels commodity devices

      @voyager529 - Not everyone chooses prepaid because they "can't afford the cost of a Verizon or AT&T contract", it's just [i]generally[/i] prepaid offers a better value over post-paid in the mid-term and shelling out more for the unsub handset makes better fiscal sense. The only thing that is holding back prepaid in the US market is the fact that (so far every prepaid carrier I've had, including T-Mo) you get shipped out to a foreign country and the support is horrible. If they levereged the unemployed to work at home via "remote" telecenters, and they are US natives, prepaid would destroy post-paid.
      JT82
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @JT82 well said maestro.
        zeedeenut
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @JT82 Verizon Pre-Paid customer support IS HERE STATESIDE. I know for a fact, because i am a Verizon Pre-Paid customer, and each & every time i have needed support, it IS STATESIDE. I chose the pre-paid route because i do not NEED NOR WANT an overly expensive long term contract. I also use the HTC Droid Incredible with Verizon, AND I LOVE THE PHONE & SERVICE !!!
        raclemons
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @JT82 Great observations. I find it hilarious that everyone thinks that prepaid customers "can't afford" contracted phone services. I have been using prepaid for the last 10 years and will never go back. Why would I enter a two year contract and pay $50/ month just to get a subsidized phone? A quick cost-benefit analysis reveals that prepaid is a better financial choice. The downside (until recently) was that the prepaid phone selection was bottom of the barrel. Glad to see change on the horizon!
        Tony Dutch
        AnthonySills
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @raclemons

        "Verizon Pre-Paid customer support IS HERE STATESIDE"

        And you know this how? Because it's good? Because it was helpful? No accent? Sorry but these days, that isn't proof of anything.
        jmiller1978
      • RE: Sprint steps up prepaid game: Android fuels commodity devices

        @JT82 I agree, prepaid sometimes makes more sense. I have a droid-x for my work, and a prepaid ATT phone for my mom to call (yes, a separate line for my mom). As for remote support: I agree too. That's why there are a lot of support centers building out in South Dakota and Utah, etc. Makes more sense than 3rd-world support, by far! AND there are people who like the cold weather too, it's very beautiful in those areas.
        Violetw
    • RE: Sprint steps up prepaid game: Android fuels commodity devices

      @voyager529 - Right - and do NOT expect that eventually they will step up to a more expensive plan (per bullet 1). Customers are typically more intelligent than the marketing department. They (marketing) spent too much money doing focus groups of the wrong population segment.
      Willnott
    • RE: Sprint steps up prepaid game: Android fuels commodity devices

      @voyager529 I live in the boonies of Virginia. Before coming here, I had an AT&T prepaid plan using a Palm Treo. Now I have some POS Samsung on Verizon, because AT&T doesn't reach me. I'd love it if AT&T would install a few towers near where I'm at so I could through this Samsung under the first semi I see.
      digital riverrat