Tomorrow, the Palm PRE will finally be available for purchase on Sprint's network; and, make no mistake about it...Sprint may have more riding on its success then Palm, Inc. does.
Sprint has been counting on their exclusive 6-month launch of the PRE to bring in new customers from other carriers; and, to migrate current Sprint Treo/ Centro customers to the new device. The idea of grabbing customers away from Verizon and AT&T was never very realistic to begin with: Sprint has the worst overall customer-satisfaction rating of any major USA wireless carrier. Now the idea is officially DOA: Verizon announced that they will be carrying the PRE as soon as Sprint's exclusive window ends in January, 2010. AT&T quickly followed with an announcement that they are talking to Palm about carrying the PRE (and, other WebOS devices) on their network, as well.
So, that leaves Sprint's existing smartphone owners (like myself) as the primary targets for the PRE. Why do smartphone owners choose Sprint? In a word, price. I pay $70 a month for 700 'anytime' minutes (I average 500 minutes per month), and unlimited data; which is defined as web and email. Texting, picture mail, TV, music, etc. are all individual optional subscriptions. Like a lot of other smartphone owners, I opt not to subscribe to these services; as much of the same data can be had for free via the web and other options (personal music collections, Slingbox, sending pictures as attachments to regular email, etc.). I pay an additional $5 per month to have my son share the minutes and data (he has one of my older Treos). Sprint's network is pretty good; and, for $75 per month, I can deal with their less-then-stellar customer service. During my years with Sprint, I've owned a lot of Treos (300, 600, 650, 700p, 755p), so moving to the PRE should be a piece of cake, right?
Actually...no.
There is a big, honking 'gotcha' attached to the PRE: you have to subscribe to one of Sprint's 'Everything' plans. These plans offer very few options for individuals and families...generally 2 choices of 'anytime' minute blocks or an unlimited minutes package.
All 'Everything' plans provide unlimited...well, everything:
- Web browsing
- Texting
- Picture mail
- Video Mail
- TeleNav GPS
- Sprint TV
- Sprint Music
- NASCAR
- NFL
In my case, the cheapest analog to my existing plan would be the 'Everything Data Family' plan:
- 1500 anytime minutes (remember, I average 500 per month)
- Unlimited 'Everything' (I only use web and email)
- Additional annual service costs of $660 ($130 per month vs. $75)
In fairness to Sprint, their 'Everything' plans offer more for less then similar plans at Verizon or AT&T. However, the people being told to pay these prices are already Sprint customers. They have well-established benchmarks of what Sprint service costs; and of having the ability to choose which optional services they do or do not want to pay for. Other then a desire for the PRE, there is no compelling upside for existing Sprint smartphone owners to migrate to the 'Everything' plans...unless they're someone who wants all of those extra services.
I talked about it with one of Sprint's Senior Executive Analysts (they work in the CEO's office), and he told me that the 'Everything' plans are justified for the PRE because:
"...the PRE is a data-intensive device..."
Not true. The PRE is no more data-intensive then any other smartphone...its just faster and more efficient at getting the data from its source into your device. It doesn't matter that the PRE is interacting with data that sits on the 'cloud', as opposed to your PC. If you get corporate push-mail, G-mail, Y-mail, etc. you are already getting your data from the 'cloud'; and it is only that same data you are transmitting/receiving to the PRE. The device and what it interacts with have nothing to do with data consumption...only with the management of that data being transferred between the two points.
What Sprint actually means, was expressed by the Senior Executive Analyst this way:
"...once customers realize that they're paying for these services anyway, they'll use them..."
I pointed out that Sprint was only providing access to the very same network that I currently pay $75 per month for; and, that I would not use any of the additional products they want to make me subscribe to. From that context, I pressed him to explain what value Sprint was going to provide to me in return for charging me an extra $660 per year. This is the answer I received:
"The decision to offer only 'Everything' plans for the PRE came from upper management..."
Obviously. In a recent interview, Sprint CEO Dan Hesse gave the explanation for that decision:
"...Sprint's Simply Everything plan, which was launched last year and offers unlimited voice, texting, e-mailing, and Web surfing for $99 a month, has helped increase monthly spending for individual subscribers."
Sprint's approach is to emulate what AT&T did when they launched the first iPhone: use an exclusive hold on the latest 'must-have' device as a way to leverage customers into more expensive contracts. Sprint has been watching iPhone-atics pay AT&T whatever they ask for; and it must have seemed like Eldorado when Palm brought the PRE to them first. However, the logic for applying the same strong-arm to Sprint customers is very flawed. Consider these facts:
- AT&T isn't loved; but, it still has a much higher customer-satisfaction rating then Sprint
- Apple owners are a breed apart; and, should not be used as the model for sales of anything else. They will pay whatever it costs for the latest Apple goodies
- AT&T had a 2-year exclusive on the iPhone...Sprint only has the PRE for 6-months. Customers will wait until they have a choice
Consider these numbers:
- Sprint lost 182,000 wireless customers in the quarter ending March 31, 2009
- During the same period, AT&T added 1.2 million new customers, and Verizon added 1.3 million
Contract customers (i.e., smartphone customers) are considered valuable because they typically spend more on their service per month. And, because of the contracts, they don't cancel service as often as customers without contracts.
If you're Dan Hesse, you should really think about that last statement; and, use it to put your PRE-pricing philosophy into perspective:
- Sprint is bleeding customers like mad
- Verizon and AT&T are growing at more then 6 times Sprint's attrition rate
- Verizon and (probably) AT&T will offer the PRE in 6 months
The number 1 reason that Sprint is losing customers is its historically lousy customer service; and, putting the squeeze play on existing smartphone customers is a particularly egregious example. History shows that people will spend more to get quality...especially if they feel that they have been treated poorly somewhere else. If Sprint doesn't honor their smartphone customers' existing plans for the PRE, then they can expect to lose a great deal of them as their contracts expire over the next year. As they walk out of Sprint's door, they'll look over their shoulders and say: "CAN YOU HEAR ME NOW?"
I have sent this onto both the Senior Executive Analyst, and to my contacts at Sprint Public Relations. I have asked them to forward it onto Mr. Hesse, along with an invitation to directly respond to the issues raised in this Editorial; and, to have them published on Palm Addicts.
Stay tuned...
PJA