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Summary:

Well, this is a fine how do you do. Today Palm just kicked Sprint in the groin while improving its own outlook greatly. Sprint is now rolling around on the ground thanks to the announcement that Verizon will sell Palm’s Pre in “about six months.” Sprint […]

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Well, this is a fine how do you do. Today Palm just kicked Sprint in the groin while improving its own outlook greatly. Sprint is now rolling around on the ground thanks to the announcement that Verizon will sell Palm’s Pre in “about six months.”

Sprint has been known to be the exclusive carrier of the Pre. In fact, one of the big complaints about the Pre — right up to Walt Mossberg’s article today — was its exclusivity to a carrier, losing customers in droves. Apparently, this criticism was too much for Palm to bear, and it shattered it today. The Pre is still exclusive to Sprint at launch, but only for six months.

Initially, Palm’s stock rose on the news, as did Verizon’s. Sprint? Well, not so much. That’s settled down a bit as of this writing, but the overall damage to Sprint is clear.

It’s not that Palm wouldn’t need to move to another, larger carrier, but this announcement — coming even before the Pre is available — really hammers Sprint in a place it was hoping for the most benefit: getting “switchers” to its network. The iPhone has proven people will switch networks for a compelling device, and while we don’t know yet if the Pre is such a device, it has a better chance of that than anything we’ve seen since the iPhone launch.

But why switch now? Verizon has some pretty loyal customers, and it may very well wait six months in order to keep on the Verizon network. Besides, Verizon may figure it’ll take six months to shake the bugs out of the Pre anyway.

It’s great that Palm will get the Pre on another carrier, but I can’t help but think it just shafted its “partner” in the process. Palm didn’t even give Sprint the benefit of a couple weeks’ sales. Did it need a stock boost that badly?

From Verizon’s standpoint, it’s a great deal for the company. Having lost subscribers to the iPhone, it obviously didn’t want to lose any to the Pre. I also wonder what this means for any rumored discussions of getting the iPhone on Verizon. Maybe the alleged talks were getting nowhere, so Verizon made a big push for the Pre?

Here’s a quick summary on how I see this affecting the major players:

Sprint

Sprint gets hurt the most. As mentioned, it loses a major shot at getting new subscribers onboard. And those new subscribers are the ones carriers value the most, since it requires data as well as voice plans.

Verizon

This seems to be an all win for Verizon. It potentially staves off switchers to Sprint, while at the same time adding another “iPhone killer” (the other being the RIM Storm) to its arsenal. While neither one may prove to be an iPhone killer, even if it is “good enough,” then Verizon can stave off switchers to AT&T as well.

AT&T

For AT&T, this is another reason that Verizon users may not switch. The iPhone is a strong lure, but when you think you’re getting something just as good (or better), then you’ll stick with the network you’ve got. Put simply, I don’t think AT&T loses because it won’t have the Pre, but rather because Verizon users may feel they have a reason to stick with the plan they already have.

Palm

You’d think this was a no-brainer great move for Palm. Still, there is a dark side. For one thing, there’s potential ill will caused with its exclusive partner at the Pre’s launch. Not much Sprint can do, but an adversarial relationship with your exclusive partner can’t possibility be a good thing. More important is the impact this could have on Pre sales at launch. Like it or not, Palm just may have given potential buyers a reason to not bother with purchasing on June 6, but rather wait for Verizon. This could be a major blunder, and yet another reason why the announcement should have come at least a couple weeks after launch.

No matter how this shakes out, what Sprint learned today is that the mobile industry is awfully cutthroat.

  1. It is I’d say ‘Level Playing Field’why Pre people should be condemned to provide those amazing instruments only to a particular service provider carrier? It has taken the wise decision, seeming tough to collaborate with others in the market but in the long run they should reap the dividends in many sense of the word….
    http://android.mobilechamps.com/iboosterlite.html

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  2. Commenting on my own post to mention the stock fallout:

    - Palm seems to be the only real beneficiary of the news today, being up 8.8%.
    - Verizon is up only 1.1%, which is LESS than Sprint’s 1.4%.
    - AT&T is up more than either carrier, at 2.3%.

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  3. Oh how I wish the Pre or iPhone would release on T-Mobile’s network. I really don’t understand this exclusivity at all. Wouldn’t Apple/Palm make more money if people on other networks like myself could buy their phones too?

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  4. Palm is throwing out the baby with the bathwater. Making an announcement like this pre-launch reminds me of the Osbourne computer fiasco. Also reminds me of Microsoft’s FUD tactics, but to use them on yourself? Kill some sales and piss off your exclusive provider? Dumb.

    That’s almost as dumb as announcing iTunes/iPhoto syncing pre-launch (this would quickly get out of the bag, but at least give yourself a week or two before Apple starts launching their arsenal of legal attacks).

    I bet that goofball Roger is behind this. Shrewd businessman, that Roger. Right.

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  5. Isaiah Henni Sunday, May 31, 2009

    @Chris Latko

    Palm didn’t announce this. Verizon did.

    Thanks.

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  6. Agreed with Isaiah. Verizon made the announcement, not Palm, which makes the analysis of the Palm side of this equation in this article a bit inacurate.
    http://www.reuters.com/article/rbssTechMediaTelecomNews/idUSN2833749320090528

    This actually hurts Palm quite a bit, since they really need the launch of the Pre on Sprint to go really well, since they’ve been having a lot of financial trouble recently. The benefit of selling on Verizon won’t happen until next year at the earliest, and everyone is going to judge Palm’s viability as a company based on the performance of the Pre on Sprint.

    Verizon making this announcement is really to stave off switchers from Verizon to Sprint. Actually, if anyone on any other carriers are willing to switch for the Palm Pre, they may choose to wait until the end of the year to switch to Verizon, the larger network, rather than switching to Sprint now.

    So, this is a business move on Verizon’s part to screw Sprint, and Palm is potentially hurt as a side-effect.

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  7. [...] and information on this device so I’m not getting into it here. It’s launching June 6 exclusively on Sprint, and in a few weeks we’ll know more about its prospects for success than we can [...]

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  8. Bassam,

    Did you read my article? You say that the “analysis of the Palm side of this equation in this article a bit inaccurate”, but then proceed to agree with me:

    - The article you linked to is the exact same one I supplied.
    - You say it hurts Palm, but so did I. It ticks off Sprint, and may cause lost sales from those willing to wait for Verizon.
    - You say Verizon did it to stave off switchers, which is exactly what I said.

    Oh well, I’m glad we agree.

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