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Sprint (NYSE: S) unveiled a new service today at CTIA called “Sprint ID,” which bundles packs of applications together around a theme, so that first-time smartphone users don’t have to search tirelessly through the Android Market. But Sprint’s real interest is not only about increasing smartphone adoption, but also about generating revenue from advertising.
The carrier’s business model was curiously left out of the press conference today. Afterwards, Sprint’s President Steve Elfman explained to mocoNews how it works. “First you buy the data plan, and then we have a revenue share from the ads, he said. “It’s very targeted.”
For example, ESPN (NYSE: DIS) could bundle together a number of apps and then deliver an advertisement for running shoes. An Electronic Arts (NSDQ: ERTS) pack was offering a demo of some of their games, like Tetris, and was also driving traffic to their Facebook and Twitter accounts. Other app packs will be built by strong consumer brands, such as Oprah, Comcast (NSDQ: CMCSA), Disney, MTV, Yahoo (NSDQ: YHOO). Sprint will take a share of the revenues from ads and any premium content sold through Sprint ID.
Sprint’s CEO Dan Hesse is also banking on these partners to help sell phones. Hesse likened it to the old MNVO model, in which brands like ESPN and Disney launched their own cellular service. They eventually shut down because the costs were too high to build the phones, package the content and sell it. This will make it much cheaper.
Kevin McGinnis, Sprint’s director of product management, explained that content partners will be able to sell Sprint phones directly to the consumer. In theory that means Disney could promote and sell the Hannah Montana phone on their web site, which is a Sprint phone with a Hannah Montana app pack pre-installed.
On Sunday, two entry-level Android devices are launching with 16 app packs, and a third device will be available on Halloween. But Hesse said he envisions the service being rolled out on all of its phones and tablets, signaling how much money it is putting behind this concept. Sprint is working with Handmark, Motricity and Sapeint to help create applications for partners.
The service will not be without its challenges. The biggest hurdle for Sprint will be in getting attention. Companies are stretched thin as it is to make applications for all the platforms out there — and now, Sprint is creating another layer of fragmentation. McGinnis argued otherwise: “It takes two hours to create a bundle, and all of the applications you include can be distributed to non-Sprint customers in the Android Market.”
It’s also questionable how much the platform simplifies the smartphone experience for the user. Each phone can download up to five app packs. Each app pack has five pages. Simple math shows that users will be managing a total of 25 pages of applications (Apple (NSDQ: AAPL) limits users to 11 pages on the iPhone). It’s also not very easy to toggle between the different packs. In a quick test on a demo device, downloading new packs took a few minutes while toggling between different packs was a fairly slow process.