Sprint Could Find ‘Winning Formula’ Following T-Mobile’s Lead by Ending Subsidies

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Might Sprint abandon the device subsidy model, a strategy that’s been successful for rival T-Mobile?

In a comment that could impact the general consumer and business user alike, Sprint CEO Marcelo Claure said on the operator’s earnings call this week that it will consider ending smartphone subsidies next year.

T-Mobile made the move last year, forcing customers to pay full price for devices, which can be as much as three times as much as the subsidized price; of course, on the flip side, the Bellevue, Washington-based operator did away with those dreaded two-year service contracts that annoy subscribers. And it’s resulted in subscriber growth that has exceeded its bigger rivals in recent quarters.

Claure said the MNO has begun a “transformational journey” that includes 2,000 more job cuts, which should amount to $400 million in savings; however, the so-called “journey” has actually been underway for some time, notes 451 Research’s Rich Karpinski commenting specifically on a CNET article, and it includes a transition that began under former CEO Dan Hesse and under new owner SoftBank.

Claure’s decision to end its “Framily” plan, launch big shared-data plans and slash prices were all part of an aggressive market move.

“ … Positioning against T-Mobile’s strong (bordering on at times over-the-top) ‘uncarrier’ marketing is one area, with Sprint promoting itself as a more mainstream, more family (not framily)-friendly alternative with generous data tiers and value pricing. That position also works against more premium-priced rivals AT&T and Verizon. Sprint is also being extremely creative in device/service partnerships, an area worth pursuing and one that could pay off if it finds a winning formula,” said Karpinski.

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