A follow up question to investors who, like me (see my posts on May 12 and November 14, 2010), are persuaded by or at least open to the investment case for Sprint Nextel (S), is whether the availability of Google’s (GOOG) Android operating system on Sprint’s 4G network is enough to woo early adopters who set tech industry trends to give Sprint’s Android offerings a try.
Of course the dominant force in the smart-phone market is Apple’s (AAPL) iPhone, which is supported by AT&T (T) and now Verizon’s (VZ) networks. But the iPhone is not yet available in 4G, while Sprint and T-Mobile’s (owned by Deutsche Telekom AG (DTEGY.PK)) 4G networks both support Android-based phones. So evidence that tech connoisseurs who demand state-of-the-art are warming to Android in 4G would help firm up the case for Sprint’s stock.
An important opportunity to probe this question is provided by Verizon’s iPhone rollout last month. Though quite successful by any reasonable measure,[i] the lines were shorter than anticipated, with pre-sale orders, bad weather on rollout day, and the iPhone 4 not being a new device all cited as culprits for the muted enthusiasm.[ii] Nevertheless, it is reasonable to ask whether the availability of Android phones on faster networks may also have influenced consumers’ choices.
Web statistics show customers were evaluating alternatives
Both Sprint and T-Mobile’s web traffic rose significantly during the week of the Verizon iPhone rollout, with each reaching a weekly peak in page visits about 20% higher than during the prior two weeks.[iii] This is not to suggest that people were necessarily buying more Sprint and T-Mobile supported phones during the rollout, but that a good number of potential Apple/Verizon customers were researching what else was out there before buying.
iPhone lines were particularly short where both Sprint and T-Mobile offer 4G
Significantly, a review of media reports grouped by whether Sprint or T-Mobile’s 4G coverage was available in the area of sale during the rollout[iv] suggests that there may have been an inverse correlation between the availability of 4G for Android-based phones, and the length of Verizon iPhone lines.
Here are reports from or around 5 major cities where both Sprint and T-Mobile have 4G coverage: New York City, Philadelphia, Kansas City, Palo Alto, and San Francisco. All show very disappointing lines, with reports from some key merchandizing spots in the single digits:[v]
New York City – Report: “New York 6:50 a.m. ET: It’s 18 degrees here in New York City, and there are now eight people in line at the Fifth Ave. Apple store . . . . There are more Apple employees inside the Apple store than there are outside.”[vi]
Philadelphia – Report: Headline says “iPhone Fans Line Up Outside Verizon Store In Center City” with report that “Some of them braved the cold,” but the photograph shows only 8 people in line.[vii]
Kansas City, Kansas (outside Kansas City, Missouri) – Report: “About 10 people were lined up at the Verizon store in Overland Park on Thursday morning to buy the phone.”[viii]
Palo Alto, California – Report: “The Palo Alto . . . [Apple store] has traditionally been a excellent barometer of customer interest in Apple’s new products. Previous new product introductions at the store have attracted . . . over 400 when the doors opened . . . In this case, just three people were in line when the Palo Alto store opened at 7 a.m.”[ix]
San Francisco, California – Report: “At 7 a.m. on the dot, with temperatures probably in the 40s–still, quite a bit warmer than in New York–the doors to the Apple Store opened up . . . . This time, however, the wild cheering seemed deeply out of proportion to the number of people in line–I think there may have been four by the time the doors opened. I felt a little embarrassed for everyone involved.”[x]