Summary
The great thing about the wireless marketplace now is that it is dynamic. The dynamics of technology always forces change; it may take time but things will change.
Analysis
Verizon’s recent deal with Palm is a homerun for Palm and for Verizon Wireless. If the Palm Pre works the way it is supposed to, this device can give iPhone a run for its money. All of it is good news for the consumer.
As for Sprint, the deal between Verizon and Palm is also good news for Sprint. The more excitement there is for Palm the greater the potential for spillover onto Sprint. Sprint needs to be able to position its own underlying business model as a cornerstone to its sale of the Palm Pre. Sprint is undergoing a major restructuring as evidenced over the last 12 months in the way Dan Hesse has made changes and dealt with the recession. The numbers are important and indicate the positives and negatives of any company but you need to understand why the numbers reflect potential.
Dan Hesse has been responsible for: changing out his executive management team (which was necessary), mitigating his WiMAX risk via the new Clearwire venture, establishing new relationships via the new Clearwire, and re-launching (sort of since it never disappeared) Boost Mobile (thereby re-emphasizing prepaid).
The Palm Pre will facilitate Dan Hesse’s turnaround of Sprint. Of course Sprint’s exclusivity is only good for 6 months but at least Sprint will have the exclusive up until the Christmas and Hanukah holidays. Sprint’s best friend to date has been the recession. The recession forced all of the major wireless and landline carriers to shift strategies. The recession gave Sprint time to act. The recession forced all of the major and minor carriers to scale back capital budgets that had been in place for the last 2 to 3 years.
The recession has reset the playing field; giving time to vendors like Nokia and Palm and giving time to carriers as well.
Getting back to Verizon. Verizon’s deal with the Palm Pre will just make it that much more interesting for all carriers. Let us not forget what this will mean for Apple’s iPhone. From the perspective of Apple, there will be two carriers selling the Palm Pre in 7 months. It is all good news for Palm. It is all troublesome news for AT&T Mobility and Apple.
Verizon now has a full lineup of smartphones. Verizon needs to leverage the Palm Pre for a particular segment of its targeted customer base.
The smartphone has arrived in full force. Investors need to begin thinking beyond the device and begin thinking about the application platforms underlying the smartphones.
Investors need to think – portable computing platforms. There are a lot of places to go from there.
