Sprint ID and the Struggle for Carrier Identity in the Post-iPhone, Android Universe

The latest comScore data on US smartphone marketshare show an even tighter race between Apple and Android. Nielsen's August numbers showed Apple with 28% of the US smartphone market and Android with 19%; however comScore reports that gap to be even smaller (less than 3 points):

  • RIM: 37.6%
  • Apple: 24.2%
  • Google: 19.6%
  • Microsoft: 10.8%
  • Palm: 4.6% 

Ironically Android would probably not be as successful as it is today without iPhone. Apple shocked and rocked the carriers (other than AT&T) and other OEMs and shifted consumer focus to the handset, loosening the carriers' iron grip on the mobile consumer in the US.

At the time of its introduction there was no "answer" to the iPhone other than Android. Neither Symbian nor Windows Mobile were competitive; RIM and webOS were proprietary like Apple's OS. Android was the only viable choice for OEMs, hence their broad adoption of the platform. And fierce competition between Apple and Google has helped make Android better and better.

With the rise of Android has come the struggle to differentiate for both OEMs and carriers. HTC and Motorola have sought to develop proprietary interfaces and software, Sense and MotoBlur respectively, to make their Android handsets different from one another. Samsung is promoting its screen resolution and pre-installed Swype keyboard. Other hardware features are being promoted by the different OEMs as well.  

Carriers in the post-iPhone, Android era are confronting the same thing. They want to avoid being commodity providers of mobile data -- or commodity providers of Android devices.

Verizon in the US has promoted and branded its network as the most reliable and fastest. Sprint has sought an advantage by being the first to (partly) roll out 4G -- although Verizon will have LTE deployed in almost 40 cities by the end of the year, substantially eliminating any competitive advantage there for Sprint. 

Verizon has also sought to cultivate a developer community and build a parallel universe of proprietary apps for its Android handsets. For its part Sprint has now come  out with Sprint ID, an app-based personalization strategy. Sprint announced this out at CTIA yesterday and describes Sprint ID as follows:

Sprint ID allows LG Optimus S users to quickly download ID packs that deliver a predefined experience, including applications, widgets, ringtones and wallpapers, all at once. Packs are designed to meet customers’ interests, whether they are sports fans, fitness fanatics, auto enthusiasts or more. The packs could be brand-specific; allow users to easily switch between English or Spanish; or be specifically tailored to the customers’ businesses or lines of work. The marketplace of Sprint ID experiences is growing and customers can have one or up to five on their devices, powered by the Now Network. 

These Sprint ID-app bundles will be available initially on three new Android devices from Sanyo, LG and Samsung. Here's a video shown yesterday during the announcement explaining Sprint ID: 

 Picture 28

MocoNews explains that ad targeting will be part of the equation for Sprint. ID bundles will offer contextually targeted advertising opportunities:

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 could bundle together a number of apps and then deliver an advertisement for running shoes. An Electronic Arts 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, Disney, MTV, Yahoo. Sprint will take a share of the revenues from ads and any premium content sold through Sprint ID.

It's very unlikely that consumers will choose Sprint vs. other carriers on the basis of this strategy. However Sprint may enjoy some ad revenue from this approach if ID is nicely done and people adopt these bundles. 

Sprint ID does not, in my mind, accomplish the task of differentiating Android handsets from Sprint vs. Android handsets from Verizon or T-Mobile. Sprint's Boost and Virgin units are successfully competing with price. But for the post-paid plans it will be about network reliability and speed as well as price/value.  These proprietary software initiatives will have a marginal impact at best on consumer decision making. 

Yesterday the Wall Street Journal reported (again) that the iPhone is coming to Verizon. This is clearly a boy who cried wolf scenario, although we know that AT&T will relinquish exclusivity in 2011 at some point. If Apple doesn't release the iPhone to more carriers it will be crushed by Android. Once the iPhone is available elsewhere it will be interesting to see whether and how market dynamics change.