Monthly Archives: March 2009

3G for Consumer Gadgets?

The Journal had an article today titled, “Sprint Looks to Power Gadgets Beyond Cellphones” where it is reported that Sprint is talking to companies such as GPS device maker Garmin Ltd., Eastman Kodak Co. and SanDisk Corp. about delivering 3G/EV-DO service for their products. This won’t be the first time – if you have not been living in another planet, you probably know that Amazon is leasing Sprint’s 3G network as an MVNO to provide connectivity to its popular ebook, the Kindle. 

There are some interesting statistics in the article: 

Wholesale currently makes up about 3% of Sprint’s revenue and 16% of its total subscriber base of 49.3 million. While Sprint’s overall subscribers have declined nearly four million since 2006, its number of wholesale subscribers has risen 27% to 8.1 million in the same period.

I am assuming the subscriber count includes voice subscribers as well. Virgin Mobile (Sprint’s biggest MVNO) has roughly 5.8 million subscribers. The numbers seem to indicate that a Sprint retail subscriber has an ARPU that is ~13 times that of a Sprint wholesale subscriber – somewhat consistent with the fact that it apparently it takes about 11 — yes, eleven — Virgin customers to equal the revenue generated from just one Sprint customer.But according to the article, while wireless wholesaling generates lower revenue than retail sales, carriers can hold down costs and maintain good profit margins. But all these numbers may be valid only for voice subscribers – data wholesaling charges may not be that bad. 

Looks like the first salvo is Sprint’s press release yesterday touting its agreement with the Ford Motor Company. From the press release:

Beginning this spring, 2009 Ford F-Series and E-Series vehicles – and later in 2009, Transit Connect vehicles – will offer an in-dashboard PC with internet connectivity via the Sprint Nationwide Mobile Broadband Network. This capability provides the opportunity to leverage productivity application solutions via the Sprint Mobile Broadband Network, including real-time labor and material-cost capture, inventory updates, invoice generation and work-order edits and completion.

The interesting aspect of these arrangements is that the application is not web browsing – instead, it is book and newspaper downloads in the case of Kindle and vertical workflow applications in the case of Ford. I am sure Amazon is paying Sprint based on the amount of bytes downloaded in addition to a per-subscriber fixed charge. Probably the reason why Amazon makes it difficult to use the Kindle as a browsing device!

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