Sign of the Times? Sprint Closing 55 Retail Stores
Sprint (S) announced it is closing 55 of its retail stores and 150 in-store repair centers and firing 1,400 employees, positioning the cost-saving moves as necessary to stem the $1.6 billion in Q4 losses and to give it room for network and business model upgrades. Is what’s behind Sprint’s business-model reformat the changing landscape of the smartphone market as it slides away from the high end toward budget-friendly devices?
Sprint (S) announced it is closing 55 of its retail stores and 150 in-store repair centers and firing 1,400 employees, positioning the cost-saving moves as necessary to stem the $1.6 billion in Q4 losses and to give it room for network and business model upgrades. Is what’s behind Sprint’s business-model reformat the changing landscape of the smartphone market as it slides away from the high end toward budget-friendly devices?
Some of the early evidence that’s the case is the redirects by major smartphone players such as Microsoft’s (MSFT) license-fee waiving of Windows Phone for two India device makers and Google’s (GOOG) revamp of Android 4.4 KitKat to fit the OS for lower-end devices. Following the device makers’ leads, the carriers’ retail operations have been heavily tilted toward the top end—now it will be interesting to see how—or if—Sprint and others adjust their business models to meet market changes.
So, is Sprint ahead of the curve or playing catch up? In other words, do Sprint’s store closings reflect the slowed pace of smartphone sales in mature markets and the shift by major device makers to cheaper handsets aimed at emerging segments? Will Sprint be better prepared with business solutions and targeted sales?
And, how closely will rivals Verizon (VZ), AT&T (T) and T-Mobile (TMUS) examine Sprint’s business model update to determine if the carrier merely is shedding costs and reacting to its quarterly losses or sagely preparing ahead of time for bigger changes in the market?
Now that smartphone sales growth has stalled in the mature markets, with the United States, Europe and parts of Asia at near saturation, new sales models could emerge that reflect the segment’s headlong move to accommodate budget-conscious businesses and consumers with suitable products and services.
According to comScore, about 156 million, or half of the U.S. population already owns smartphones. By comparison, the same number of people own smartphones in India out of a total population of 1.2 billion. Similar figures hold for the market opportunities in Africa, Brazil, China, Eastern Europe, India, the Middle East, Russia and others.
With a low-end boom already hitting the smartphone market, will carrier stores remain in the forefront of how businesses and consumers purchase mobile phones?
Incidentally, step two in Sprint’s overhaul came earlier last week. Parent company SoftBank’s chief executive Masayoshi Son, who’s previously characterized the U.S. wireless market as beset by slow speeds and overpricing, said the carrier might ally with satellite television provider Dish Network (DISH) in a broadband partnership.
