Sprint Acquires Virgin Mobile
What Were Sprint's Strategic Prepaid Wireless Options?

Sprint acquires Virgin Mobile USA and shook up the future of its prepaid wireless strategy!  If you haven't already, you can review more details about this acquisition by visiting the Sprint Buys Virgin Mobile page. The strategic options that follow were those that come immediately to mind following the announcement.  Of course, we now know what ultimately transpired with at least their short term strategy; however, I've decided to keep thisdiscussion here as an interesting look at Sprint's strategic decisions.  The updates in red reflect how things ultimately transpired for comparison!

1.    Keep Boost and Virgin operating completely independently

This is the "do nothing" scenario.  In other words, Sprint acquires Virgin Mobile and continues with the existing brands and their respective roadmaps.  If you believe what the Sprint executives and analyst were saying, the brands appeal to completely different demographics (i.e. age, income, race, etc.), with minimal overlap, then this strategy could have made sense, and simply allows Sprint to eliminate a massive competitor.  I personally did not believe what they were saying.  While the two brands did initially target different demographics, there's so much overlap in practice that leaving things as is would have been inefficient.  In addition, Boost had spent millions of dollars trying to broaden its appeal from urban to more middle America (i.e. where Virgin is!) with its Unwronged campaign and Danica Patrick partnership.

Conclusion - Although I suspected things would remain this way for at least a year following the close of the deal, I guaranteed that this would not be Sprint's go forward strategy.

Update - So over two years following the acquisition, this is essentially the strategy Sprint took.  I called this the lazy person's strategy.  Ok, that's not fair.  The reality is that they spent a lot of time and money combining the back office systems and processes for the two companies, and also folding the working staff into the Sprint organization.  However, from a branding perspective, they haven't done anything meaningful.  In other words, Virgin Mobile and Boost remain as they were from a customer perspective, only being run by different people.  From my inside sources, I understand that this has been a disaster, which is why we didn't see Virgin or Boost do anything really meaningful or interesting since the acquisition.  Boost's Shrinkage program was the only notable campaign.

Update - After years of struggling, Sprint re-launched it as an iPhone only brand; check out the details at Virgin Mobile iPhones Only!


2.    Virgin as the CDMA play & Boost as the iDEN play

Boost had been whiplashed from network to network over a number of years.  They started out on the Nextel iDEN network where most of their growth came from.  Then we saw them move to CDMA with the launch of their first monthly unlimited planned dubbed UNLTD - Unlimited by Boost (in 2007).  However, just as that seemed to be taking off, they discontinued the program.  Then, shortly after Sprint brought on its new CEO, Dan Hesse, we saw Boost launch its now famous $50 Monthly Unlimited plan.  With all of the problems Boost had with the iDEN network (do you recall the text message delay issue?), the question became would they move back to CDMA to gain capacity and access to better technology?  If I were running Boost, I'm thinking that iDEN was a dead end technology with a weak handset lineup, and no highspeed data, and no technology roadmap to get there...yikes!

That said, Sprint could have chosen to keep Boost on iDEN and continue with Virgin as its CDMA play.  This could have been a good approach to really help with targeting different users with different features (ex. high speed data versus walkie-talkie) and minimize overlap.  However, this approach would almost certainly foreshadow the demise of Boost, because eventually iDEN was foretasted to disappear as it had no relevance in the future of wireless technology.  i.e. Boost needed to move to a different, non-iDEN technology or die!  Harsh but true (in my opinion).

Conclusion - This would only have occurred if Sprint acquires Virgin Mobile and decided that the Boost brand would ultimately be phased out once iDEN became truly uncompetitive.  I didn't foresee this to be the short term decision, however, the long term may have proved out to look something like this unless Boost expanded its CDMA offering quickly.

Update -Sprint announced in 2012 that it was decommissioning its iDEN network.  The result was the migration to CDMA phone sales only, and ultimately discontinuing support of iDEN a couple of years later.


3.    Focus Virgin on PAYG & Boost on Monthly plans

If you recall, in 2008 Boost saw severe declines in its business, and analysts were predicting some pretty hard times ahead for the carrier and brand.  However, when they launched their $50 Monthly Unlimited plan in early 2009, all of a sudden they became the industry's sweetheart and favorite topic of conversation.  Meanwhile, Virgin was continuing to bleed customers and market share, and after going public it became known that in fact they hadn't been making a profit for a long time, if ever!  So, perhaps a reasonable strategy was to focus Boost on Monthly Plans, while keeping Virgin on PAYG, while also trying to grow its Prepaid Broadband presence.

This would have certainly helped to eliminate any competition for customers between the two brands.  However, Sprint would have wanted an easy and seamless way to move customers back and forth as their usage needs change.  This would have proved to be expensive from a platform development perspective, not to mention technologically impractical and unappealing given that customers would have needed to buy a new handset when they switch between the brands (due to the different technologies; iDEN vs. CDMA).  More than likely, this would have required that Boost offer their monthly service on CDMA, which, in my opinion was the only play that kept Boost surviving.

Conclusion - This is a reasonable approach, however, unlikely to be the go forward strategy.

Update - This turned out to be correct in that it was NOT the strategy Sprint elected to pursue.


4.    Dissolve Virgin into Boost

This strategy would have basically meant that Sprint acquires Virgin Mobile and subsequently eliminated the Virgin brand over time, and continue with Boost as Sprint's prepaid brand.  This was arguably logical given that Boost was doing well at the time, while Virgin was not, at least from a profitability perspective.  However, given Sprint's investment in the Virgin brand, and my belief that Virgin's brand is much stronger overall, with a far wider appeal than the Boost brand, I thought this approach was borderline silly.  I included it here only for completeness.

Conclusion - Never going to happen!

Update - Obviously, this didn't happened.  In fact, Virgin was doing so poorly that they eliminated its Broadband2Go prepaid Internet program, as well as the lower end payLo brand.


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