Sprint Acquires Virgin
Sprint's Prepaid Brand Options Continued

Sprint acquires Virgin Mobile USA was a headline that needless to say got a lot of attention at the time!  It definitely had an impact on their prepaid wireless strategy.  If you haven't already, you can review more details about the Virgin purchase by visiting the Sprint Buys Virgin Mobile page.  The strategic options below are the second half of the list; to review the start of the list, check out the previous Sprint Acquires Virgin Mobile page.

5.     Offer Similar Products But Target Different Niches

This approach is very much what Sprint said was its strategy at the time of announcing the purchase of Virgin Mobile.  In other words, Sprint acquires Virgin and it's business as usual, with the assumption/statement that the two brands target very different customers, and while there may be some overlap, it's not significant enough to be concerned.  I personally never bought into this, and that operating the brands independently, and paying special attention to targeting different demographics, would ultimately fail.

Customers really needed to clearly understand what each brand stood for, and how that translates into the differences in plans, value, and the general service experience; otherwise there would be confusion and even frustration.  Even if Sprint attempted to offer different distribution, and advertise each brand in different markets, with the world the way it is, open and accessible, this strategy would have ultimately been a challenging approach with a high probability of failure.

Note that the difference between this approach and Option 1, is that here Sprint completely merges all operations, and simply targets the distribution and marketing in different niches.  To the contrary, Option 1 has both brands existing as they do today, simply under the Sprint owned umbrella.

Conclusion - The likely short term approach, but would never be a long term successful strategy.

Update - From what I understand from inside sources at Sprint is that they ultimately merged operations of the two business.  I'm told that this process was painful and distracting, and that the business lost a lot of valuable employees who are fled to better opportunities, or who were laid off.  I still believe that this is a plan for failure, and clearly neither brand has made any significant impact on the market since the acquisition.


6.    Dissolve both brands into new Sprint Prepaid brand

This strategy is actually discussed in the Sprint Prepaid Cellular Phones section, and while I still believe it is a very viable approach, the purchase of Virgin Mobile USA really did change the conclusion I made in that discussion.  I believe that the Virgin brand is sufficiently valuable that Sprint would be wise to maintain a distinct prepaid brand under a Virgin offering.  While I'm certainly not a brand expert, I do believe that while the Boost brand has limited appeal and value (as previously discussed), having the Virgin brand persist would help differentiate the offerings.

I still do believe that allowing customers to transition between prepaid and postpaid plans should be simple and easy, leveraging the Virgin name would have helped to add clarity as to whether a customer is on a contract or no contract plan.  In other words, when it was a choice between Boost, Sprint prepaid, or creating a new prepaid brand, I believed that Sprint prepaid would be the best choice.  However, with the purchase of Virgin Mobile, my recommended best approach shifted to taking advantage of Virgin's brand.  Your opinion may differ?

Conclusion - While this was still a viable long term approach, Sprint never went this direction.

Update - Sprint is clearly still maintaining the Virgin and Boost brands.  Whether that will remain the case in the future, only time will tell.  Note that purchasing Virgin does not mean that Sprint holds a lot of value in their brand per se, but rather that they value the prepaid customers that they now own.  That said, it would be a political nightmare to have purchased Virgin only to later dissolve the brand.  Particularly since the Sprint postpaid brand failed, keeping its other brands alive would seem to make the most sense at this point in time.

7.    Dissolve Boost into Virgin

This strategy would have meant that Sprint acquires Virgin and the Boost brand is eliminated in favor of using Virgin as Sprint's prepaid brand.  Unlike Option 4, I believed this option was actually possible!  Bottom line is that the Virgin brand has a much broader appeal.  Boost has been pigeon-holed into somewhat of a ghetto brand, as opposed to being a generic youth and value brand as has been the case with Virgin Mobile.  I believe that people are looking for good quality products and no contract plans that offer great value, and that they don't really care a lot about the brand itself.  In fact, some people may be turned off by Boost's legacy brand.  We've actually seen Boost try to expand its appeal over time, which it arguably has failed to do in a meaningful way.

Ultimately, I believe that customers just need to know a plan or offer is available, and they will then choose the one with the best value, and to a large extent offers a phone they really want.  In other words, they don't really place much value in the brand, although a poor brand would have a negative effect.  In the case of both Virgin and Boost, both brands are associated with Sprint, and that appeal (or lack thereof) will have a greater impact than the individual Virgin or Boost brands.

Conclusion - This was the best, and arguably very likely candidate for Sprint's long term prepaid strategy!

Update - I still believe that this could be a good long term strategy, though it could take the better part of a decade to execute.

Sprint Acquires Virgin - Overall Conclusion - Updated!

I don't believe that Sprint has seen anywhere near the operational synergies that it had expected.  Based on my contacts, I understand that they're still struggling hard to achieve these efficiencies, even after all this time; however, at the loss of most of the good talent.

Also note that Sprint has a history of screwing up mergers - i.e. The Sprint Nextel merger was deemed the worst merger in the history of corporate America, essentially destroying the entire value of the deal (~$30 billion), along with the Nextel brand.

The whole point here is that Sprint acquired Virgin, however, we'll need even more time before anyone will be able to make any meaningful conclusions as to which strategy is truly at play.  We'll see some things implemented over time (as we have seen so far), but what's the ultimate end game?  Do they actually have one, or is it fluid and changing over time as they discover the complexities, as well as distractions over the struggling postpaid brands?

UPDATE on Sprint Acquires Virgin - Sprint Prepaid Wireless - Sprint Announces Its Multi-Brand Strategy!

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