Sprint Acquires Virgin
Sprint's Prepaid Brand Options Continued
Sprint acquires Virgin
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
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
Offer Similar Products But Target Different Niches
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
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
the way it is, open and accessible, this strategy would have ultimately
challenging approach with a high probability of failure.
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
Option 1 has both brands existing as they do today, simply under the
Sprint owned umbrella.
likely short term approach, but would never be a long term successful
- 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.
believe that this is a plan for failure, and clearly neither brand has
made any significant impact on the market since the acquisition.
Dissolve both brands into new Sprint Prepaid brand
strategy is actually discussed in the Sprint
Prepaid Cellular Phones
section, and while I still believe it
very viable approach, the purchase of Virgin Mobile USA really did
change the conclusion I made in that discussion. I believe
the Virgin brand is sufficiently valuable that Sprint would be wise to
maintain a distinct prepaid brand under a Virgin offering.
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.
still do believe that allowing customers to transition
between prepaid and
postpaid plans should be simple and easy, leveraging the
name would have helped to add clarity as to whether a customer is on a
or no contract plan. In other words, when it was a choice
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
While this was still a viable long term approach,
never went this direction.
- Sprint is clearly still maintaining the Virgin and Boost brands.
Whether that will remain the case in the future, only time
tell. Note that purchasing Virgin does not mean that Sprint
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.
Dissolve Boost into Virgin
strategy would have meant that Sprint acquires Virgin and the Boost
eliminated in favor of
using Virgin as Sprint's prepaid brand.
4, I believed this option was actually possible!
Bottom line is
that the Virgin brand has a much broader appeal. Boost has
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
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
turned off by Boost's legacy brand. We've actually seen Boost
to expand its appeal over time, which it arguably has failed to do in a
Ultimately, I believe
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
they really want. In other words, they don't really place
value in the brand, although a poor brand would have a negative effect.
In the case of both Virgin and Boost, both brands are
with Sprint, and that appeal (or lack thereof) will have a greater
impact than the individual Virgin or Boost brands.
was the best, and arguably very likely candidate for Sprint's long
term prepaid strategy!
- 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 -
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.
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
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
Sprint Buys Virgin - What do you think?
Do you have thoughts as to what Sprint will do with the Virgin Mobile and Boost Mobile brands? Please share!
Read Other People's Opinions
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