Devices & Strategy: Relying on Instinct: Sprint hits back with touch

Sprint Nextel Corp. has launched an expensive, frontal assault on rivals in a bid for a hit handset that will resuscitate its fortunes.
While it remains early in the game – the Instinct handset has been on the market for 11 days – the carrier already claims record sales for the device by Samsung Electronics Co. Ltd.
Not only is Sprint spending $100 million to market the Instinct, it has chosen the tactic of making side-by-side comparisons with AT&T Mobility and Apple Inc.’s device in prominent video pitches on its Web site, among other outreach methods.
Sprint’s pugilism extends to price, near and dear to consumers’ hearts. Once slated to retail at about $200, Sprint aggressively chopped that to $130 (with a two-year contract and a $100 mail-in rebate) after Apple and AT&T Mobility announced earlier this month that the new 3G iPhone (8 GB), due on shelves in less than two weeks, would cost consumers $200.
Sprint does not release sales figures but claimed that the Instinct is already a hit with consumers, after launching June 19. The carrier crowed last week that the handset was the “fastest selling EV-DO handset in Sprint history” and that it broke Sprint’s record for the first week of sales of any device. A company spokesperson was not immediately available for comment.
Muzib Khan, vice president for product management and engineering at Samsung, said the Instinct represented his company’s best effort at ease-of-use for consumers and represented the closest pairing of a new handset with a carrier’s launch of new service plans. As Samsung has earned the No. 2 global handset vendor ranking behind Nokia this past year, it has done so by delivering the large display feature phones exemplified by the Instinct.
Khan said the large-display feature phone trend was much bigger than simply competing with the iPhone. The ease-of-use battle is on, he said.
“A handset must deliver carrier services and make the consumer feel good about the experience,” Khan said. “We wanted to make it simple so the consumer would be happy. And Sprint wants to retain its customers. They did a good job with their ‘Simply Everything’ plan and their services have been integrated into the device for ease of access.”
“Using Local Search, for instance, a voice prompt can provide directions to the nearest gas station,” Khan pointed out. “That kind of interaction is what consumers really want. One touch takes you to music, TV, the browser, LBS services and voice commands.”
“This is a paradigm shift for the Sprint portfolio, in that it required a redesign of its service offerings, how to access them and it’s one of the closest match-ups between a device and the carrier’s services,” Khan added. “We’ve been pleasantly surprised with the reaction, which overall has been very positive.”
The device’s aesthetic qualities – thinness, a “minimalist design” and its CMF – “should make women comfortable buying it,” Khan said. (The bulk of early adopters of the iPhone have been young males with high discretionary income.) That message is carried over into Sprint’s advertising campaign for its Simply Everything plans, whose homepage offers the image of two women and touts the service “For anyone who’s ever wanted it all.”
But Samsung is not shy about discussing the features embodied in the Instinct that directly take aim at much-discussed omissions in the iPhone. For the record, the Instinct’s touchscreen provides haptic feedback and its in-box bundle of accessories include two replaceable batteries and a charging cradle for the one not currently in use, a leather case, wired stereo earbuds, a 2 GB microSD card, a CD for media management and a 2.0 USB connector for side-loading music and transfers to a PC. The device supports A2DP stereo, the iPhone does not.
Analyst Avi Greengart at Current Analysis gave the device and its accessories bundle a thumbs-up, while questioning the wisdom of Sprint’s head-to-head comparison with the iPhone.
“The Instinct is a well-designed touchscreen feature phone with attention to detail throughout: from the accessories in the box to the user interface to the attractive cosmetics,” Greengart wrote in his report on the device. “Combined with Sprint’s Simply Everything plans, the Instinct serves as a voice, GPS and entertainment device.”
“However,” Greengart warned, “it is not an iPhone – it is not even a smartphone – and Sprint invites ridicule by creating a Web site and video ads claiming the Instinct ‘defeats’ Apple’s iconic product.”
As the flagship device to launch the carrier’s Simply Everything plans the Instinct “should help Sprint reduce churn and may even bring Sprint back into consideration for consumers who had largely written off the carrier,” Greengart wrote.
Backed by the carrier’s Simply Everything plans, the Instinct makes “a wonderful navigation device and Samsung has done extensive work integrating navigation into other applications on the phone, such as local search,” the analyst added.
That said, the analyst also wrote that “like all vendors of sophisticated products, Samsung needs to continue fixing bugs and releasing firmware updates.”
Samsung’s Khan is all ears. He is keenly aware that the U.S. market is increasingly in play as Motorola Inc.’s grip loosens on its home market. Rivals are toiling to win consumers’ hearts and minds – and carrier deals.
“If there’s anything you think we could do to improve this product,” Khan said, “please let me know.”