Many of Ovum’s competitors (e.g. Forrester, Gartner, IDC, Yankee) have started official blog networks (Ovum doesn’t have one, but several individual analysts have personal blogs, like this one). Many of both our analysts and our competitors’ analysts are on Twitter (here’s SageCircle’s list) and Facebook. But in all these we’re really feeling our way through the process of creating new ways for clients to interact with us, and have had little direct input from clients on how they’d like to interact.

I’m curious as to whether our clients find any of these methods of interacting with clients useful, and if so, which Ovum should adopt and how. Are any of the other analyst blog networks out there particularly good (or bad) examples of how this should be done? And if we should start blogging through official channels, what should the content of the blog posts be? What should the emphasis be on? If Twitter, what would be useful to see there?

By definition this is a personal blog, and so I’m asking this question as an individual analyst and not as an official survey of Ovum’s clients. But I’m a big believer that we need to be doing more in this space, and I’d love to have some real feedback from clients to either reinforce that view or amend it.

If you’d prefer to comment privately, please send me an email (janovum [at] gmail [dot] com).

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I’ve just concluded a day and a half with Sprint at their annual analyst day. At this point I’m sitting at Kansas City airport – one of the easiest to get through in the world – unfortunately waiting for a few hours because of a delay to my flight. But this gives me an opportunity to set down some thoughts while they’re still fresh in my mind.

Housekeeping & links

I wrote up my thoughts on last year’s event here. More posts on Sprint can be found at this link. I used Twitter to share some of my thoughts as the event went along and you can see that thread here.

First, the good news

Sprint’s come a really long way since last year’s event, and it’s made progress in several key areas. Dan Hesse (the CEO) has the same set of three priorities now as he outlined last year, which is always a nice surprise at these events! They are the brand, financial stability and the customer experience. And on the last two at least I think they’ve made significant progress. Financial stability is much approved to the point that the company is throwing off a decent amount of cash, has a more manageable (though still substantial) debt burden and is improving margins. They’ve also done a sterling job of improving the customer experience, where the key proof point is the 40% reduction in calls to customer care they’ve seen over the past year.

The company is now in a much better place as a result. Many of their customers have experienced improvements in customer care and in the overall experience of being a Sprint customer. Neither customers nor investors need have significant concerns about the short-term financial viability of the company. And the launch of the $50 unlimited Boost plan has turned around a key metric for them in the past quarter – iDEN net adds. That opportunity is a really great one for them for the foreseeable future because they can add a ton of customers at very low subscriber acquisition costs (1/5 of postpaid adds) and zero incremental capex because the iDEN network is so empty. 

The senior executives were approachable and frank, which is always refreshing. Dan Hesse himself was available to the analysts for informal conversations over dinner, along with many of the other execs, and the new CFO is disarmingly frank and blunt. Both tell a good story. And they have achieved an enormous amount over the past year in these key areas – that progress is impressive and they deserve a good deal of kudos for it.

Now, the bad news

The bad news is that it isn’t yet clear how Sprint is going to turn around what is now its single biggest challenge – continuing net subscriber losses. Even though churn is improving, and that’s a big step, the problem is gross adds, which continue to be well below where they should be, and massively lower than they have been in the past. No-one is adding as many subs as they have in the past because the market’s slowing down, but Sprint at least needs to win its fair share, and it hasn’t done for some time now. What I was looking for more than anything going into this event was a solid story about how Sprint will grow gross adds, but I didn’t feel like we got it.

When I put that question directly to Mr Hesse, his response was that the gross adds strategy was everything they’d talked about over the day and a half. While that’s part of the answer, my overwhelming impression was that all the initiatives are very long term, and we’re left (along with Sprint) waiting for them to kick in. A constant theme throughout the event is that perception lags reality, and while Sprint has improved network performance and customer experience, these are things that will take a long time to flow through into customers’ perceptions and even longer to flow through into non-customer perceptions. 

Other things Sprint is “waiting for” (in my view) are:

• 4G rollout – yes, in theory, Sprint will have a two-year edge over Verizon and an even bigger edge over AT&T. But it will only roll out a handful of markets this year and only make serious progress next year. And handsets won’t begin to show up until late next year. And in the meantime customers who don’t live in the mostly tier 2 markets that will be first to light up will not see any impact
• The Pre – yes, this one is coming soon so the wait shouldn’t be too long, but there were echoes of the many mentions of the Instinct at the last event and the great hopes placed in that device. The Pre is a more truly competitive device than the Instinct, but it won’t be a real game changer for Sprint anymore than the Instinct was.
• Economic recovery – a large part of Sprint’s performance among business customers – especially in the Nextel segment – is dependent on economic recovery, and that may be some time in coming. 
• Brand rollout – Sprint is changing is brand messaging again (in contrast with Verizon, which has had a fairly consistent message for 7 years, and AT&T, which has been consistent for 3), and I’m still not convinced that the new branding makes any more sense than the old branding. Even if it works, it will take considerable time to kick in.

I don’t want to give the impression Sprint is simply sitting around waiting for things to happen – it is proactively working on its three key priorities and making progress in all three areas (though I’m most dubious about the brand, as I just mentioned). But these are all long-term initiatives with an uncertain payoff at the end, and in the meantime there is little Sprint is doing that will provide a short-term boost to postpaid gross adds. 

In summary

Sprint is undoubtedly in a better position than it was a year ago. It has solved many of the fundamental issues it faced then, and made improvements in other areas. But I remain concerned that they don’t have a long-term strategy that gives them a clear view of when they are likely to see positive postpaid net adds again. All the other things they’re doing are good, and will improve other metrics including margins and cash generation. But unless they can start growing again they will remain subscale compared with Verizon and AT&T – their two most significant competitors – and will have significant cost disadvantages flowing from that lack of scale and the fact that they’re running two separate networks. 

Over the next couple of years, if Sprint does start to present a more significant threat to the big two, they will respond aggressively, and I don’t think Sprint will be in a position to fight back. It has less cash to spend on advertising, it has less headroom to increase device subsidies or otherwise make its offerings more attractive, it will be operating on three network technologies which are becoming increasingly marginalized (iDEN, CDMA and WiMAX) when competitors are operating on LTE and gaining all the scale advantages that will offer. 

Having said all that, I’m genuinely excited about the Pre. From what little we saw of it, I was impressed that it will be a compelling device for people willing to put up with the perceived shortcomings of Sprint as a carrier, although the impact may be significantly hampered by whatever Apple and AT&T announce in early June. I also believe that if the 4G rollout is handled right it will be the one true differentiator that Sprint has for mainstream customers and could provide a good boost (no pun intended). And the management team at Sprint is smart, focused and hard working with a track record of executing on a clear strategy, so if anyone can do it, they can.

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Harold Wilson, who was Prime Minister of the United Kingdom for parts of the 1960s and 1970s, coined the phrase, “A week is a long time in politics”. I was reminded of that phrase when I read a post just now by David Pogue, the New York Times’ tech columnist about a new book about Microsoft by Mary Jo Foley. Foley posted about the key issue on her own blog as follows:

As I mentioned in the conclusion of Microsoft 2.0, I had just submitted the final version of my book manuscript a week before Microsoft announced its $44 billion bid to buy Yahoo.

Disbelief was followed by utter despair — and not just on Yahoo CEO Jerry Yang’s part. All I could think on February 1 was I was going to have to go back and revise every single one of my 300-plus pages.

I did go back in and update my chapters to reflect the possibility Microsoft might end up buying Yahoo. Then I revised again to say Microsoft did buy Yahoo (given that much of the press in February made it sound like it was pretty much a done deal). Right before my drop-dead go-to-printer date, I revised one last time, saying that Microsoft might or might not buy Yahoo.

Well, as we now know, on May 3, Microsoft withdrew its takeover bid, after being unwilling to meet the higher per-share price that the Yahoo board was demanding.

So this poor woman completed her book on Microsoft, then the Yahoo! bid was announced, she made a bunch of changes to incorporate the seemingly inevitable acquisition and submitted the final version, and then Microsoft called the whole thing off. What a miserable experience, and presumably one which will greatly damage sales of her book.

But all this makes me wonder how much it’s really possible to predict the future in the world of technology. If a week is a long time in politics, it can sometimes be an eon in tech. We’re being asked now for our research publication plans for 2009. The year won’t even start for another seven months, and won’t end for 19 months, and yet we’re supposed to predict the broad outlines of what we’ll publish that far ahead. I just can’t imagine that we’ll be able to do an accurate job of forecasting what’s we’ll publish in late 2009, and yet clients will not doubt want to hold us to at least some of it regardless of whether it’s the most relevant or interesting research to be publishing that far down the road.

Of course, we publish forecasts with a five-year time horizon and generally think we have a good handle on future trends. And in terms of Internet penetration, or wireless subscribers, or MPLS ports, that’s actually fairly straightforward to do. Occasionally, we might buy into the hype around a new product or service too much or underestimate the growth in an unexpectedly hot market. But on the whole those long-term product and service trends are relatively straightforward. They tend to grow in a steady fashion after they cross the famous chasm and so are relatively easy to predict with a reasonable degree of accuracy.

But predicting industry news, actions of specific players and especially mergers and acquisitions is much more art than science, and would take a real crystal ball and not the analyst’s metaphorical one to foretell accurately. This is why it’s important in our job as analysts to separate one from the other. We can still do the forecasting bit, and we can certainly talk about whether it would be wise for a particular company to pursue a certain course. But we shouldn’t really be in the business of predicting decisions or performance by a particular company unless we have real inside information (in which case we probably shouldn’t anyway).

We all have a lot of work to do in providing balance between these various things that we do, but we also need to be honest with our audiences about what we can reasonably do and what we should leave to others more willing to peddle their fortune telling skills.

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