Wednesday, July 13, 2011

Sprint Unlimited Strategy Shows One Way "Disruption" Can Play Out

Facing larger and more powerful competitors, contestants in just about any market will cast about for strategies that allow them to survive, and hopefully narrow the gap with the dominant providers.

Attackers frequently employ the "same features, lower price" strategy. It's an easy thing for consumers to understand. Network services providers often try the "get more, pay less" strategy in ways that take advantage of unused capacity (evening hours and weekends for voice, for example). Service providers can offer "unlimited calling" at times when the network has ample surplus capacity, and the incremental cost of such operations is quite low.

Bandwidth providers, whether in the local access markets or in the global undersea business, often will instinctively offer "same features, lower price" products because they can. If your network is brand new, has lots of capacity but you have few customers, that is a rational strategy.

Not all disruption comes from smaller, attacking firms, though. As Apple has shown, sometimes disruption happens best when a strong, financially well-heeled firm decides to disrupt a market. Still, smaller firms in highly-competitive markets, who have lots of capacity but few or fewer paying customers, often can be expected to try the "get more for your money" strategies. Sprint is doing so.

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