July 10th, 2009

Sprint Nextel said the company has prepared to hand over the operation of its networks to Swedish telecommunications equipment manufacturer, Ericsson, as the company’s latest effort to reduce cost and stop further falls in subscribers to its cellular phone services.

Sprint said the company has signed an agreement with period of seven years and value of US$4.5-5 billion, which will free a substantial lump of cash that the company intends to use for developing new products and improving network coverage and quality.

The company said Ericsson will undertake day-to-day tasks like maintenance of service and cellular towers, while Sprint will retain its ownership. Sprint will still have full control of the network, own it and will never sell it.

Under the agreement, 6,000 Sprint employees will be handed over to a subsidiary of Ericsson which is based in Overland Park (Kansas) near Sprint’s headquarters.

Sprint has been striving to overturn its luck and prevail over the status of poor customer service, and has seen a slight rebound recently, chiefly with the Palm Pre smartphone, which lately debuted to amble reviews and is available exclusively on Sprint in the United States.

Charter Equity Research said it agrees that the outsourcing agreement will free cash for the company, which has endeavoured with decreasing revenue and operating losses. Sprint is doing this out of necessity, while the Palm Pre they just released is costing them a pretty penny, so it is a big cost for them, the research firm said.

Sprint denied to give details on the cost saving, but Macquarie Securities expects the network outsourcing and reshuffling employees to lead to an yearly savings of US$100 million.

Separately, Nieslen IAG said Ericsson is familiar with handling operations for other mobile phone companies, from Britain to New Zealand. Nieslen said Ericsson currently manages networks that serve more than 275 million subscribers throughout the world.

But considering that Sprint  has 50 million users, the company is the largest carrier that Ericsson has handled and so far this is a big deal for Ericsson. Separately, Ericsson said the company’s vast experience in managing services has made it capable to operate the network at lower cost than Sprint.

Yet, Ericsson reminded that Sprint should be cautious that the hand-off will not harm the quality of its voice and data services. It said that one of the biggest challenges Sprint has today is to make the American public confident that the network will be at least as good as it is now when Ericsson is going to run it.

Anyway, the changes should actually improve Sprint’s service to customers. With Ericsson doing the day-to-day job, Sprint can focus on the quality of the coverage, pay attention to new products and services that differentiate the company from the competition.

In the stock market, investors seemed to have a positive response to the report, as Sprint shares climbed 17 cents or nearly 4% at US$4.48 by the end of the trading day when Spprint announced the plan. The company’s share price has climbed by almost two times since January.

Freeverse Software released of Postman 2.0, an update to their iPhone OS 3.0 application for creating virtual “postcards.” It costs $1, and is a free update for registered users, announced on Thursday.

Well, if you like use your photographs on your iPhone or iPod touch to create postcards you can e-mail to friends and family. It supports the Map API in iPhone 3.0, but the software running on iPhone OS 3.0 and supports geolocation.

The new Postman iPhone postcard has other features allow you can add a personalized message, then share your postcard by e-mail, the Web, Facebook, Twitter or Tumblr directly from the iPhone application.

As increasing on iPhone OS 3.0 or later, Postman 2.0 now sports a more streamlined user interface and also features more professionally-created themes on your gadgets.

Apple has been considered the real winner of the battle between Google and Microsoft by Yankee Group’s research firm, and this statement,  has raised an interesting point on the gaps in what Google has offered consumers.

Everyone admits that Google is as famous as any company in the worlds and it attain a reputation for technological innovation. Yet, the company’s products have been inconsistent so far, easy to use and interconnected in the manner Apple’s are.

But Yankee Group said Google’s ambitions have been hampered by the company’s inability to build a brand ecosystem. As Google announced about the Chrome OS, the company has missed the opportunity to intertwine a consistency for consumers.

The research firm imagines that if Apple were to introduce a netbook or some other portable computing device, it would connect neatly into its line of products that range from the iPhone and iPod to the Mac and Apple TV.

The only thing that Yankee Group does not talk about is that Apple will undoubtedly command a price premium for any portable computer entry, and that a segment of users would willingly pay it. Becoming a luxury goods provider like Apple is not easy. We need to maintain the style and the substance that make our products worth more than the undistinguished competition, but it is great job to get it.

However, Google is a company that is based on exploiting the relentless reduction of the cost of computing hardware, the economies of open source software, and the efficiency of huge data centers.

It drives down the cost of everything it gets involved with by offering services, from e-mail storage to Web analytics and soon, operating systems, for free. All it asks is the chance to show some ads and collect some data. For corporations, which want higher levels of service and don’t care for ads, Google charges fees, but much lower than its rivals.

So far, this has been a rewarding strategy, while betting on technology getting cheaper is on the right side of history.

So now the question today will be, is Google wasting some of what could be the best brand but created this century by positioning its operating system as cheaper than Windows? Then, what will happen if the company made the Google name worth paying extra for?