Cheaper Versus Disruptive – Sprint

Sprint's prepaid mobile unit, Boost Mobile, announced today a new pricing plan.  Customers can get nationwide unlimited calling, text and web access – with no roaming charges.  The company President said "This plan is designed to be disruptive." (read article here)

That's a poor choice of words.  All this new plan does is lower price.  And the predominant reaction is that this may spur a deepening price war.  There's nothing new being offered.  Just a lower price.  Offering more at a lower price isn't disruptive.  It might challenge competitors to match that price, and hurt profits, but it isn't disruptive.  It doesn't offer a new technology curve that can provide better service at lower pricing long term, it's just another step along a price discount curve.

This change might be very good for consumers.  But it's not as good as a really Disruptive action.  For example, cell phones were disruptive because they offered a service never before available – mobile telephoning – and offered an entirely new cost curve.  In the beginning they were more expensive, so limited only to those who really needed the service.  But as time went along and volume increased it became possible for wireless telephony to eclipse old fashioned land-line service.  In many emerging countries wireless is the phone service – just as it is for many younger people who have no land line service in their homes relying entirely on mobile phones.

If the CEO at Sprint Mobile wants to be Disruptive he has to come up with a new solution that creates the opportunity for entirely new users who are under- or even unserved.  Perhaps telephony that is free because it's linked to a simple radio.  Or perhaps a telephone that can translate languages for international use.  Or perhaps a phone that can scan documents and send as emails in popular applications like MSWord.  Or maybe phones that offer free netmeeting services with document transport and manipulation operating simultaneously with voice service.  Or these might just be new features down the road for existing phones – and not even disruptive themselves.

Disruptive innovations are not just price discounts or changes in pricing structures.  They bring in new customers and offer the opportunity for dramatically lower pricing because of a different technology or solution format.  And they require White Space to develop new customers that can effectively use the new technology and prove its value.

Therefore, we can expect competitors to quickly match the new pricing offered at Boost Mobile.  And profits to be curbed.

‍