Sprint bets on Samsung phone to help recovery

By Sinead Carew

LAS VEGAS (Reuters) - Sprint Nextel Corp (S.N) is betting on a touch-screen phone from Samsung Electronics Co Ltd (005930.KS) and more than $100 million of marketing to help the No. 3 mobile service provider regain cache among consumers.

Sprint, which has been losing subscribers because of customer service problems, will unveil the Samsung Instinct phone during a keynote speech by Chief Executive Dan Hesse on Tuesday at CTIA, the annual U.S. wireless show in Las Vegas.

The company will spend about three times more on marketing the Instinct than on its biggest phone launch last year. Sprint also took the unusual step of leading the design of the device's user controls, known as the user interface, with an aim to making the phone as easy as possible to use.

"The iPhone set a bar for user interface," said Sprint product commercialization director David Owens. "We wanted to have an equivalent experience."

Sprint said the Instinct should be a top seller this year and is a key part of a campaign to win back customers from rivals such as AT&T Inc (T.N), the exclusive U.S. provider for Apple Inc's (AAPL.O) popular iPhone.

"Our goal is clearly that it's large volume," Owens said.

Sprint's shares have lost more than two-thirds of their value since hitting a year-high in June 2007. The company posted a $29.45 billion loss for the fourth quarter after a massive write-off and steep customer losses.

Sprint has yet to finalize pricing for the Instinct's mid-June launch but said it would cost less than $300. In comparison, the cheapest iPhone costs $399 with eight gigabytes of storage and $499 for a model with twice as much memory.

MARKETING CLARITY

The phone will be sold to customers who sign up for Sprint's Simply Everything plan, which starts at $69 a month for 450 minutes of phone calls and unlimited data services. For $99 a month, the plan's subscribers receive unlimited voice and data.

Current Analysis analyst Avi Greengart said that while one phone is not enough to save a carrier, Sprint's pairing of the Instinct with unlimited data plans could start to improve the company's often-criticized marketing strategy.

"Everyone's going to offer you something that looks like an iPhone. Here's something that also offers you a lot of cool things to do with it at a flat rate," he said.

Sprint's marketing is seen as unfocused compared with rivals, which have built their reputations on specific strengths. Verizon Wireless, a venture between Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L), boasts a reliable network, for example.

AT&T boasts hot devices: besides being the first to sell the iPhone, it was also the first to sell Motorola Inc's (MOT.N) once-lauded Razr in late 2004.

Sprint's work with privately held technology company Icon Mobile and its large ad spending on Instinct reflects its importance to the company, Owens said.