iPhone Could Crunch Sprint

Verizon Wireless is expected to report that it added 1.7 million net new customers in the first quarter, but Verizon's industry-leading pace isn't likely to last. And the June timing of the iPhone debut isn't necessarily good for Sprint.

Analysts predict Sprint will report a first-quarter net customer loss of about 250,000 users next week when it releases earnings. But that should be the extent of the Nextel damage, say observers. Sprint's efforts to improve the Nextel network and retain customers should start to pay off in the second quarter with the return of user gains.

But as Sprint's luck would have it, just when users stopped leaving, along comes the iPhone -- another reason to jump ship.

Sprint has somehow managed to perform an astonishing number of missteps in what has been an otherwise robust wireless industry growth streak. Huge customer losses and key executive defections were capped off last month when the company got booted off of the federal contract gravy train.

Some observers, however, say Sprint has a fighting chance against the iPhone with its Samsung UpStage device, which has a music player and large screen on one side and a phone on the other.

Sprint's UpStage sells at a fraction of the cost of the $500 iPhone, says Roger Entner, an industry expert with IAG Research. The lower-priced multimedia phone means Sprint has a much larger group of potential customers to sell phones to, says Entner.

"Does GM (GM Quote) care about the newest car from Bentley or Rolls-Royce?" asks Entner. "Not much."