Sprint Lands Exclusive On HTC High-Res-Audio-Capable Smartphone

Crutchfield and World Wide will launch brick-and-mortar sales of the phone ($229 on a two-year Sprint contract) on May 9, as will Sprint’s 3,300 company-owned and dealer locations, Hesse said. Sprint.com, Bestbuy.com and a select number of RadioShack’s new showcase stores will get the special edition phone on May 2, featuring a 24bit/192KHz digital audio converter supporting playback of FLAC files, Sprint Smart Device Product Management Group Manager Kevin Cordes said. Crutchfield and World Wide, both of which will be selling a smartphone for the first time, will market the hardware, but refer service contracts to Sprint, Hesse said.

"We will see over time” whether Sprint seeks to expand distribution of higher end smartphones with CE specialty retailers, Hesse said. “This phone is different and it’s going to appeal to audio retailers because it as much an audio device as it is a phone.”

The HTC One (M8) Harman Kardon edition is more expensive than the standard Android-based HTC One M8 ($199 on two-year contract) in adding the high-res audio capability, Sprint executives said. The two single-chamber speakers -- one at the top and bottom of the five-inch 1080p screen -- were tuned to work with Harman’s Clari-Fi technology that’s designed to restore the high-end frequencies lost during audio file compression, HTC CEO Peter Chou said. The smartphone also will contain Harman’s LiveStage, which is due in the coming weeks, to simulate multichannel audio and surround sound, Cordes said. The companies haven’t partnered with a supplier for high-resolution audio tracks, but demos at the news conference used titles from HDTracks.

The special edition model has the same Qualcomm quad-core 2.5 GHz Snapdragon 801 processor as the HTC One M8, along with HTC’s internally developing digital signal processor (DSP) chip, Chou said.

Having sold a stake in Beats Electronics last year, HTC is embarking on its own audio development effort, the first fruits of which arrived with the HTC One M8 and HTC One (M8) Harman Kardon special edition. Whether HTC will release more audio-focused smartphones hasn’t been decided, but “certainly if we had other audio technology on other devices we would look at them,” HTC Americas Region Public Relations Director Tom Harlin said.

The high-res audio capability will be keyed to Sprint’s plans for expanding deployment of its Spark network, which debuted last fall in five markets, including New York, and has since grown to 24 with Newark and Orlando being the most recent. Spark network uses 800 MHz, 1.9 GHz and 2.5 GHz bands, analyzing each of them, connecting a device to the optimal band in an area. Spark enables peak upload/download speeds of 12-14 Mbps and 50-60 Mbps along with stronger in-building signals, Cordes said. But that’s still short of the 100 Mbps download speeds delivered on AT&T’s and Verizon’s LTE-A. The network averages 8-10 Mbps and 30 Mbps upload/download speeds, Cordes said. Spark is forecast to be available to 100 million potential customers by year-end. Sprint expects to complete by 2015 its buildout of the 2.5 GHz spectrum it acquired last year in buying Clearwire Communications. Sprint is deploying 4G LTE on 1.9 GHz spectrum overlaid by 800 MHz and 2.5 GHz. Sprint ended Q1 with 225 million LTE points of presence in 41 markets, up from 200 million the previous quarter and with a goal of hitting 250 million by mid-year, company officials said.

Meanwhile, Sprint continues its push with the Framily rate plan, which launched Jan. 17. Sprint signed up 1 million subscribers for the service within the first 40 days the Framily plan was available, company officials said Tuesday on an earnings call. Framily lets subscribers add up to 10 lines to a group of friends and family, with pricing reduced as more members join. New customers pay a $55 monthly fee for unlimited talk, text and 1 GB of data. Framily members share savings, but can get separate billing. To be eligible for the plan, Sprint customers must buy one of 14 devices at full retail price or pay 24 monthly installments through the Sprint Easy Pay program. Sprint earlier this month signed on Best Buy to sell both Framily and Easy Pay plans. About 29 percent device sales in Q1 were with installment plans, Sprint officials said.

The shift of some sales to Framily plans and tablets will likely reduce Sprint’s postpaid average revenue per user by 5 percent this year, which will be offset by expected gains in EBITDA, company officials said. “Framily is a foundation upon which there is a lot we can do,” Sprint’s Hesse said on the earnings call.

The Framily plan has been extended to include a new Sprint partnership with Spotify that provides discounted access to the streaming music service. Sprint Framily plan customers will be able to get six free months of Spotify Premium, allowing consumers to listen to the service on a mobile device and download songs for offline listening. After the six-month trial, the monthly fee rises to $7.99 with up to five people on a Framily plan. If there are 6-10 people on the plan, the monthly fee is $4.99. Spotify Premium normally has a $9.99 monthly fee. Sprint customers not on the Framily plan will get three months’ free Spotify Premium, with the fee then going to $9.99. Spotify has made similar deals with international carriers, but this is the first with a U.S. carrier.

Sprint’s Q1 net loss narrowed to $151 million from $652 million a year earlier despite $52 million severance costs tied to the closing of 55 stores and the trimming 330 contract consultant and 3,000 customer service jobs. Sprint also took a $75 million asset impairment charge tied to network equipment assets. Sprint’s total operating expenses declined to $8.4 billion from $9.7 billion the previous quarter. Sprint’s Q1 revenue fell to $7.09 billion from $7.15 billion, the company said. Sprint’s Q1 postpaid average revenue per user fell to $63.52 from $63.67 the previous quarter, due largely to an increase in tablet sales and the launch of the company’s equipment payment installment plant, company officials said.

Sprint lost a net of 231,000 postpaid subscribers, bettering analysts’ forecast for a 244,000 loss. The better-than-expected results were driven by the addition of 516,000 net subscribers from tablets, Jefferies analyst Michael McCormack said in a research note. Minus the tablets, Sprint would have loss 747,000 net subscribers, the company’s weakest performance in five years, McCormack said. Sprint had 1.67 million gross additions, ahead of McCormack’s forecast for 1.38 million. Sprint’s postpaid monthly churn was 2.11 percent, up from 2 percent the previous quarter and 1.84 percent a year earlier, driven both by competition and the continued revamping of its network as it installs 800 MHz for voice/LTE, 1.9 GHz for 3G and the 2.5 GHz band acquired in buying Clearwire also for LTE. Sprint ended Q1 with 29.9 million postpaid subscribers, down from 30.1 million the previous quarter and 30.2 million a year earlier.

Sprint’s prepaid business, which includes services sold under the Boost and Virgin brands, lost a net 415,000 subscribers, vs. analysts’ forecast for 113,000 net additions. Prepaid had a drop in Q1 average revenue per user to $26.45 from $26.95 in the prior quarter. Sprint’s prepaid ended Q1 with 15.2 million customers, down from 15.6 million in the prior quarter and 15.7 million a year ago. Sprint had 53.5 million total subscribers at the end of Q1, down from 53.9 million in Q4 and 53.8 million a year earlier. Sprint’s prepaid monthly churn rose to 4.3 percent from 3 percent in Q4 and 3.04 percent last year. About 29 percent of device sales in Q1 were with installment plans, Sprint officials said. Sprint’s wireline business had a $62 million Q1 operating loss vs. a $27 million profit a year ago as revenue dipped to $770 million from $893 million. Sprint shares closed 11.3 percent higher Tuesday at $8.27.