Sprint HTC Evo 4G Shortage Is Hurting Its Advantage

While Sprint was the first U.S. carrier to launch a 4G-capable smartphone, shortages of the HTC Evo 4G, due to recession-slowed parts suppliers, is undoing the carrier's lead in its race for mobility subscribers.

Sprint is facing new hurdles in its race against competitors AT&T and Verizon. The nation's third-largest carrier by subscriber volume, Sprint was recently the first carrier in the United States to introduce a 4G-capable smartphone, the HTC Evo 4G. An inability to keep shelves stocked with the consumer-approved device, however, may prevent it from holding on to its lead or winning many new customers.

"We thought we would have more of a head start than we'll end up having," Sprint CEO Dan Hesse told the Wall Street Journal.

Sprint has reportedly sold 300,000 HTC Evo 4G phones so far, but HTC's suppliers are having a hard time meeting its demand for parts, leaving Sprint in the lurch. The Sprint Website currently doesn't even offer consumers a prospective shipping date, but tells them instead: "Sorry, this device is so hot we can't keep it on our virtual shelves. Check back later-more are on their way!"

According to the Journal, it's the Evo's big, beautiful display-the largest on a touch screen to date, at 4.3 inches -that's causing the major hold-up. HTC has reportedly signed a new deal with Sony to manufacture the displays while supplier Samsung builds a new factory. Conveyor belts at the new Sony plant, however, aren't expected to begin rolling until 2012.

The supplier's inability to meet demand is largely a factor of the global recession. Hesse told the Journal that in 2009 "high-tech capacity was taken offline, and now it needs to be brought back up."

Sprint pairs the Evo 4G, as well as its modem devices such as the Overdrive 3G/4G Mobile Hotspot, with the 4G technology WiMax, through Clearwire, which Sprint owns a majority share of. AT&T and Verizon, however, plan to roll out 4G using the competing LTE (Long-Term Evolution) technology. Verizon's 4G network is scheduled to go live in the fourth quarter, with AT&T following in 2011. Analysts have long suggested that despite WiMax having the head start, LTE will ultimately be the dominant technology-an idea Hesse has seconded.

In March, he told an audience at the CTIA Wireless trade show that, while LTE will most likely dominate in the end, "We couldn't wait. ... Time to market was very important. That is our competitive position."

A shortage in supplies of its most impressive smartphone to date, however, may significantly damage Sprint's position. During the company's first fiscal quarter of 2010-which it announced in April, before the launch of the HTC Evo 4G-it posted a loss of $865 million on revenue of $8.1 billion. Sprint lost 75,000 subscribers during the quarter, although that was far fewer than it had lost in previous quarters.

Still, Sprint continues to push ahead. The company announced June 28 that later in the summer it would launch the nation's second 4G-capable smartphone, the Samsung Epic 4G. The Epic's touch screen will be a 4-inch Super AMOLED that Sprint described as offering the "best representation of color on a mobile phone."