Sprint-Nextel Merger Poses Tech Challenges

Analysts say that while Sprint's high-speed CDMA network should please Nextel's enterprise customers, they're also in for some short-term pain as the companies work to integrate their technologies.

The short-term outlook for Nextels enterprise customers under new, combined Sprint-Nextel management could prove difficult. But in the long term, the merger signals a new level of data service for the enterprise as Nextel moves its enterprise customer base from its aging IDEN (Integrated Digital Enhanced Network) to Sprints CDMA (Code Division Multiple Access) system.

"Obviously theres going to be a bit of upheaval, as there is with every merger," said Michael King, principal analyst at Gartner, adding, "its probably a good thing for the long-term viability of both companies."

As a result of the merger, Sprint gains a focused, vertical sales force that Nextel has arranged along industry lines. In addition to knowing the Nextel offerings, said King, sales team members also understand the issues facing specific vertical issues, the tools they currently use and their data needs.

For Nextel, he said, that has produced the industrys highest penetration of data users and highest penetration of enterprise users.

/zimages/1/28571.gifRead more here about how the newly formed Sprint Nextel will shape the wireless industry.

The merged companys ability to keep those enterprise customers will be a test of its mettle.

"The enterprise has to view this long term with some trepidation," said Lance Wilson, director of wireless research at ABI Research.

As a Nextel customer himself, Wilson said he has observed the superb customer service and technical support that enterprise customers demand. "You dont wait on the line 40 minutes to talk to somebody. Its a different philosophy and a different culture of doing business [from Sprints consumer-focused service], and its geared to people and enterprises where time is of the essence—where time is money, in other words.

"Unless the Nextel customer can perceive a service level that is differentiated from that of the consumer-driven Sprint service, then that customer is up for grabs," Wilson said.

Transitioning customers from Nextels IDEN network to Sprints high-speed CDMA network poses other challenges.

"Ultimately, integration is going to be kind of a problem," Wilson said. "What are they going to do about handsets?"

A large portion of Nextels line of handsets are geared toward heavy-duty, outdoor use and are designed for construction, mining, electrical and industrial environments. Those functions will have to be replicated in Sprints offerings in order to retain Nextels enterprise customer base.

"That certainly can be done, but that just adds to things they have to do," Wilson said.

Next Page: Gaining more bandwidth.