Palm Pre isn’t the iPhone-answer Sprint hoped

The Palm (NASDAQ:PALM) Pre may be winning accolades in the press, but it isn’t winning Sprint (NYSE:S) the subscriber contracts it needs to turn around its declining customer base. Palm sold 823,000 of the touch-screen smartphones in the quarter ending in August, after nearly three full months of Pre sales. Those numbers are nothing to scoff at, and — assuming Sprint sold the majority of those devices — those sales are likely reflected in its Q3 results: Sprint reversed the downward spiral in its quarterly gross customer adds for the first time in more than two years.

Sprint’s pace, however, is nothing compared to that of the AT&T (NYSE:T), which has been enjoying million-plus-iPhone-activation quarters for the last two years and ended Q3 with its best Apple (NASDAQ:AAPL)-driven quarter yet: 3.2 million iPhone activations. What’s worse, analysts are projecting that Pre sales are petering off, and Sprint will soon lose it’s exclusivity on the device. Most significantly, though, Sprint seems to be losing a postpaid customer for every smartphone customer its signs up. Churn is still well over 2%, leading to loss of 500,000 net total subscribers and 800,000 postpaid subscribers. CEO Dan Hesse summed it up at Sprint’s Q3 earnings call: “We’re beginning to turn the corner in gross adds, but we must reduce churn further.”

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