Sprint says it's doing all it can to manage its Instinct

On Monday, Sprint announced that the Samsung Instinct has turned into the fastest selling EV-DO handset in the carrier's history, leading to product shortages in some parts of the US since the phone's release on June 19.

In mid-June, Samsung unveiled a successor to the Instinct known as the Omnia, which adds Wi-Fi and Samsung's new TouchWiz user interface, while boosting smartphone cameras capabilities to 5 Mp from the 2 Mp in the Instinct.

But despite an even more capable phone for the months ahead, Sprint is pouring its marketing efforts into the Instinct, according to Sprint officials, who have publicly acknowledged plans to spend some $100 million on marketing the Instinct -- or three times the budget for Sprint's biggest phone launch in 2007.

"Right now, we're just focusing on the Instinct," a Sprint spokesperson noted during the recent "Digital Experience" show in New York City, when asked by BetaNews whether Sprint -- like fellow OHA member T-Mobile -- plans to ship an Android phone at any time by the end of this year.

There and in other venues, Sprint has shown off features of the Instinct that include digital video and audio recording, movie downloads, an FM radio, GPS with audible driving directions, and a Speech to Action capability for placing phone calls by voice, just for starters.

The apparent popularity of the Instinct comes at a crucial time for Sprint, Although with its future WiMAX network, Sprint does look likely to beat Verizon and AT&T to market in the 4G arena, the financially struggling company has been losing ground to both of those companies in the 2G/3G space.

Now, AT&T's exclusive relationship with Apple for iPhone distribution in the US has posed a related threat. After quickly gobbling huge amounts of market share with the release of its first iPhone in mid-2007, Apple intends to ship the 3G iPhone on July 11.

Not surprisingly, though, Sprint CEO Dan Hesse has been deeply downplaying the potential impact of the 3G iPhone.

"One competitor has announced a new 3G device. But keep in mind that the 3G coverage could be relatively small, so the user experience could be disappointing to many," Hesse said, in a speech at the NXTcomm conference in mid-June.

"WiMAX and 4G [combined] is wireless at rocket speeds," according to Hesse. "We believe we could have a two year head start over the competition in true wireless broadband ... at landline type speeds."

With the Instinct, Sprint has pulled a turnabout on AT&T by getting an exclusive. Both phones share a number of features in common. Like the Instinct, the 3G iPhone supports GMS and HSDPA. Also in the 3G iPhone, Apple has added GPS support.

Apple's new phone, though, will be priced at $199 for an 8 GB version and $299 for a 16 GB edition. In comparison, Sprint's Instinct is selling for $130 with a two-year contract, after a $100 rebate.

At least one industry analyst has tested out Sprint's claims of product shortages. In a note to clients today, Pali Research Analyst Walter Piecyk said he asked 100 US Sprint stores about the availability of the Instinct.

Twenty-eight of the 100 stores had five or fewer Instincts in stock. Among those 28, 11 had totally run out of Instincts. Southern California appeared to be hardest hit.

Some Web-based retailers seem to be making hay out of the shortage. In a quick search of the Internet late today, BetaNews came across prices among the e-tailers ranging from $230 to $400 for Sprint's new 3G device.