Didn't See This One Coming, No Not At All -- Amp'd Files For Bankruptcy

from the not-surprising dept

About two years ago, a group of execs that had founded the successful Boost Mobile youth-focused brand for Nextel announced they were starting a new virtual mobile operator called Amp'd. Amp'd would also target young users, but it would differentiate itself by charging high prices and, in exchange, offer all sorts of multimedia content. From the outset, we were skeptical because the company was focusing on content, and not communication -- a strategy that's proved untenable for other MVNOs, and similarly failed for Amp'd, so it was forced to try and attract users by slashing voice prices. Still, the company's business plan (poor strategy and all) helped it pull in $360 million in venture funding, with a good chunk of that coming even after the company displayed an inability to attract subscribers. So, in what's one of the least surprising pieces of news we've seen in a while, Amp'd has filed for Chapter 11 bankruptcy. The company spins bankruptcy by saying, "As a result of our rapid growth, our back-end infrastructure was unable to keep up with customer demand." The company was beset by operational problems (as well as poor strategy), so there's some truth in that, but with so few users, it's not much of an excuse. Amp'd says it hopes to secure more financing and keep operating, though its top creditors are Verizon Wireless, its network provider, and Motorola, which provides it with handsets, owing them a combined $49 million. We would say that Amp'd will have a hard time finding more investment, but given that the company was able to raise so much money from VCs even after it was clear it was headed for the deadpool, you never know.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Sohrab, Jun 4th, 2007 @ 1:46pm

    Helio just announced that they were filling for Bankruptcy too right?

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Ajax 4Hire, Jun 4th, 2007 @ 1:57pm

    Who would have guessed that trendy young users

    would not want to spend money on mobile phone content?

    This is the same group that gave meteoric rise to the Peer2Peer software, PS2/XBox, AIM, youTube and is the poster child for RIAA Pirate.

    I know this group and they like youngsters before them (back to the time of Mozart); money simply slips thru their fingers. What little money they have.

    Someone should have informed the investors that this group of trendy young users will spend money on Starbucks and brag about their discriminating taste. This same group would be *!embarrassed!* to admit _buying_ phone content. They would rather cover up the purchase with "downloaded it of the internet". No way they would admit to spending money on content that others might get for free.

    So rather than pump up Amp'd content you lie about the purchase.

    I though the name was stupid too.

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    Anonymous Coward, Jun 4th, 2007 @ 1:59pm

    Their lame commercials said it all...: "Now I can watch concerts on my phone!"

    Who the hell wants to do that?

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    Jezsik, Jun 4th, 2007 @ 2:09pm

    "... unable to keep up with customer demand." My guess is the customers were demanding value for their money!

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    Betaflame, Jun 4th, 2007 @ 2:30pm

    Helio dead?

    I hope not, I just signed up for 2 years of service! As opposed to Amp'd, I've actually heard good things about Helio.

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    Anonymous Coward, Jun 4th, 2007 @ 2:41pm

    Will Helio take Earthlink down with it?

    You could build a REAL cellular network for what Earthlink and SK have spent on becoming a failing MVNO.

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    WHATCHU GONNA DO WHEN IM ON THE BLOCK!?, Jun 4th, 2007 @ 2:44pm

    their commercials were good

     

    reply to this | link to this | view in thread ]

  8.  
    identicon
    IronChef, Jun 4th, 2007 @ 3:14pm

    Hmmm.

    Another reason why the MVNO model is so troubled... A successful MVNO needs to focus on volume of minutes, not necessarily features- Virgin does this.

    The fundamental flaw with MVNO is in the business' ability to raise additional capital.. This is typically tied to tangibles and capital investment. By lacking in ownership of the network, it makes it exponentially more difficult to get additional financing- investors have nothing to divest if the concept fails.

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    Henry S, Jun 4th, 2007 @ 3:54pm

    I owned stock in Leap Wireless..

    I lost a lot of money when Leap's stock tumbled, and happy to see it's coming back around.

    Sue Swenson was COO of Leap Wireless (Cricket) before they filed for bankruptcy in 2003. And she's COO of Amp'd...

    COO of two companies that file for Bankruptcy in less than 5 years. Then, to add to it, she was sued by tmobile, where she was, again, held the title of, (surprise, surprise) COO.

    To quote justin timberlake- what goes around comes around..

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    joe, Jun 4th, 2007 @ 8:26pm

    they're commercials were AWESOME

    but they had such a great marketing campaign. I mean, they cussed (and subsequently bleeped) in every commercial! That's so cool OMG RITE?!! I mean, "kids these days" cuss all the time, right? So let's cuss in our commercials - they can't help but love us! BRILLIANT

     

    reply to this | link to this | view in thread ]

  11.  
    identicon
    Charles Griswold, Jun 4th, 2007 @ 9:03pm

    Re:

    Their lame commercials said it all...: "Now I can watch concerts on my phone!"

    Who the hell wants to do that?
    The same people who talk on their cell phones at concerts?

     

    reply to this | link to this | view in thread ]

  12.  
    identicon
    Myself, Jun 6th, 2007 @ 12:59am

    Unable to keep up with demand, my back-end!

    So wait, their back-end infrastructure was provided by Verizon and Motorola? I highly doubt either of them was overwhelmed or incapacitated by a two-bit MVNO's misguided attempts to squeeze blood from a market consisting mainly of stones.

    Either they're misrepresenting their troubles in an astonishingly dishonest way, or there's more to the story.

     

    reply to this | link to this | view in thread ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This