Virgin Mobile to Offer iPhone 4, 4S With No Contract, No Subsidy

By Michelle Maisto  |  Posted 2012-06-07 Print this article Print

Virgin Mobile, following Cricket Communications, plans to start selling the iPhone 4 and 4S June 29 with no contract but also no subsidy. While Android competitors struggle, Apple has a knack for keeping even old hardware selling.

Sprint-owned Virgin Mobile plans to celebrate 10 years in business by becoming the second prepaid mobile carrier to offer customers the Apple iPhone 4 and 4S. Virgin announced June 7 that it will begin selling the Apple smartphones June 29, and customers will be able to pair them with its Beyond Talk unlimited data and messaging plans, which start at $30.

The most affordable of the Beyond Talk plans includes 300 voice minutes. A $40 plan boosts those minutes to 1,200, while for $50 users can get unlimited talk and data. For an added $15 a month, customers will be able to use their iPhones as Mobile Hotspots, with 3.5GB of data per month at €œfull speed.€

The 8GB iPhone 4 will sell for $549 and the 16GB iPhone 4S for $649.

€œWhat better way to thank our fans for 10 years of loyalty than by giving them exactly what they want: the perfect plan for the perfect phone,€ Richard Branson, founder of the Virgin Group, said in a statement.

In late May, Leap Wireless subsidiary Cricket Communications became the country€™s first prepaid carrier to offer an iPhone€”also the 4 and 4S. Like Virgin, Cricket decided to balance the benefit of a contract-free offering with the decision not to offer a subsidy. It sells the 16GB iPhone 4S for $499.99 and the 8GB iPhone 4 for $399.99.

Leap CEO Doug Hutcheson said in a statement at the time that the offer marked a €œmajor milestone€ for the company.

At a time when Android-running devices are finding themselves potentially competing on little more than price points€”distinctiveness is a major challenge, say analysts€”Apple is still managing to sell iPhones at not inexpensive prices.

For AT&T, Verizon and Sprint, in February, March, April and May, the iPhone 4S€”despite being eight months old€”was the top-selling device, Canaccord Genuity analysts said in a June 5 research note.

Noting the Cricket launch, the analysts wrote that their checks with suppliers €œindicate pending launches with several more tier-2 or prepaid U.S. channels such as MetroPCS and Virgin Mobile.€

Jefferies analysts, in a June 6 note, wrote that their checks showed iPhone 4S sell-through to remain €œvirtually flat€ quarter-to-quarter, €œwith builds at 28 million to 32 million [units] according to Asia ODMs [original design manufacturers] and component players.€

In a May 21 note, the Jefferies analysts again highlighted Apple€™s ability to keep even old hardware selling, writing that they believed Apple €œhas signed an agreement with a major global distributor for the iPhone 3GS and tasked them with penetrating prepaid and developing markets.€

They added that they believed the 3GS was €œin the process of being repriced downward into the $250 to $300 range€ from its current $375 price point, €œallowing someone to buy it with no subsidy for around the cost of an iPhone 4S with a contract.€

The iPhone and subsidies were also the topic of a June 6 Piper Jaffray research note. With an iPhone 5 expected this fall, the analysts forecasted that AT&T and Verizon will sell the phone for $649 but subsidize it somewhat for current customers.

For customers 13 to 16 months into a two-year contract, AT&T is expected to discount the price to $449, and offer others, deeper into their contracts, the full subsidy, selling it for $199. Verizon, however, is expected to make those customers, midway through their contracts, pay the full price, offering the subsidy only to those at least 20 months into their contracts.

Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.

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