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

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.