Leap estimated to pay Apple $150 subsidy for contract-free $500 iPhone 4S
Currently, a contract-free 16-gigabyte iPhone 4S through the Apple Store or AT&T costs $649. That led analyst Brian Marshall with ISI Group to estimate that Leap is subsidizing the phone by about $150 to offer it at a contract-free price of $500.
Of course traditional carriers like AT&T, Verizon and Sprint offer much heavier subsidies to get the price of the 16-gigabyte iPhone 4S down to $199, but that price comes with a two-year service agreement. Cricket Communications is a prepaid carrier that advertises "unlimited" service at a price of $55 per month.
Though the $500 iPhone 4S through Cricket carriers a higher up-front cost, Marshall estimates the carrier's relatively inexpensive $55-per-month plan will allow customers to break even in about six months when compared to a traditional carrier's $199 subsidized price and higher monthly payments.
For example, comparable voice and data plans from AT&T and Verizon can cost a single user more than $100 per month, so a savings of $50 per month with Cricket would amount to $300 in savings in the first six months. That $300 amount also happens to be the price difference between a 16-gigabyte iPhone 4S at Cricket versus traditional U.S. carriers.
Because of the low-priced monthly prepaid plan, Marshall believes the iPhone on Cricket could gain traction among customers, "depending on quality of service." If so, it would represent sales in a new, previously untapped market for Apple.
Leap announced earlier Thursday that Cricket would begin offering the iPhone 4S and iPhone 4 starting June 22. The relatively small carrier with 6.2 million customers offers "unlimited" data plans under a "fair usage policy" that allots 2.3 gigabytes of data per month.
Cricket's voice and data services operate on a 3G CDMA network, like Verizon and Sprint. Its parent company, Leap, owns the seventh-largest wireless telecom network in the U.S., and offers coverage in all 50 states.
12 Comments
And so it begins...
And so it begins...
What? There have been US PAYG iPhones for a while.
Even ones without data, I think.
Should be nice to see how it works out for Cricket - I know they're not doing well and their stock has been falling a lot.
Open Mobile in Puerto Rico also sells the iPhone without a contract, but it seems they subsidize the phone a bit more, but in exchange charge a bit more for their plan ($70/month). It seems they're a CDMA carrier, too, like Cricket.
The big question is, is it unlocked? Could you use it on AT&T or foreign GSM carriers?
The big question is, is it unlocked? Could you use it on AT&T or foreign GSM carriers?
My Sprint iPhone is unlocked, but I am pretty sure I can only use it on foreign GSM networks and not on AT&T. But then again no reason to try it so I don't know for sure.