Game-Changer: Cricket, Virgin Mobile To Offer Apple iPhone

Jun. 12, 2012 6:39 PM ET, , , , , , 7 Comments
Kofi Bofah
433 Followers

On June 22, 2012, Leap Wireless (LEAP) will begin offering the Apple (AAPL) 8GB iPhone 4 and 16GB 4S through its Cricket Communications subsidiary. On June 29, 2012, Sprint (S) will follow suit and offer both Apple iPhones through its Virgin Mobile subsidiary. Cricket and Virgin Mobile specialize in pre-paid phones that do not lock their customers into long-term service contracts.

These moves will change the game. Taken together, Apple, Leap Wireless, and Sprint can all unlock new standing armies of potential customers that will translate into impressive top-line growth. Competitors, such as Microsoft (MSFT), Nokia (NOK), and AT&T (T), however, should tread lightly. Tim Cook and Apple management have upped the ante, and are more than willing to outflank any desperate organization that decides it wants to play hardball.

Cricket Cost Savings

Apple sells its unlocked, contract-free iPhone 8GB 4 and 16GB 4S devices for $549 and $649, respectively. At AT&T, you may purchase these iPhones for $99 and $199, if you agree to the terms and conditions of a two-year service plan. Your two-year service plan is likely to cost you more than $100 per month for unlimited talking minutes, texting, and data usage. Potential hidden costs within your service plan, of course, include an early termination fee that caps out at $325. Basic arithmetic indicates that traditional phone carriers are effectively granting $450 worth of up-front iPhone subsidies, in exchange for future revenue streams of at least $2,000.

Later this month, Cricket will offer the iPhone 4 and 4S for $400 and $500 up-front, respectively. After purchasing the device, Cricket pre-paid customers will pay $55 monthly for unlimited access to this carrier's 3G network, which it effectively leases from Sprint. Alternatively, Sprint will retail the iPhone 4 and 4S for $549 and $649, before offering flexible monthly calling plans that range between $30 and $50.

This article was written by

433 Followers
I am a 2002 BSBA graduate of The University of North Carolina at Chapel Hill. In 2004, I founded Onyx Investments in Chicago with $12,500, one Dell laptop computer, Microsoft Office software, and one telephone. Onyx Investments has now grown to more than $3.5 Million in assets, en route to $1 Billion.  I am now working on my MBA at The University of Illinois Urbana - Champaign.

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