Up until a year and a half ago, U.S. customers had almost choice of carrier or rate plans when buying an iPhone. That’s something that has changed dramatically. The iPhone’s launch on Verizon and Sprint followed by several regional carriers across the country and the recent introduction of the iPhone as an option on prepaid networks Cricket and Virgin Mobile.
The new prepaid iPhone options may seem pricey because Cricket offers a very limited subsidies to attract iPhone 4 and 4S buyers and Virgin offers no discount or subsidy at all. As we noted earlier, however, paying the cost of the iPhone up front can actually save you money overall if you go with either Cricket or Virgin.
Beyond the upfront costs, however, there’s a big question to consider: will either prepaid carrier be included in the launch of the iPhone 5? While there isn’t a solid answer at this point, it seems likely that they won’t.
One of the unique and attractive features of prepaid carriers is that they are contract-free. That means you can switch phones or devices whenever you want, adjust billing cycles and features as you like, and you can cancel service temporarily or permanently if your needs change.
The flip side of that is that you can’t usually get the most recent devices. If you look through the current range of smartphones available from Virgin, you’ll notice that many are variations of phones that Sprint launched last year or even earlier. Even Virgin’s top phone, the Android-based and WiMax-enabled HTC Evo V 4G, is a variation of the HTC EVO 3D that Sprint launched last summer. The same holds true for Boost Mobile, Sprint’s second prepaid brand next to Virgin.
There are two factors at play here. The first is that slightly older handsets cost less the leading edge new devices. The second is that Sprint makes more money selling on-contract phones that guarantee a monthly revenue stream for the length of the contract. That means that the company has a strong incentive to offer the latest and greatest options only to Sprint customers under contract. Depending on the device manufacturer, it’s also possible that Sprint isn’t allowed to launch brand new phones on its prepaid subsidiaries.
At the same time, by offering reasonably recent phones that are solid performers, Sprint can cash in on users that prefer the prepaid options. Such customers get a perfectly good if not new-to-market option and that, combined with lower monthly costs, helps to build loyalty to the Virgin brand.
It seems extremely likely that Sprint/Virgin and other prepaid carriers will continue this model with the iPhone. The result being that you can buy an iPhone 4 or 4S, both of which are solid phones – the iPhone 4S is also current if not brand new. However, you’re not likely to see the iPhone 5 on Virgin any time soon. For iPhone users and fans that can’t wait for the iPhone 5 to ship, that’s a deal breaker. For many consumers, however, the iPhone 4S is a perfectly capable phone and one that will be useful for a long time to come. Getting it with the advantages of prepaid service is likely to appeal to a pretty wide range of American consumers.
Does that mean Virgin customers will need to wait until Apple unveils the iPhone 6? Possibly. Or possibly not. If you look at the original Sprint launch dates for the phones that Virgin offers, there’s a gap of nine or ten months between the Sprint launch and the Virgin launch.
Source: Virgin Mobile.