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Unsubsidized iPhones Not Selling Well at Leap
Company May Face $100 Million in Unsold Stock
by Karl Bode Monday 04-Mar-2013 tags: wireless · wireless
Leap Wireless's bet on the iPhone apparently isn't working out so well. A report in the Wall Street Journal claims that Leap will likely sell just half as many iPhones required in its first year contract with Apple, which could result in $100 million unsold iPhones by mid-year. Leap's Cricket brand last May became the first prepaid operator to start selling the iPhone without subsidies for $400 to $500, though the device is locked to the Leap network. Leap's contract with Apple required them to move $800 million worth of iPhones during the first three years, but with the company losing customers as prepaid competition intensifies -- that's turning out to be harder than the company predicted. This may not be a good sign for T-Mobile's unsubsidized ambitions.

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IowaCowboy
Want to go back to Iowa
Premium
join:2010-10-16
Springfield, MA

Postpaid is better

With postpaid, I get a generous subsidy from Verizon Wireless where I can get a $749 device (iPhone 5 32GB) for $299. I also don't have to worry about running out of minutes in the middle of a phone call.
clone

join:2000-12-11
Portage, IN

Re: Postpaid is better

So, you can save $450 on a device by paying an extra $1200 over the course of two years on contract? How generous of them!

There are many reasons postpaid is superior to prepaid, the subsidy is not one of them.

BF69
Premium
join:2004-07-28
Camden, TN

Re: Postpaid is better

said by clone:

So, you can save $450 on a device by paying an extra $1200 over the course of two years on contract? How generous of them!

There are many reasons postpaid is superior to prepaid, the subsidy is not one of them.

Where do you get all this "extra" money from? My bill is the same if I pay 100% for my device or I get a discount. So I'll take the discount. My current phone cost $450 retail. I paid like $60 for it total. If I had to pay $450 I'd stuck with my older crappier phone.
clone

join:2000-12-11
Portage, IN

Re: Postpaid is better

We're talking about Postpaid vs. Prepaid, not BYOD on a contract provider.

If I buy a high-end smartphone that retails for $649 or $749 respectively, it will cost $199 or $299 with a subsidy. So I am receiving a break of $450 on the device.

An unlimited voice plan with unlimited texting and 2GB of data will run me around $100 a month on Verizon or AT&T contract (give or take). It will run around $50 a month on prepaid (give or take, $45 on ST, $55 on PP, $50 on SIMple Mobile, etc.)

$50 savings x 24 months = $1200 cold, hard, American dollars.

$1200 (monthly savings) - $450 (since I had to pay more for the device) = $750 in savings on Prepaid.

The only benefit to paying full retail (which I recently did) on Verizon contract is to keep an unlimited data plan. On AT&T, Sprint, any other contract provider, you'd have to be stupid to NOT take the subsidy if you're going to keep on postpaid, as what you said is 100% true.

Even with my current usage on Verizon, my cost would go up at least $40 a month if I moved to a tiered data plan that met my needs. Spending $699 ($400 more than subsidy) on the device still saved me $960 over two year (for a net savings of $560). It's just not worth it.
en103

join:2011-05-02
Reviews:
·RoadRunner Cable

Re: Postpaid is better

I guess that depends on usage.

While 'unlimited' prepaid can save you some money, it doesn't always.

I have 2 lines, with 'rollover' (550 anytime), and a balance of ~3000 minutes unused, and don't use TXT, but also have unlimted data on both.
My bill comes to $100/month for both, and I have a few hundred dollars of subsidy (iPhone 4 for $9.99 more than a year ago)
shrraga

join:2012-07-22

Re: Postpaid is better

why would anyone pay that much? We got an iphone and 4 android phones on t-mobile, our shared family value plan is $60 a month for the 5 lines. Unlimited text, 1000 shared minutes (with unlimited nights and weekends and mobile to mobile...). We only use 10 minutes of the 1000... and, yeah, with the roaming agreement with at&t we have service anywhere there are t-mobile or at&t towers.

Galleries

@comcast.net
Don't bother the sheep prefer to get a discount on phones and pay out the ass on a contract.

They probably rent to own also..that's a good deal.

badtrip
I heart the East Bay
Premium
join:2004-03-20
Albany, CA
I got a cutting edge phone for $350 (Nexus 4) and pay $45/mo on Straight Talk and I too don't have to worry about running out of minutes. I also pay substantially less than someone on Verizon with a subsidized iPhone over a typicall 2 year Verizon contract period.
shrraga

join:2012-07-22

Re: Postpaid is better

Don't forget you also have unlimited data too... that is pretty valuable with today's caps and high overage fees.
elefante72

join:2010-12-03
East Amherst, NY
Reviews:
·Time Warner Cable
·Verizon FiOS
·voip.ms
Seriously? Most prepaid are unlimited minutes now, and I guarantee that you will spend many times more on your postpaid contract. If you can't manage your cash flow, then I agree pay up. I say keep going, you only SUBSIDIZE prepaid people by padding Verizon's bottom line so they can offer a lower cost secondary market.

The problem is:

1. The iphone is a TOTAL rip $500-700. It costs them under $200 to make. I can buy an ipad mini for $329 (which probably costs on par to make)?
2. You typical prepaid person is aware of money, and given the choice between a usable $200 android or a $700 iphone, that extra $500 probably doesn't make sense, except for a lapse in logic.
3. Apple is going to come out with a ghetto iphone, so it will be maybe??? $400. Still double your ghetto android.
4. Your average Joe uses phone for texting, facebook, twitter, and maybe audio/video...and sometime voice. What function there can't be done on $100 phone? My wife it the average user. I bought her a used droid (only 1 year old BTW) for $120. She is happy. Camera sucks tho and I hear it.
4. The Nexus 4 has set the bar and it's $300. These droid vendors are just going to own that market. I have played w/ a Nexus 4, and IMHO it is far superior to the iphone except for 3 areas:

1. Camera. iphone cameras are better, even my 4s
2. Battery life. Android is just not as efficient, and the battery is too small (except for maxx...)
3. O/S stability. I have a Nexus 7 and every now and then some process goes crazy and wipes the battery. While the O/S presentation is now far superior to IOS the stability is not. Yes it's not a N4, but it's the same OS.
Absnerdity

join:2013-03-04
Catawba, NC

Re: Postpaid is better

"...but it's the same OS."

Windows is the same OS on most people's computers. Yet some people get blue screens and constant crashes while others work flawlessly. Hardware, drivers and installed software make a huge difference.

battleop

join:2005-09-28
00000
"2. Battery life."
"3. O/S stability. "

My company allows us to choose between Android and Apple when our phone's contract it up. The last three phones I have had were Android phones so I thought I would give the iPhone 5 a try. On my Androids I had to deal with random reboots and really shitty battery life. I've had the iPhone for about 3 weeks now and it's only rebooted when an IOS update was done. The battery life is much better than any of the 3g or 4g Androids I had. I am charging my iPhone5 about once ever 2-3 days where I could not make it 4-5 hours on an Android even if it sat on my desk and I made no calls.
--
I do not, have not, and will not work for AT&T/Comcast/Verizon/Charter or similar sized company.

buddahbless

join:2005-03-21
Premium
Reviews:
·AT&T DSL Service
·Verizon Online DSL
·Comcast
·T-Mobile US

Re: Postpaid is better

As far as OS stability I must say Apple has the top draw over Android and thats only because so many different devices run Android , similarly the explanation that was given with Windows OS on diffident computers. This could be where windows phone takes part of googles market, smart phone OS stability.

When we talk battery life, previous and most current android phones are short in life, I found the fix for that with Android, turn background data OFF. All my email apps are still pushed through everything else lies dormant. I went from your same 4-5 hrs to at least 1 full day. However 2-3 days current android phones just wont do it. ( maybe one comes close the" LG L9" )

battleop

join:2005-09-28
00000

Re: Postpaid is better

If Android had the same death grip over the phones and app store that Apple has over the iPhone I think they would have similar results.
--
I do not, have not, and will not work for AT&T/Comcast/Verizon/Charter or similar sized company.
shrraga

join:2012-07-22
Also, android is a general purpose OS that can multitask. It is linux, with a phone style GUI. Apple's OS is a simple one task at a time OS built for a specific piece of hardware. Many android bugs come from a manufacturer's port of android to their phone, and that is why there are third party android roms (such as cyanogenmod). If your phone is buggy/ slow (or not updated...), you should try third party roms.

anondownload

@comcast.net

most leap stores not able to sell iphone

a huge part of the problem is that the iphones are an 'exclusive' available only on the website, corporate owned stores and a few chosen premier dealers. none of the smaller dealers are allowed to carry the iphone.

believe it or not many of the big spending cricket customers shop in small stores that deal in used and flashed(moved from sprint or verizon) phones in addition to new cricket phones. for years these have been the stores to go to for anyone looking for top of the line phones and have the $$'s to afford them.

how do i know this? i have worked at several cricket stores.

if leap would have allowed any dealer to sell the iphone and offered the same level of discounts that they do through the web site and the corporate stores the iphone would have been selling like hotcakes since release.

battleop

join:2005-09-28
00000

Re: most leap stores not able to sell iphone

I would also say that the average Cricket customer isn't going to drop the cash to buy a brand new iPhone. The whole reason they are with Cricket is because their credit sucks and or they are looking for something cheap that they can afford.
--
I do not, have not, and will not work for AT&T/Comcast/Verizon/Charter or similar sized company.
openbox9
Premium
join:2004-01-26
japan
kudos:2

Just wait

Could this be because it's Leap? Wait for T-Mobile to realize that most US consumers aren't willing to pay upfront for their $300-600 smartphones, when the company makes the leap soon.

n2jtx

join:2001-01-13
Glen Head, NY

Re: Just wait

said by openbox9:

Could this be because it's Leap? Wait for T-Mobile to realize that most US consumers aren't willing to pay upfront for their $300-600 smartphones, when the company makes the leap soon.

A big problem here is you are paying full freight for a locked iPhone. WTF? You can go to the Apple store and pay the same price for an unlocked phone. Leap made a big mistake in their locking policy and will have to rethink it fast or eat the cost.
--
I support the right to keep and arm bears.

jap
Premium
join:2003-08-10
038xx

Re: Just wait

Agreed. A mistake to compare T-Mo to Cricket. It's not an unsubsidized handset issue it's the lock-ins, coverage options, ala carte services options, and the company one must deal with. Huge judgement error on the part of Leap. Also, Apple is coddled by the privileged set. Leap apparently doesn't know their customer base either.

carpetshark3
Premium
join:2004-02-12
Colorado Springs, CO
It's also locked to Leap. If sold unlocked, it might work better.
The N4 is unlocked and I prefer it that way.

jimk
Premium
join:2006-04-15
Raleigh, NC
Reviews:
·RoadRunner Cable
·voip.ms
said by openbox9:

Could this be because it's Leap? Wait for T-Mobile to realize that most US consumers aren't willing to pay upfront for their $300-600 smartphones, when the company makes the leap soon.

You won't have to pay $300-600 upfront to get a smartphone on T-Mobile. You will be able to make a down payment which is close to the typical cost for a smartphone today, and pay off the rest in monthly installments with your bill at 0% APR.

Once the phone is paid off, your monthly service rate goes down until you finance a new phone. This is how it should be... why should one have to keep paying a subsidy for a phone that is 3 years old?

AT&T, Verizon, Sprint, and T-Mobile Classic postpaid are already forcing you a monthly payment for your phone, you are just not seeing it as a line item on your monthly bill. With these plans, you are really screwed if you buy phones from someone other than the carrier. Prepaid is sometimes an option, but usually prepaid plans have more limitations buried in the terms of service that can come back to bite you later.

The Value plan on T-Mobile and its upcoming replacement that completely removes the contract (while still retaining typical postpaid plan benefits such as roaming) is a very good idea, and I hope it works out. For those who like the current business model of buying a phone for at a lower cost upfront and paying for it over the life of the device, that option is still available... it is just structured differently.

Duramax08
Win8 sucks
Premium
join:2008-08-03
San Antonio, TX
Reviews:
·Millenicom
·Cricket Broadband

Cricket/Leap wireless sucks anyways

Horrible customer service, spotty coverage. Over here its known as the "ghettos wireless" because you can drive into the ghetto and see nothing but cricket stores and tents.

Better off going prepaid somewhere else like straight talk or tmobile.
--
»mc-buildville.enjin.com/

ilikeme
I live in a van down by the river.
Premium
join:2002-08-27
Denton, TX
kudos:1

Re: Cricket/Leap wireless sucks anyways

said by Duramax08:

Horrible customer service, spotty coverage. Over here its known as the "ghettos wireless" because you can drive into the ghetto and see nothing but cricket stores and tents.

Better off going prepaid somewhere else like straight talk or tmobile.

Its the same way in Houston. If you drive thru the ghettos, there are Cricket stores and signs everywhere! I know people who have tried it and they have all said its horrid. I don't know how Cricket plans to sell that many iPhones at an unsubsidized price when all but a few of their stores are in the ghetto.
--

Fiber Optics is the future of high-speed internet access. Stop by the BBR Fiber Optic Forum

realcheckman

@comcast.net

Re: Cricket/Leap wireless sucks anyways

You guys are missing a more reasonable explanation. Apple is in decline. Perhaps unsubed iPhones are not in vogue but androids my be selling like hotcakes. It isn't the carrier, or the unsubed piece, it is an apple problem.
Angrychair

join:2000-09-20
Jacksonville, FL
Reviews:
·Comcast

Re: Cricket/Leap wireless sucks anyways

said by realcheckman :

You guys are missing a more reasonable explanation. Apple is in decline. Perhaps unsubed iPhones are not in vogue but androids my be selling like hotcakes. It isn't the carrier, or the unsubed piece, it is an apple problem.

My thoughts precisely. The problem is that the iPhone has played out. It's not a growth market item any more. If it had been on cricket three years ago they'd probably have sold a lot more of them. Everyone that wants an iPhone at this point has one.

anondownload

@comcast.net
said by Duramax08:

Horrible customer service, spotty coverage. Over here its known as the "ghettos wireless" because you can drive into the ghetto and see nothing but cricket stores and tents.

Better off going prepaid somewhere else like straight talk or tmobile.

actually i bet those 'ghetto' stores could sells a ton of iphones. but leap will not let them order any. instead the keep the iphone online and at the shiny new stores in modern shopping strips/malls.

unfortunately those store cater to cash strapped consumers who tolerate cricket until they fix their credit and go back too a big 4 carrier. believe or not some of the 'ghetto' stores are ones with the biggest spending customers, especially if they have have built a reputation for have high end phones soon after release flashed from other carriers. having worked at a few different cricket stores in different cities i am pretty confident iphone would sell well in the small mom&pop style stores that are not allowed to sell them.
decifal

join:2007-03-10
Bon Aqua, TN
kudos:1
Reviews:
·Verizon Broadban..

me thinks

Me thinks that having phones subsidized all these years made the prices of phones in general increase more and more being people wasn't really paying the real cost anyways... Now with a unsubsidized phone cost WAY more than it should and the whole contract less trend will have an uphill battle to even get a brief start...

Phones cost too much for what you get.. Specially being they are made by slave labor
tkdslr

join:2004-04-24
Pompano Beach, FL
Reviews:
·T-Mobile US
·Speakeasy

Re: me thinks

I agree, there is NO WAY a handheld device(smart phone) should cost more than a full sized laptop, (complete with a much larger (10-15x) lithium ion battery)!!

There are some reasonable deals available,
Exhibit II 4g, 200$(Walmart/Target), Nexus 4, 350$(Google)..

Just don't expect to get a good deal from a dedicated wireless store. They have way too much overhead to cover.

It that simple, avoid the high cost retail outlets if you want to save money.

grydlok

join:2004-01-06
Richmond, VA

These comments are closet Racist

Ghetto? everyone in the Ghetto market is cash strapped huh? everything must be ghetto if it doesn't fit the image of what you think a community should be? It's ghetto.

Metatron2008
Premium
join:2008-09-02
Stockbridge, GA

Re: These comments are closet Racist

Can't have a topic without somebody whining for political correctness huh?

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