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How many pre-paid buyers will pony up $650 for a new 16GB iPhone 4Sto be able to get no-contract service starting at $30 a month? Some analysts believe there won't be very many customers who willtake advantage of such a plan, as announced this week by Virgin Mobile USA and luanching June 29. That's especially the case, the analystssaid, with Android phones costing less than one-third of the iPhoneon a typical pre-paid plan. "I can't see too many Virgin customers calling up and saying Iwon't sign up for your service unless I can get an iPhone,especially since credible Android devices are one-half toone-fourth the cost," said Jack Gold, an analyst at J. GoldAssociates. "The costs of these [iPhones] is so high and we've seen littlesuccess in a non-subsidized model," like the one Virgin isoffering, said Gartner analyst Phillip Redman. "I have many doubtsthis [Virgin] plan will work also, but Apple has surprised usbefore... Maybe there's enough pent-up demand at these smallcarriers, but the sales numbers won't be big." Sprint, which owns Virgin, sees things differently, of course.Sprint and Leap Wireless, which buys Sprint network CDMA 3Gservice, are exploring ways to expand the popularity of the iPhonebeyond the traditional base of post-paid subscribers. Post-paid customers get the same iPhone subsidized by the Sprint,AT&T and Verizon Wireless for $199-- less than one-third theVirgin cost-- but must sign a two-year contract for monthly serviceis more than double the discounted $30 monthly price Virgin isoffering for 300 minutes of voice and unlimited texting and data. "The Virgin Mobile brand is extremely well-positioned to carry thisiconic device and accelerate its growth as an alternative forprevious post-paid subscribers," Jayne Wallace, director ofcommunications for Sprint, said by email. "There's no question thatthe iPhone on both our pre-paid and post-paid platforms is awin-win for the business all around." She explained that post-paid contracts are slowing down across theindustry. "The growth area in the market continues to be theno-contract space," she added, explaining that was why Sprintacquired Virgin in 2009 and created its multi-brand Sprint PrepaidGroup in 2010. Pre-paid customers have traditionally been viewed as younger or ona budget and might not even have a credit account to pay for atwo-year post-paid service plan. But Wallace indicated that "theface of pre-paid has changed from the traditional pay-as-you-goers,now that we can offer the better devices, services and value." Even so, pre-paid customers are still not considered as profitableto carriers as post-paid, and Sprint has struggled more thanAT&T and Verizon at keeping its post-paid customers in recentyears. Sprint added 489,000 pre-paid customers in the firstquarter, but lost 192,000 post-paid contract customers. Still, there's an upsurge of interest in pre-paid industry-wide.AT&T and Verizon Wireless are considering offering the iPhoneand more high-end smartphones to pre-paid customers, in the endlesspursuit of more customers and more revenues, analysts said. Boost Mobile, another pre-paid brand from Sprint, is also expectedto offer the iPhone on a pre-paid basis, said Ramon Llamas, ananalyst at IDC. Paying $650 up-front for an iPhone with Virgin will be the biggestobstacle for pre-paid buyers, Llamas said. "That $650 is still alot of money, no matter what the per-month cost," he said. "Forgetabout college students and just look at younger users who are nowon pre-paid deals." Llamas said there's obviously a market for the Virgin plan. "Thereare some buyers for it, but the question is just how big is thatmarket? We know that pre-paid users want smartphones" based oncurrent pre-paid purchases of BlackBerry and Android smartphones. "Those BlackBerry and Androids on pre-paid plans aren't slouches asfar as phones go, but the iPhone pre-paid will bring a new level ofcachet and a new level of demand," Llamas said. By comparison, Sprint's 24-month post-paid plan for smartphonesoffers 450 minutes of voice, plus unlimited text and talk for$79.99. With the $450 added cost of the iPhone on Virgin, theVirgin overall cost including $30 a month service and phone for twoyears would still be $750 less, or $31.25 a month less, than thepost-paid plan.(The $30 service fee is discounted by $5 from $35 ifa customer arranges for automatic payment with a credit or otheraccount.) Llamas said that customers will need to evaluate whether that$31.25 monthly difference is worth it, since any data usage above2.5GB per month on Virgin could be throttled to a slower speed andsince the Virgin coverage map seems to have some gaps that couldeffect a user's experience depending on where he works or lives."Virgin would be fine in metro areas," he added. Leap's iPhone offer on its Cricket service is $150 less for theup-front hardware cost than Virgin's, but Leap will charge $55 amonth for unlimited voice, data and text. Leap's service isregional, not national, available to about 20% of the country. Leapis a separate Sprint company that operates as a Mobile VirtualNetwork Operator and buys network capacity from Sprint. Whatever happens to Sprint's experiment with the Virgin Mobilepre-paid iPhone plan, Llamas noted that the ultimate winner isgoing to be Apple. Sprint has a four-year commitment to Apple topay $15.5 billion for iPhones, and must satisfy the debt inwhatever way it can. "The one who's sitting pretty with all this pre-pay is Apple,"Llamas noted. "Pre-pay to Apple is another distribution chain,another set of customers who may or may not upgrade to anotherphone regularly." "This approach is another opportunity to sell more people on theiPhone and upgrade them," he said. "Sprint's the one on the hook." Matt Hamblen covers mobile and wireless, smartphones and otherhandhelds, and wireless networking for Computerworld. Follow Matton Twitter at @matthamblen or subscribe to Matt's RSS feed . His email address is . See more by Matt Hamblen on Computerworld.com. Read more about mobile and wireless in Computerworld's Mobile and Wireless Topic Center. The e-commerce company in China offers quality products such as Custom Metal Business Cards Manufacturer , Dual Interface Smart Card, and more. For more , please visit RFID Smart Card today!
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