Print 33 comment(s) - last by timothyd97402.. on Mar 4 at 7:02 PM

Carrier could have $100 million worth of unsold iPhones by midyear

The iPhone 5 has been a sales success for most carriers around the world. However, Cricket Wireless – the no contract prepaid network operated by Leap Wireless -- isn't having luck selling the iPhone 5 and is seeing stock levels climb as consumers opt for other devices.

Leap Wireless says that it believes it will sell about half as many iPhones as it committed to sell during the first year of its contract with Apple, which ends in June. Leap Wireless believes that the poor sales could leave it with as much as $100 million worth of unsold iPhones by the middle of 2013.

Leap Wireless has 5.3 million subscribers and areas where it can sell the iPhone are limited by its limited network coverage. Leap was the first of the major prepaid carriers in the US to offer the iPhone last year.

Perhaps the biggest challenge facing Leap Wireless and other prepaid carriers who offer the iPhone is one of cost. While carriers that require a contract, such as AT&T and Verizon, are able to subsidize the cost of the iPhone making it significantly cheaper up front, Leap charges the full retail price of $500.

Considering that pre-paid carriers tend to attract customers shopping on a budget coming up with $500 could be a stretch for many subscribers leading them to “cheaper”, subsidized phones.

Source: Wall Street Journal

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

By JimboK29 on 2/28/2013 8:51:13 AM , Rating: 1
Lots of unsold iPhones means Cricket does not appeal to hippies.

RE: Cricket
By xti on 2/28/2013 8:56:18 AM , Rating: 4
i dont think cricket appeals to anyone with a job.

RE: Cricket
By Wolfpup on 2/28/2013 11:01:21 AM , Rating: 2
Huh? Because people with jobs like paying more? And people without jobs can buy cell phones?

RE: Cricket
By xti on 2/28/2013 11:06:25 AM , Rating: 2
its a knock at their image, store locations, etc etc

RE: Cricket
By Cheesew1z69 on 2/28/2013 11:10:51 AM , Rating: 2
don't feed the troll...

RE: Cricket
By xti on 2/28/2013 12:05:56 PM , Rating: 2
oh look, mr sunsh1ne is here

RE: Cricket
By FITCamaro on 2/28/2013 2:08:54 PM , Rating: 2
The vast majority of people on services like Cricket are those on welfare and illegals.

People without jobs can certainly buy cell phones. They take their EBT cards, buy groceries, then sell the remaining value for cash. There is so much fraud and abuse in the system its unreal.

RE: Cricket
By mcnabney on 2/28/2013 7:17:10 PM , Rating: 2
There actually is a subsidized wireless program, but not for smartphones. It is part of the Lifeline program, started by Reagan. It is paid for by a national user fee (which everyone else pays).

RE: Cricket
By sigmatau on 2/28/2013 7:28:03 PM , Rating: 2
I'm sure you feel pity and not anger for anyone that sells their food stamps, right? I mean you can't possibly be mad at someone that lives at the bottom of the barrel and gets just enough food stamps to buy $5 of food a day for themselves. That they are in such a dire situation that they would dig themselves deeper by selling some of their $5/day food stamps for other things to make them feel better or whatever reason.

I pitty them. Life is more precious than worrying what others are doing with their terrible lives.

RE: Cricket
By GotThumbs on 2/28/2013 9:10:20 AM , Rating: 5

It clearly means that most people are not willing to pay the actual high cost of the phone. It's simply not worth it to them. Simple economics. Signal to Apple...It's not All that anymore.

All non-contract services do not subsidize the cost of the phone since no two year contract commitments. Simply add up the cost of two years of contract service against two years of non-contract service...and you will see why.

Personally I'll never own an Apple product. Wouldn't even take a freebie. I have Page Plus for my cell provider and only pay 29.95 Mo for 1200 minutes, 3000 texts and 250 mb of data. I've had it for over two years and never exceeded the data limit, even when I used the Google navigation on a 2280 mile trip. I just set my android to pull/download attachments only when connected to WiFi.

Ever heard of the old adage? "A fool and his money are quickly parted"

Best wishes,

RE: Cricket
By GulWestfale on 2/28/2013 9:29:40 AM , Rating: 2
i currently use an automatic pay as you go service in canada automatic means they debit my bank account at the start of each month, just like a contract, except i do not have a contract. i prefer this because it is quite a lot cheaper for me when compared to their plans, and it doesn't make me a phone company slave for 3 years.

on the downside, i had to pay for my phone. the iphone, at $500+ was never an option, and neither was the galaxy S3 (also at 500 bucks). instead i went with a galaxy S2X (1.5GHz duallie, 4G, 4.5" 800x480 AMOLED), and paid only $250 for it. i'm perfectly happy with it, my iphone-owning brother is jealous of the screen and of what android can do, and i saved 250 bucks.

so i think dwindling iphone sales aren't necessarily due to low-cost carriers not being able to sell them; i think it's also due to people becoming more aware of alternatives. 3 years ago apple was the leader; but now they make mid-range handsets and sell them at premium prices. people can compare, and choose better options.

RE: Cricket
By Dorkyman on 2/28/2013 12:30:03 PM , Rating: 2
Our household has 3 Sprint Evo 4G's, contract up this summer, we are moving all three phones to Ting, which is PAYG and which uses Sprint's network, so coverage stays the same.

The Evo is a very nice phone, and I can purchase spares on eBay for <$100 if one gets trashed or lost (I already have one spare ready to go). Our phones have been backed up, so it will be a simple matter to clone a spare and be back in business if a loss occurs.

Oh, and Ting is cheap compared to Sprint's contract prices.

RE: Cricket
By MadMan007 on 3/1/2013 12:07:38 AM , Rating: 2
You should double check the coverage to make sure. MVNO on X network doesn't mean same coverage as a contract on X network.

RE: Cricket
By Motoman on 2/28/2013 10:33:46 AM , Rating: 2
It clearly means that most people are not willing to pay the actual high cost of the phone. It's simply not worth it to them.

...which is why, I believe, that cellphone subsidies should be regulated out of the industry. Traditional carriers, with their long-term contracts, obfuscate the true cost of the hardware you're getting, and gullible consumers (read: essentially all of them) have no idea what they're actually paying for the phone.

Cell phones should be no different from landline phones. Which is to say, you should be able to go to Target, buy whatever f%cking cell phone you like, take it home and arrange at-will service with any cell phone service provider you like. With no contract. And with your number and service being immediately portable at will.

There's no technical reason this can't be done. It would cause all the providers to actually compete against each other...and may cause at least some of them to care about keeping their customers happy. would remove the obfuscation from the true cost of the cell phone in the first place. Which is something that the vast majority of consumers simply can't adequately deal with.

RE: Cricket
By eagle470 on 2/28/2013 10:49:14 AM , Rating: 2
Let the market decide, I for one will not be renewing my contract with a new subsidized phone. Instead, I will pay full price and simply go month to month.

RE: Cricket
By Motoman on 2/28/2013 1:35:52 PM , Rating: 2
Yes, but it sounds like (at least in this case) you're not an idiot. Most people are, and they're easily cowed by marketing and propaganda.

RE: Cricket
By Solandri on 2/28/2013 3:36:32 PM , Rating: 3
I would love to let the market decide. Unfortunately the carriers won't let it. Except for T-Mobile, they all charge you the same monthly service fee (which supposedly includes subsidy) whether or not your phone is subsidized (in contract).

You buy a $700 iPhone for $200 and a 2-year contract at $75/mo. The $500 price subsidy over 24 months + interest works out to about $25/mo. So the service actually only costs $50/mo, and the extra $25/mo is to pay for the phone. But after the 2 years are up, the carriers continue to charge you $75/mo. Meaning the market perceives the extra $500 for the phone as "free" when in reality it's the carrier stealing money from them once their contract is up.

The FTC really needs to force carriers to turn these subsidies into a loan. If you want a carrier-subsidized phone, fine. But the subsidy has to show up in your bill as a separate line item, and it has to disappear once your contract is up.

RE: Cricket
By DanNeely on 2/28/2013 11:09:51 AM , Rating: 2
The carriers would just use a 2 year contract with a 2 year standard payment plan for ~$400 worth of the phones sticker price (and a down payment equivalent to the current on contract price), and advertise the combination of the two as their headline price.

RE: Cricket
By Motoman on 2/28/2013 1:33:36 PM , Rating: 2
What you're talking about there is financing the phone, seperately from the cost of the cellular service. In order for any such regulation as I mentioned to be effective, there'd have to be rules about how you could advertise such stuff, to prevent such loopholes.

Off the top of my head, you'd have to force the companies to prominently list the cost of the monthly cellular service, then the cost to purchase the phone, then the cost of a monthly payment if you finance the phone, and then if you want a combined price of the financed phone + montly cellular service.

Or maybe you just prohibit the last option at all, and force consumers to actually think for themselves and do some basic math. It's sad that you have to force people to think...but the fact of the matter is, we're pretty f%cking stupid.

RE: Cricket
By kmmatney on 2/28/2013 11:44:46 AM , Rating: 2
Virgin Mobile is a better deal if you don't need the talk minutes. 300 min talk, unlimited text and Data. $35/month. They have iPhones available, but the EVO 4G is really nice (4.3" screen) and price has gone down to $129 recently. Bargain.

By Samus on 2/28/2013 8:57:12 AM , Rating: 2
I don't even understand why MVNO's are playing into Apple's sales model? This isn't what MVNO's generally stand for. Virgin Mobile has had similar problems moving iPhones, even though they offer the lowest priced iPhone plan in the industry.

What is obvious is when unsubsidized, people lose interest in the iPhone because of the ridiculous $500+ price tag. Other Android and WinMo phones of comparable quality, features and often superior screen size cost hundreds less.

Then there is the blind-observation buyer who simple looks at an iPhone next to, say, a Galaxy S III, and says to themselves, hmm, the iPhone is smaller, heavier and more expensive. What are my alternatives?

The unsubsidized model will kill Apple.

By xti on 2/28/2013 9:01:05 AM , Rating: 4
actually, if you look at the cricket website, ip5 is 440, gs3 is 380...not exactly hundreds

both dont make sense since obviously you to go cricket when there are financial limitations...yet you blow over $200 on the phone up front.

By TSS on 2/28/2013 10:00:02 AM , Rating: 2
It tends to make sense as subscriptions are alot more expensive if you count up what they cost you over the duration vs what the same pre-paid phone plus a sim only subscription costs you. Suprise, if you want the carrier to risk upfronting the cost you have to pay for the privilege.

For example the smartphone i recently got cost me about 340 euro's, prepaid phone, prepaid plan, no debt or payments. Had i gotten the same phone with a contract from a carrier here, it would've cost me ~1375 euro's over 2 years. Only after which the phone would be actually mine.

The iphone is a different story however as it is Apple who does the mark ups and not the carriers. Even in webshops where other phones are cheaper pre-paid then with the carriers, the Iphone is still just as expensive as with a contract. The reason why carriers have it is because of the hype however and they hope to make their profit on volume. Apple already makes their profit when the carrier buys the phones, not when they sell it to their customers.

So why on earth any carrier would offer it without subscription i haven't got a clue. I don't even know why they continue to offer the Iphone when they could get much higher profit margins on android devices, it's not like they're legally obliged to sell Apple stuff. Yet.

By Samus on 2/28/2013 10:14:21 AM , Rating: 3
I see the iPhone5 as $499 and GS3 as $379. The GS3 is substantially more "phone" than the iPhone5 though, so my original post was not necessarily a fair comparison (although the GSIII is still cheaper.)

The Galaxy S Victory for $269 and HTC One SV for $279 are more comparable to the iPhone specs (same processors, ram, slightly larger screens, LTE, etc) whereas the GSIII has all the bells and whistles like NFC, huge screen and Touchwiz GX.

By xti on 2/28/2013 10:39:35 AM , Rating: 3
the only spec you mentioned that appeals to the masses is the screen and 4G. I really wish my gs3 didnt have the clunky plastic look and feel. I hate how much better the apple app store is than google play. NFC is cool and obviously used heavy in marketing, but if you google tech sites, which are pro-heavy users, the usage is barely half...which translates to minimal given the average joe.

the point is, "cricket" and "non-subsidized phones" are practically opposing concepts.

By Samus on 2/28/2013 11:38:32 PM , Rating: 2
considering the average lifetime of s phone is about 2 years maybe they should be made out of basic recyclable plastic.

also, if you drop the lighter, more impact resistant galaxy s3 from the same height as the heavier steel, aluminum and glass case of the iphone, guess which one is more likely to break?

By xti on 3/1/2013 8:36:39 AM , Rating: 2
dont drop the phone? lol...

By timothyd97402 on 3/4/2013 7:02:48 PM , Rating: 2
iPhone 4s is still the best made piece of kit I have ever owned. It is very nice looking and feels very solid. I have dropped it naked twice and you'd never know it. I checked out the Galaxy S3 and was not impressed with the look and feel and didn't really care about the screen size. I am not sure I feel the same about the iPhone 5.

By DanNeely on 2/28/2013 3:06:03 PM , Rating: 2
Cricket isn't an MVNO, it owns and operates significant amounts of AWS (1900x2100mhz) and PCS (1800/1900mhz) spectrum. Along with US Cellular and formerly MetroPCS (until the T-Mobile finishes the takeover) Cricket's one of the little three carriers that operates its own primary network. They sit between the big 4 and MVNOs (and tiny local carriers) in terms of scale/status. Being squeezed from both sides it's questionable how well or if they'll be able to survive.

By abhaxus on 2/28/2013 3:31:50 PM , Rating: 2
A big reason they aren't selling enough iPhones is due to the fact that they allow devices to be flashed to their network. A significant amount of fraud in my store is people using credit mules to purchase sprint iPhones and then never paying the bill. Within a few days the phones are flashed to cricket and sold on Craigslist cheaper than Cricket themselves. As long as Cricket allows this practice, they will have a tough time competing with fraudsters.

By mcnabney on 2/28/2013 7:22:34 PM , Rating: 2
This is quite true. All those poor people with iPhones that the Right likes to complain about are actually buying 'pre-used' devices on the secondary market and activating them on Cricket or MetroPCS. Some know that they are stolen, others do not.

By Shlong on 2/28/2013 2:25:06 PM , Rating: 2
*crickets* for iPhone sales.

By Shadowmaster625 on 3/1/2013 8:21:28 AM , Rating: 2
The only people who buy iphones are dumbed down morons who crave blowing $100+ a month in a vain attempt to fill the void left in them by the mass raping of consciousness that they experience every time they watch their idiot box Teelevision Programming, which just happens to be plastered with siguls of a half-eaten white apple. Anyone with a brain would not waste so much money when you can get the same thing for half the price or less. So yeah there is no market for prepaid iRipoff crap.

"This is from the It's a science website." -- Rush Limbaugh

Latest Headlines
Inspiron Laptops & 2-in-1 PCs
September 25, 2016, 9:00 AM
The Samsung Galaxy S7
September 14, 2016, 6:00 AM
Apple Watch 2 – Coming September 7th
September 3, 2016, 6:30 AM
Apple says “See you on the 7th.”
September 1, 2016, 6:30 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki