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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

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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.

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