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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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RE: Cricket
By Motoman on 2/28/2013 10:33:46 AM , Rating: 2
quote:
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.

And...it 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.


"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007














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