Will you pay $650 up-front for an iPhone 4S to pay less monthly?

Virgin Mobile is betting you will

1 2 Page 2
Page 2 of 2

Paying $650 up-front for an iPhone with Virgin will be the biggest obstacle for pre-paid buyers, Llamas said. "That $650 is still a lot of money, no matter what the per-month cost," he said. "Forget about college students and just look at younger users who are now on pre-paid deals."

Llamas said there's obviously a market for the Virgin plan. "There are some buyers for it, but the question is just how big is that market? We know that pre-paid users want smartphones" based on current pre-paid purchases of BlackBerry and Android smartphones.

"Those BlackBerry and Androids on pre-paid plans aren't slouches as far as phones go, but the iPhone pre-paid will bring a new level of cachet and a new level of demand," Llamas said.

By comparison, Sprint's 24-month post-paid plan for smartphones offers 450 minutes of voice, plus unlimited text and talk for $79.99. With the $450 added cost of the iPhone on Virgin, the Virgin overall cost including $30 a month service and phone for two years would still be $750 less, or $31.25 a month less, than the post-paid plan.(The $30 service fee is discounted by $5 from $35 if a customer arranges for automatic payment with a credit or other account.)

Llamas said that customers will need to evaluate whether that $31.25 monthly difference is worth it, since any data usage above 2.5GB per month on Virgin could be throttled to a slower speed and since the Virgin coverage map seems to have some gaps that could effect 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 the up-front hardware cost than Virgin's, but Leap will charge $55 a month for unlimited voice, data and text. Leap's service is regional, not national, available to about 20% of the country. Leap is a separate company that operates as a Mobile Virtual Network Operator and buys network capacity from Sprint.

Whatever happens to Sprint's experiment with the Virgin Mobile pre-paid iPhone plan, Llamas noted that the ultimate winner is going to be Apple. Sprint has a four-year commitment to Apple to pay $15.5 billion for iPhones, and must satisfy the debt in whatever 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 another phone regularly."

"This approach is another opportunity to sell more people on the iPhone and upgrade them," he said. "Sprint's the one on the hook."

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at  @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

Copyright © 2012 IDG Communications, Inc.

1 2 Page 2
Page 2 of 2
7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon