Leap launches prepaid iPhone to little fanfare, but says sales were 'brisk'

Cricket provider says it is pleased with prepaid iPhone rollout
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Cricket provider Leap Wireless (NASDAQ:LEAP) launched Apple's (NASDAQ:AAPL) iPhone on Friday, becoming the first U.S. prepaid carrier to do so. While the company said there were lines at some its stores, there appeared to be little fanfare considering many consumers said they were pleased when the company announced in late May that it would carry the Apple device.

Leap spokesman Greg Lund declined to give sales figures. So far, customer activity has been brisk with customers waiting at the door as the stores opened," a Cricket spokesman told PC Magazine. Similarly, CNET reported on Friday that Cricket had seen "brisk" sales activity.

Still, others saw the launch as a bit lackluster. "It's too early to tell what the response has been for Leap and we have only been able to get two stores to actually answer a phone, but clearly the buzz has died down since Leap's initial announcement at the end of May," BTIG analyst Walter Piecyk wrote in a blog post. "The phone is not available in all of its markets, there has been little marketing and Leap's big-box distribution channels are not carrying the product.  América Móvil offers a more compelling offer for pre-paid customers by allowing the customer to use a Straight Talk SIM card with a lower-priced used or legacy iPhone product."

Leap started selling the iPhone 4S and iPhone 4 June 22. The iPhone 4S costs $499.99 for the 16 GB model and the iPhone 4 costs $399.99 for the 8 GB model. The 16 GB iPhone 4S is often sold for $650 without a contract and the 8 GB iPhone 4 is often sold for $550 without a contract. The carrier is offering the iPhone with its $55 per-month, all-inclusive unlimited talk, text and data plan, though after customers hit 2.3 GB of data in a month they may have their data speeds throttled.

However, Leap is only selling the iPhone in markets where it uses PCS spectrum, since the device does not support its AWS spectrum. Those markets cover 70 percent of its total covered POPs, which amounts to around 60 million POPs across the country. Those markets exclude major cities including Boston, Chicago and New York, but customers can roam onto other networks. Leap in 2010 inked an MVNO deal with Sprint Nextel (NYSE:S) that allows Leap to sell its services nationwide.

Sprint's Virgin Mobile brand will follow Cricket  and will offer the iPhone beginning June 29 for $649 for a 16 GB iPhone 4S and $549 for an 8 GB iPhone 4. The prepaid carrier said its Beyond Talk pricing plans for the iPhone will start at $30 per month but will require customers to register for automatic monthly payments.

Leap's iPhone sales provide a potential window into how willing customers will be to pay a higher up-front cost for the iPhone in exchange for not being tied to a service contract. "For many, Leap will be a small but interesting test on whether the traditional model of heavily subsidized $200 iPhones on two-year post-paid contracts can be challenged with a higher-priced $500 phone with a cheaper monthly no-contract rate plan," Piecyk wrote. "In addition, if Leap is successful at attracting customers to pay $500 for an iPhone, it could provide an early indication of how Apple could address the prepaid opportunity that exists on a much larger global scale. Of course, that's a bit of a stretch given the relative wealth of the U.S. compared to prepaid dominant emerging markets throughout the world."

For more:
- see this CNET article
- see this PC Magazine article
- see this BTIG blog post (reg. req.)

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