Sprint's Virgin Mobile launches prepaid iPhone to few lines

Virgin becomes second U.S. prepaid carrier for iPhone after Leap's Cricket
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Sprint Nextel's (NYSE:S) Virgin Mobile brand launched Apple's (NASDAQ:AAPL) iPhone Friday to few reported lines and little fanfare. Virgin became the second U.S. prepaid carrier to carry the iPhone after Cricket provider Leap Wireless (NASDAQ:LEAP), which launched the iPhone June 22.

Virgin opened its first 10 branded retail stores in Chicago to capitalize on the launch, and also sold the phone through RadioShack and Best Buy. According to checks by BTIG analyst Walter Piecyk, there were no lines at eight RadioShack and Best Buy locations in New York City and San Francisco.

"We were not surprised by the lack of lines but it was a little odd to see no signage on the front of the stores or marketing collateral within the stores advertising the product launch," Piecyk wrote in a blog post. "Phones were available, but the lack of marketing materials and the comments made by the store personnel we spoke to indicated that they did not expect many of their customers to opt for the costlier version of the iPhone."

Virgin Mobile spokeswoman Jayne Wallace declined to comment on the first weekend of sale.

Virgin is offering customers the iPhone 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. Virgin customers can choose from a $30 plan with 300 voice minutes and unlimited texting and data, a $40 plan with 1,200 minutes and unlimited texting and data, and a $50 plan with unlimited voice, texting and data. All of the plans have a 2.5 GB data cap, after which customers' data speeds will be throttled for the remainder of their billing cycle.

Sprint, which signed a $15.5 billion, four-year deal with Apple to sell the iPhone, is looking for multiple sales channels through which it can sell the iPhone. 

"We think there's good demand for high-end devices like the iPhone in the prepaid market," Sprint CEO Dan Hesse said in an interview with Bloomberg ahead of the launch. "There's a misperception that the prepaid market is only for people that are economically challenged. That's not the case. Our expectation, based on preorders, is that the iPhone will do very well on Virgin."

Piecyk said he is not as convinced. "It's still early but we think it's reasonable to assume that prepaid iPhones priced at $650 might not be big sellers in the market and that Apple might need to identify a lower priced version of the iPhone or implement steeper cuts on its legacy products to address this large market," he wrote.

Cricket has not given initial sales figures for its iPhone launch but company representatives have said that opening weekend sales were "brisk."

For more:
- see this Bloomberg article
- see this BTIG blog post (reg. req.)

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