Virgin Mobile USA announces prepaid iPhone 4 and iPhone 4S

Prepaid offers substantially lower TCO, greater flexibility

Apple has made another entry into the CDMA prepaid phone world in a deal announced on June 7 by Virgin Mobile USA. Virgin joins Cricket from Leap Wireless, which announced a subsidized iPhone on May 31. This is the first time that Apple has worked with prepaid carriers in the United States to sell the iPhone.

Virgin Mobile is selling the 16GB iPhone 4S for $649, the same price of the noncontract unlocked GSM iPhone 4S sold through Apple's (NASDAQ: AAPL) website and in Apple stores. Virgin will sell the 8GB iPhone 4 for $549, also the same price as the unlocked GSM iPhone.

Cricket's prices are lower, at $499.99 and $399.99 respectively. However, Virgin's lowest rate is just $30 per month for 300 minutes of voice and unlimited data. Cricket charges $55 per month for unlimited voice and data. Virgin charges $50 for the same voice and data. Virgin Mobile is owned by Sprint (NYSE: S), and the new iPhone will run on the Sprint network. Cricket's phone will be available June 21 and Virgin's on June 26.

While other smartphones have been available without contracts for several years, most have not been such high-end phones. Notably, the Samsung Galaxy S III is available in an unlocked GSM version on, but at a much higher price. Unlocked GSM iPhones have been available since the days of the iPhone 4.

The benefit to users is that the total cost of the prepaid Virgin Mobile phone is substantially less expensive to own than the same phone when sold by parent company Sprint. The higher purchase price will be offset in less than a year by the much lower monthly cost. An unlimited plan with Virgin will cost iPhone owners about $720 per year less when compared with a Sprint plan, offsetting the cost of the phone itself. Sprint's unlimited plan, including a smartphone surcharge, is $109.99 per month.

For many companies, the use of prepaid plans could save a significant amount of money each year. While the capital expenditure would rise, the TCO would be dramatically less, regardless of the carrier. For example, T-Mobile's prepaid unlimited plan costs the same per month as Virgin's. Although data throttling kicks in sooner, that only applies to 4G data, and the iPhone doesn't do 4G. AT&T's prepaid plan is somewhat higher, but the savings over its postpaid plan are still substantial.

Apple is clearly moving into deals with prepaid carriers as it works to improve its global footprint. In Europe and Asia, prepaid phones are the rule rather than the exception and a wide variety of retailers handle prepaid smartphones, including stores run by carriers.

For more:
- check out the Virgin press release

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