Cricket/Leap Wireless Reports iPhone Sales Weaker Than Expected

[MacRumors]

Six months after it started carrying the iPhone, U.S. regional prepaid carrier Cricket reports that it will only purchase half of its first-year commitment of iPhones by June 2013, reports BGR.

Back in June 2012, Cricket started carrying the iPhone 4 and iPhone 4S after committing to buy at least $900 million worth of iPhones from Apple over the life of its deal with Apple. It got the iPhone 5 a week after it launched on the major U.S. carriers.

The carrier revealed that it is on pace to purchase only half of its first-year commitment from Apple through June 2013. The information in the filing contradicts earlier statements made by the company's chief financial officers Jerry Elliot. The executive previously said that "sales of Apple devices were pretty good in the fourth quarter" and the carrier wasn't concerned about meeting its commitment with Apple.

Cricket is generally considered one of roughly half a dozen "super-regional" carriers in the United States, with more than 5 million customers. The carrier offers a nationwide network through roaming agreements and its prepaid model offers simple pricing with no activation fees or overage charges.

Article Link: Cricket/Leap Wireless Reports iPhone Sales Weaker Than Expected

[OrangeSVTguy]

Does their service suck?

[GuitarDTO]

I like my iPhone 5...BUT. It is starting to feel stale. Meanwhile, Samsung keeps pushing the envelope with the Galaxy series (Note, S3)....the Lumia's are somewhat interesting, and I'm also curious to check out what the new Blackberry has to offer. I'm not surprised by this type of news, there is a lot of great competition out there now, and we as consumers (not fanboys) all benefit.

EDIT: and yes, who the F is cricket?

[rjtyork]

Yeah, their internet is worse than Sprint's too. So no thanks. I'll go with Straight Talk or Solavei so I can use data while I'm on a phone call and have decent speeds. No way I'm ever buying with a contract again. What a scam.

[DavidFulero]

Lol, it's a famous, expensive phone, on a small regional carrier that (let's face it) exists to service people with an income level too low to require or afford a national service plan with a major carrier. We are surprised by this?

[komodrone]

Well...I guess all they heard were...(puts on sunglasses)...crickets. YYYYYYEEEAAAAHHHHHH!!!!

[paul4339]

the CFO has some explaining to do... you'd think they'd learnt from RIM's false statements.

[KdParker]

Are these phones subsidized?

[Rocketman]

Weak sales? Perhaps because the market is largely postpaid. When folks have to front the money for an iPhone 5, they are willing to pay more per month (prepaid credit).

This is why I am concerned about the remainder of the untapped smart phone market. Either they don't have credit, or have bad credit, or there is no technology to determine credit in the region. That means those folks have to buy hardware and pay month to month for service.

I pay a ridiculous $140 per month for two phones, but when I got them if I had to pay $1600 up front and $90 per month for service, it would not have seemed like a good deal to me.

The "low cost" iPhone will solve this on the margin, but the main solution is establishing some meme of credit approvals in un-civil markets.

BTW China Mobile announced today they are testing TD-LTE with about a million units of hardware. Nice test sample. I thought a sample was 32. Anyway this means Apple is about to penetrate a large market in a couple of months.

Buy AAPL.

[Northgrove]

Cricket was supposedly offering iPhone 4 and 4S with a $150 discount. I guess the iPhone 5 hasn't been subsidized like that?

Now, I guess the question is if this was taken into account when setting the expectations here.

[QCassidy352]

Originally Posted by GuitarDTO

I like my iPhone 5...BUT. It is starting to feel stale. Meanwhile, Samsung keeps pushing the envelope with the Galaxy series (Note, S3)....the Lumia's are somewhat interesting, and I'm also curious to check out what the new Blackberry has to offer. I'm not surprised by this type of news, there is a lot of great competition out there now, and we as consumers (not fanboys) all benefit.

EDIT: and yes, who the F is cricket?

Wow, what an original and helpful comment. Totally not just stirring the pot with exactly the same sentiments that get repeated a hundred times in every thread that mentions the iPhone. Well done sir.

[BC2009]

Cricket does not sell the iPhone on subsidized contracts and they do not sell it in all their markets. Is it any wonder that the most expensive smartphone would not sell as fast without subsidy? The pricing is Apple's problem -- they don't have a competitive unsubsidized price.

The iPhone 4S is $500 on Cricket if I am not mistaken and Cricket does not even offer the iPhone in my area so I cannot get the price on iPhone 5. So obviously you are going to have problems selling a smartphone if:

1) You don't offer it in all regions of the USA where you have a presence

2) You offer it at full the full unsubsidized price while your competitors are charging far less on subsidy for the same device.

Incidentally, the Galaxy S3 is $379 from Cricket.

UPDATE: The Verge is reporting that Cricket/Leap actually lost more than 600k subscribers and their attempt to redirect everybody's attention to Apple and iPhone is an attempt to cover the fact that:

A) They are failing to compete with the likes of AT&T, Verizon and Sprint

B) Their over-optimism lead them to over-committing the company in their iPhone contract with Apple.

The CEO is playing "cover my butt" by trying to misdirect everybody's attention on this story. Kudos to Jeff Blagdon at The Verge for calling him on it.

[3N16MA]

Originally Posted by GuitarDTO

I like my iPhone 5...BUT. It is starting to feel stale. Meanwhile, Samsung keeps pushing the envelope with the Galaxy series (Note, S3)....the Lumia's are somewhat interesting, and I'm also curious to check out what the new Blackberry has to offer. I'm not surprised by this type of news, there is a lot of great competition out there now, and we as consumers (not fanboys) all benefit.

EDIT: and yes, who the F is cricket?

Apple has sold a record number of iPhone 5. This is more of a reflection of Cricket than the iPhone 5.

[iGrip]

Originally Posted by Rocketman

if I had to pay $1600 up front and $90 per month for service,

The Nexus 4 starts at $299. The times, they are a'changing.

[mac1984user]

Originally Posted by Rocketman

I pay a ridiculous $140 per month for two phones, but when I got them if I had to pay $1600 up front and $90 per month for service, it would not have seemed like a good deal to me.

That is frighteningly expensive. I used to shudder when my monthly payment tariff was £35 a month. Off contract, my phone bill is now £16(~$25). If I ever move back to the US, I fear the cost of owning a cell phone! I opted to abandon Apple on the mobile phone front recently and bought a Nexus 4 outright for £279. My monthly bill is still £16 (which is certainly not the cheapest option!).

[Essenar]

Originally Posted by 3N16MA

Apple has sold a record number of iPhone 5. This is more of a reflection of Cricket than the iPhone 5.

No, the issue is that Apple isn't subsidizing the pricing with Cricket because it's a no contract commitment.

What would you rather do, pay $600 for an iPhone 5 followed by $55 a month for unlimited text, minutes and data on a CDMA 3G network (1.5Mb/s if you're LUCKY) or $650 for an iPhone 5 and pop in a Walmart based T-Mobile SIM card and get 100 minutes, unlimited text messages and 5GB of 4G data at HSPA+ speeds mostly throughout the nation?

It's an easy choice to make. It's the same reason Verizon needed LTE on the iPhone 5 and they're Big Red, leaders of marketshare for users in the United States.

[noiseordinance]

Wait... so a GHETTO cellular company is having a harder time selling a luxury phone? Strange!

[Plutonius]

Let the pumping and dumping of Apple stock commence .

[Rogifan]

Originally Posted by noiseordinance

Wait... so a GHETTO cellular company is having a harder time selling a luxury phone? Strange!

Apple is doomed.

[Rocketman]

Response to PMs: Verizon. California.

[uknowimright]

Originally Posted by BC2009

Cricket does not sell the iPhone on subsidized contracts and they do not sell it in all their markets. Is it any wonder that the most expensive smartphone would not sell as fast without subsidy? The pricing is Apple's problem -- they don't have a competitive unsubsidized price.

The iPhone 4S is $500 on Cricket if I am not mistaken and Cricket does not even offer the iPhone in my area so I cannot get the price on iPhone 5. So obviously you are going to have problems selling a smartphone if:

1) You don't offer it in all regions of the USA where you have a presence

2) You offer it at full the full unsubsidized price while your competitors are charging far less on subsidy for the same device.

Incidentally, the Galaxy S3 is $379 from Cricket.

The 4S is $399 and right now $349 with a mail in rebate
The 5 is $499 and right now $449 with a mail in rebate (can't buy online)
The GS3 is $549 but they are offering $50 instant off + $20 web discount + $100 mail in rebate

using zip code 73301 to get prices

[JoeIsInTheCloud]

Give the proles filet mignon and they'll demand Burger King. This is the crowd that's happy with $49 Android phones running Froyo.

[ArcaneDevice]

The majority only choose Cricket if they have to.

For everyone else there are bigger carriers with better service. And in some cases better plans. If you are going to pay full price for a phone, why choose one of the weakest carriers?

T-Mo's $30 a month 4G prepaid plan has served my data needs well.

[GuitarDTO]

Originally Posted by QCassidy352

Wow, what an original and helpful comment. Totally not just stirring the pot with exactly the same sentiments that get repeated a hundred times in every thread that mentions the iPhone. Well done sir.

This whole thread being on the front page has no other point than to stir the pot....so don't pretend like you came in here with your panties not already in a bunch. My comments aren't any worse than anyone else's, and no comments on this topic are going to help anyone, so get over yourself bro. I stand by my comments.

[macrumors12345]

I think the iPhone, or any phone with an ASP above $300, is a tough sell in the prepaid market, even with a modest subsidy.

That said, these numbers are more about Cricket's business than the iPhone specifically. Gross customer additions dropped almost 50% YoY, from 615,000 in Q4 2011 to 322,000 last quarter. Sounds like they got the projected mix of iPhones vs other phones about right, but they didn't realize their total prepaid phone sales would drop so much.