Cricket lagging in iPhone sales, on pace to fulfill half of inventory

Cricket announced last year that it would offer the iPhone, it sounded like great news for prepaid providers. Long stuck with an array of low- and mid-range devices, Cricket finally brought the goods. Sure, people had to shell out $550 for a new iPhone, but Cricket charges just $55 per month for service. which works out to $1,870 over a two-year span. The same service on Verizon, despite a $350 difference in price of the phone, amounts to $2,360. Customers could really save big. Unfortunately, they have not chosen to take this path. A recent Wall Street Journal report suggests that Cricket is on pace to sell less than half the number of iPhones provided in its contract with Apple. Since Cricket made that commitment, it is on the hook for the full order of devices, sold or not. That could amount to $100 million worth, which will not look good as a line item on an earnings report. Still, Cricket has maintained its cool in spite of this potentially gargantuan problem. COO Jerry Elliot said that the company is “not concerned” and that they’re “going to be fine.” That’s nice to say, but what, exactly leads him to believe those words? Apparently Cricket has the ability to reduce the price at which it sells the iPhone. That will increase its financial burden, but will help move the phones. Additionally, they plan to spend extra marketing dollars to help ratchet up sales. Focusing on their $55 monthly service plan, compared to nearly double that at Verizon and AT&T for similar features, could possibly help. On the other hand, Cricket’s lack of a nationwide network could really hurt them in this situation. Yes they have roaming agreements, but that doesn’t help them sell the iPhone in more markets. As it stands they can only sell to certain parts of their own primary network, because of conflicting network technologies. These limitations can’t be overcome with price reductions and marketing dollars. In theory, it was a great idea. In practice, it doesn’t seem to be working out so well. Cricket has some time to turn around its iPhone misfortune, and it sounds like the company has a plan. Might this say something about the viability of high-end devices on prepaid carriers?]]>