Virgin’s plan to sell nothing but iPhones is crazy, but will it work?
Virgin Mobile has announced a pretty bold (or crazy, depending on how you look at it) change in their business model: they want to sell nothing but iPhones.
That means Android phones are totally out of the picture. No cheapo feature phones. Nada. Just iPhone.
We’re not sure what compelled them to do such a thing, though we do know it’s being touted as a partnership between the Sprint-owned prepaid carrier and Apple (which likely means a whole boatload of money was involved). Here’s the statement:
There’s iPhone. And then there’s everything else. At Virgin Mobile, we’re teaming with Apple to offer you nothing but the world’s most popular phone. Because life in the Inner Circle is about living big, expanding your horizons and pursuing your passions. And it starts with an iPhone you’ll adore.
Immediately, the question is: why would a prepaid carrier — which mostly attracts customers who don’t like paying premium prices for phones and services — suddenly lock their customers into the most premium (well, based on pricing, anyway) option there is?
That’s because Virgin can offer the iPhone SE lower than typical prices at a cool $279 through this partnership. That’s a full $120 off its regular retail cost. They’re also letting folks get up to 1 year of service at just $1 per month (and back up to $50 per month afterward) in a limited time promo to kick this off.
So it’s a really tempting deal, and it could compel those folks to make the jump to iPhone for the sake of saving money in the long run. But is it really smart?
Android owns 80% of the global market share, and here in the US — where this deal is going down — it’s around 60% in Android’s favor to just around 37% for iOS. Granted, Apple is beginning to close the gap a little, but it’s still a significant lead.
As such, Virgin’s play is to cede their meager share of 60% for a bigger chunk of the 37%. The only question is whether that deal will be enough to actually move the amount of customers they’re expecting it to. It’s an amazing deal by industry standards, but I can’t tell you how many people I know whose budgets don’t stretch far beyond $150 to $200 in search for their next prepaid phone despite my insistence to them that a $300 budget goes pretty far these days.
Still, that deal is just good enough to tip the scales if folks see that they’re actually saving a boatload of money in the long run. It’ll be on Virgin to effectively communicate that, otherwise this could be the biggest self-administered dosage of cyanide we’ve seen a company hit themselves with in a long time.