StraightTalk has posted a dedicated tutorial page for the Apple iPhone 4, meaning that the Walmart-backed virtual operator may be preparing to sell the smartphone within the next few weeks. With Apple taking steps to realign its sales model in the US to open up the device to prepaid services during the year, the iPhone 4 on StraightTalk may mean more to consumers and prepaid service than it does to carriers, and it should be a cause for concern.
Apple’s Continuing Push for U.S. Prepaid Marketshare
As Apple seeks to drive down the costs of iPhone production every year, keeping older models in production represents a source of easy profit, as the costs for the iPhone 4 are now completely sunk and and free from any ancillary production costs, much like the previous iPhone 3G S, which was discontinued recently as the “free” entry-level contract offering for carriers earlier this year after being on the market since 2009.
Now with the iPhone 4 being the entry-level “free” or low-cost option, Apple is now seeking additional ways to eke out the most profit on still viable hardware while slowly phasing in higher-end models, especially with development and sales cycles becoming more compressed every quarter, case in point being the current 9-month cycle for the iPhone and the six month cycle for the iPad.
By opening up the iPhone to prepaid carriers earlier this year, Apple was not only opening up additional markets for the iPhone in the US outside of contract customers, it was also testing the marketplace to see how price sensitive prepaid customers actually were compared to the average prepaid service customer in terms of the total cost of hardware, as prepaid models are typically unsubsidized or at substantially lower subsidy rates compared to postpaid service.
While prepaid service customers are usually more price sensitive when it comes to phone hardware costs, the fact that many still purchased the iPhone on Cricket and Virgin Mobile at list pricing earlier this year when launched in the summer despite having cheaper and more capable alternatives may have shown to Apple that prepaid customers in the US were willing to purchase the iPhone for those particular services as long as it was available in an official capacity and the service rates remained the same, or as was the case with Virgin Mobile $5 cheaper per month provided customers signed up for automatic monthly payments.
StraightTalk’s CDMA iPhone Push
For StraightTalk to offer any iPhone at all at an official level would make it one of the first true prepaid MVNOs without direct carrier backing to offer the smartphone, but the twist to this version is that the tutorials make multiple references to an MEID on the device. As CDMA devices use MEID ranges after exhausting the ESN serial number range, this means that the iPhone 4 listed may be either on Sprint, as with the Virgin Mobile version, or the more remote possibility existsing that the version being offered and the one most anticipated by many StraightTalk customers is the Verizon-powered version.
Should the iPhone 4 being planned for release be powered by Verizon’s network, it would not only undercut Verizon’s $80 monthly prepaid (and now iPhone friendly) plan, it would also give those on Page Plus a reason to move away from that provider as it seeks to move towards higher cost and higher margin monthly prepaid plans away from the pay per use model and still has yet to officially support the iPhone, despite featuring service plans that lend themselves to heavy iPhone usage such as the 55 plan with 2GB of monthly data access and the new 69.99 plan with 5GB of data access.
Rounding Up The Last Details
Few additional details are known outside of the tutorials at the present time, but more details are expected to surface closer to launch, such as the instruction manual and other documentation. What is also not known is what the phone will cost, since the iPhone 4 is older hardware.
While Virgin Mobile and Cricket sell their versions of the iPhone 4 for $349.99 and $299.99 respectively, StraightTalk may decide to leverage its Walmart backing to sell the phone at an even lower rate to draw in more customers, although since the most expensive branded device it carries in the now obsolete Galaxy S II is currently for sale at $349.99, the provider may decide to sell the iPhone at the same rate in order to avoid an increase in its standard $45 monthly rate, which is the cornerstone of the service.