Leap Wireless took a gamble when it started offering the iPhone at almost full retail prices in a US market that is dominated by inexpensive phones with high carrier subsidies. This is one bet that may not be paying off for the wireless carrier, says a report in the Wall Street Journal.
Leap Wireless, which owns and operates the Cricket brand, confirmed in an annual report filed with the Securities and Exchange Commission earlier this week that it was struggling to sell the iPhones it had committed to sell.
The carrier is offering the latest model iPhone for $449 without a contract, but customers are not buying it. If sales don't improve, Leap could be left holding the bag on $100 million worth of unsold iPhones. Leap is in discussions with Apple and is working to improve marketing efforts to get people to jump on the Cricket/Leap bandwagon.
It's not a lack of demand for the iPhone that is hurting Leap. It's the lack of demand for an almost $500 iPhone on a network that doesn't have a robust nationwide presence. At least in the US, customers are accustomed to buying a phone for $200 or less along with a two-year contract. It'll be a difficult task to wean customers off that purchasing model and persuade them to spend more money up front on a phone, especially when the ability to switch carriers at the drop of a hat is not valued in the US.