Apple and Sprint are about to do the unthinkable: by July 1,
they plan to bring the hugely popular smartphone to Virgin
Mobile. According to the
Wall Street Journal
, this is all part of Sprint's (NYSE:
) plan to make the iPhone, which it reportedly paid billions to
obtain, more profitable for the cellular carrier.
If this report is accurate, this will be the first time that a
major OS has invaded Android's dominance in the pay-as-you-go
market. While Leap Wireless (NASDAQ:
) already announced that it will provide its pre-paid customers
with an iPhone option, the carrier is limited to a very small
portion of the U.S. population. Since Virgin Mobile uses Sprint's
network, it can reach millions of additional customers, providing
almost the entire nation with coverage.
Virgin Mobile is scheduled to add the iPhone at a time when
Sprint's stock continues to suffer. While the company showed
promise in the early summer months of 2011, shares declined
sharply at the end of July, dropping from $5.16 on July 27 to
$3.13 on August 8. Leap Wireless has been hit even harder, going
$16.79 on July 1 to $6.27 by August 8.
Whether or not the iPhone has what it takes to save either
company remains to be seen. But in the months since the iPhone
came to Sprint, the stock has struggled to return to pre-August
In the short-term, this might be a much better deal for Apple
), which will now have a new opportunity to sell its iPhone.
Instead of releasing a cheaper, smaller model, and instead of
trying to one-up Android by diversifying its product line, Apple
is slowly infiltrating new markets. Now Android, which
essentially owned the pre-paid market, will be forced to compete
with a phone that is much more powerful than any device currently
available to pay-as-you-go customers.
Apple is up 0.93% this morning in pre-market trading. Sprint
is up 0.40%.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.