A buddy of mine, Mike, was telling me today why Sprint’s stock is so awesome and how it’s been going up over the past two months. I started offering everything I knew about the phone service provider as reasons why he thought the stock would improve but he just smiled and said Virgin Mobile. Now I know why. This past Thursday, Virgin Mobile, which is a pre-paid, no contract phone service offered by Sprint, said that it would start selling Apple’s iPhone 4 and iPhone 4S on June 29th, which services starting as low as $30 a month. That’s just plain crazy!
But before you go canceling your current data plan, understand this. Anything that’s too good to be true, usually is and this is no exception. Virgin Mobile will charge $549 upfront for the base model iPhone 4. Typically, when you buy a phone from a large mobile-phone provider, you get the phone at a discount because you enter into a contract with them, which typically subsidizes about half the cost. However, maybe this isn’t such a bad thing. If you do the math on this, you’ll see that the base model Jesus phone, plus two years of Virgin Mobile service comes out to about $1270, not including pesky taxes. If you bought that same phone from Sprint, you’d save money on the phone itself, but by the time it was all said and done, two years later, you would have paid about $800 more. Sprint typically charges $100 for the hardware and $80 month for service.
And Sprint isn’t the only one getting it’s pre-paid folks in on the action. Leap Wireless, which is behind the Cricket prepaid mobile service (Leap and Cricket… I get it now), said that it would start selling the iPhone on June 22nd, starting at $400 for the phone itself and $55 per month for the service.
So, yes, you’ll have to spend more money upfront to save money down the line. If you look at it from a financial perspective, it makes sense to spend more now and save more over time. But not everyone will see that. Some folks want the iPhone but will never have about $500 in loose cash to just drop on a phone. By contrast, Virgin Mobile sells other smartphones for as low as $80.
And if you really wanna look at exactly what Virgin Mobile is selling, the iPhone 4S (the latest version) will sell for $649 with 16GB memory. The lowest plan is $35, but they knock of $5/month if you do auto-pay. Here’s where I think the deal sucks. The plan provides for 300 minutes of calling per month (Really? They actually still have 300 minute plans?) but unlimited texting. Not sure how that’s gonna fly. A lot of your conversations would probably be “Hey, how are you? I’m gonna hang up and text you!” They also say that data usage is unlimited, but they hit you with the dramatically slow usage after 2.5GB has been used since last bill. So yes, you’ll pay more with Virgin Mobile’s parent company, Sprint, but you do get true unlimited data with no slowing down. Now the flip side to this argument is that most people don’t talk that much on their phones that much any more. Most of the communication happens via text message and social media. Also, some, like my buddy Mike, would argue that unless you’re streaming a lot of pr0n, 2.5GB is sufficient for 95% of the people who wouldn’t approach that threshold. Well let’s look at that, shall we?
In a study by ArsTechnica, “If you use Siri 2-3 times per day at an average of 63KB per instance, you might expect to use 126KB to 189KB per day, or 3.7 to 5.5MB per month. For 4-6 times a day, that might come out to 252KB to 378KB per day, or 7.4 to 11MB per month. If you use it 10-15 times per day, you might end up using 630KB to 945KB per day, or 18.5 to 27.7MB per month.” Other sites have reported that you can use 208MB with just on 45-minute episode of a TV show. So maybe Mike is correct, unless you use your smartphone device to watch streaming videos, do a lot of G-chat and social media, and browse the web on your phone, you should be ok with 2.5GB. However, in all the research I’ve seen most people agree that Sprint is truly unlimited, which begs the question…
What’s more important to you? Speed of data use (for heavy users) and truly unlimited everything? Or saving money?
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Virgin Mobile To Sell iPhones! Yay! Wait…