Since I often take the minority view, I am used to receiving lots of hate mail. Regarding Apple, the hate mail I receive usually spikes when I write that Apple is overly dependent on subsidies from phone carriers or when I write that my research shows Apple is facing headwinds with less affluent consumers. Of course, I also receive some intelligent and insightful emails, but these dwarf the hate mail.
Here is some more hard data to support the thesis that Apple faces challenges on the low-end and that carrier subsidies are its Achilles’ heel. Leap Wireless through its subsidiary Cricket Communications offers prepaid wireless plans. These plans are popular with those who do not want to sign a two-year contract with the likes of AT&T, Verizon and Sprint, or unable to pass the credit qualifications required by major carriers. Cricket was the first company in the United States to start selling iPhones on prepaid plans.
Last year Leap entered into a contract with Apple to buy about $800 million worth of iPhones over a three-year period. The contract also has annual commitments. In a 10K filing with the Securities and Exchange Commission, Leap Wireless says that it is not able to sell iPhones in number anywhere close to its commitment to Apple.
The following statement from Leap in its 10K is an eye opener.…Read more at Forbes
