Virgin Mobile iPhones Only
A Doomed Strategy!
a long delay, and a number of rumors and speculation regarding its
brand re-launch starting in 2016, on June 27, 2017, it officially
launched its Virgin Mobile iPhones only strategy. I was
personally shocked at this highly unusual and
risky approach. After all, while iPhones are some of the most
popular phones on the planet, Android smartphones actually have a
higher overall market penetration, and offer much greater variety, and
a much larger range in terms of price and features. This
partnership between Apple and Virgin was likely sparked by Sprint's
struggle to position its Virgin Mobile brand amongst its Boost Mobile
and Sprint Prepaid brands, coupled with the general decline in iPhone
sales in the couple of years prior. Let's take a look at the
offer, and some of the strategic considerations.
Mobile iPhone Only Offer
the time of launch, you have to purchase an iPhone SE, or a 6 or 7
series from an Apple store or Virgin's website. Any model
that can't be activated on the new Virgin Mobile plan. The
is $50/month, and includes unlimited talk, text, and data. Note that
after 23GB your data will be de-prioritized/throttled. The
plan also requires that you signup for autopay.
Requiring autopay to a
credit/debit card helps to increase the likelihood of people paying on
time, and in essence tends to eliminate the lower credit end of the
market. That said, the unbanked or un-credit-worthy can still
prepaid debit cards. Though prospective customers wanting to
prepaid cards should check with the card provider, as some actually
don't allow their cards to be used for automatic payments.
said, it also depends on how Virgin completes the enrollment.
Generally, it's best practice to do the card pre-authorization with a
note that it's for an auto payment, however, it's not required, so it
may work even though the card technically doesn't support automatic
payment enrollments. Think of this as a tip or loophole, as
many people know about this process. I just happen to know as
built the first automatic payment product in the prepaid market in the
U.S. I'll keep my eyes open to see how Virgin has implemented
for 1 Year Limited Time Offer
Virgin Mobile iPhones only plan launched with a $1 for the first year
of service offer. The offer was only for new customers who
iPhone, and transfer their number over, or existing Virgin Mobile
customers who upgrade to an iPhone (either from a lower model, or from
an Android phone). This offer, however, was really more of a
marketing investment, as it expired on July 31, 2017, only 5 weeks
after the program launched. Note, however, that there was one
location on its website that inferred that after the limited time
promotion of 12 months expired, you would still get 6 months for a
$1. Time will tell whether that's a standing offer, though I
expect it's also a limited time promotion.
Note that the $1
offer does require that the customer pay taxes and other telecom fees
on top of that (based on the actual plan value of $50), and that
payments be made on a monthly basis via autopay. Don't get me
wrong, that's still a great deal, however, customers should never
forget to read the fine print!
What's In The Inner Circle?
an apparent attempt to leverage the Virgin brand, which is really the
only differentiating element of the brand, they're offering the
- Buy a round trip
economy ticket from the U.S. to the UK on Virgin Atlantic, and get a
companion ticket for the cost of taxes and fees.
- Get a third night free at a
Virgin Hotels location.
- Save up to 20% when you buy
a Virgin America or Alaska Airlines ticket.
- Get 15 bottles from Virgin
Wines for $60 (a over $230).
You'll get your offers within 3 weeks of joining, and you get a new
offer (or what they call a Virgin Perk) every 4 weeks, UP TO 3 MONTHS
after you join. Again, these offers and "perks" sound more
acquisition marketing, and not real, long term value for
customers. What do you think?
Do I Think A Virgin Mobile iPhones Only Strategy Is Stupid?
can definitely appreciate the creativity behind this
can also respect the attempt to leverage the only real differentiable
asset; the Virgin name. That said, and for lack of a better
I think going iPhones only is just stupid. A number of years
when the Apple brand had an allure of quality, innovation, and a cool
factor, going exclusive would have been a decent strategy to position
any carrier. However, iPhones have lost this
there's still a fantastic following, and iPhones remain one of the most
popular smartphones on the planet, however, they've been on the decline.
reality is that Android smartphone sales surpass iPhones.
smartphones also come in a much greater range of costs, from the low
end to the high end. The quality and diversity of selection
Android manufacturers is just so vast, and creates fantastic
competition, resulting in great value for customers.
I have seen long term iPhone users starting to try out Android phones
out of frustrations over quality, price, value, and overall hardware
and software quality issues. Apple is no longer the icon of
and perfection that it once was. Sidelining the vast
Android customer base, and the lower cost structure of Android phones,
just doesn't seem wise as a long term business strategy.
Why Would Apple Partner With Virgin?
the iPhone first launched, it was exclusive to AT&T, which
the carrier win customers at a time when the new-to-the-world
smartphone was just so
unique and fantastic. Even when iPhones became available on
carriers, it wouldn't allow prepaid carriers to sell it for
was considered too low end for its brand. When iPhones
essentially became ubiquitous, Apple allowed Cricket to be the first
prepaid carrier to launch it; Virgin Mobile followed thereafter, and
the rest is history. In today's world, what does Apple
As a declining product and brand (though still one of the wealthiest
companies in the world!), Apple hopes to get more sales, including
in the mid- and lower-mid-tier. At this point, anything to
sales results is really up its alley. In other words, for
Apple it's all about increasing sales.
Will This Last?
this is 100 million dollar question! When I say "this", I'm
pondering not only the Virgin Mobile iPhones only strategy, but also
the overall brand. No doubt Apple and Virgin Mobile have a
term contract, whether that's three years, five years, or more, we
don't know. Realistically, it will take a number of years to
the results of this new business plan, particularly given that they
have the $1 12- and 6-month offers. Personally, I don't think
is going to work to make the Virgin Mobile brand relevant, or at least
sufficiently valuable to maintain. I expect they'll see a
term lift, followed by a leveling off, and a subsequent sharp
decline. Whether it's a few or more years down the road, they
need to either add Android smartphones, or trash the whole brand
Realistically, it will take awhile for egos to admit
to letting go, however, I don't see this gimmicky approach to return
any meaningful long term shareholder value. That said, I will
definitely be keeping
up with the company's antics and performance, and who knows, maybe I'll
be wrong and people will eat this stuff up for years to come?!
You can explore the new plan at Virgin
Mobile Inner Circle