Leap's iPhone Sales Lacklustre Relative To Their Contracted Commitments

1 March 2013

AllThingsD:

In a filing this week with the U.S. Securities and Exchange Commission spotted by BTIG analyst Walter Piecyk, Leap said it expects to sell significantly fewer iPhones than the number it’s obligated to move over the first year of its agreement with Apple. “At our current purchase rate, we project that we will purchase approximately one-half of our first-year minimum purchase commitment through June 2013,” the company said.

The Wall Street Journal appropriates this sales gap to weak iPhone demand, citing the iPhone’s premium price as a deterrent for consumers. But, as all other carriers reported strong (in many cases, records) iPhone sales, it makes much more sense for the deficiencies to be inherent to Leap’s offering, not Apple’s.

For example, I can see why Leap’s unsubsidised sales model is unappealing to customers in the current economic climate, due to the higher upfront prices. Network coverage and reliability issues also need to be factored in.

The data matches up with this. Total customer additions in the fourth quarter for Leap were lower than expected; Leap is struggling with selling phones in the aggregate, its not just iPhones. The Journal’s article states this plainly, and yet they still imply the sales slump is due to a deterioration in the iPhone brand. It’s so blatant they are trading on the “impending-doom-of-Apple” bandwagon for linkbait-driven traffic.