Diversification

Brian Chen has an article in The New York Times about Apple and its phones:

Sprint said that the iPhone would become available this month on Virgin Mobile USA, its service for prepaid plans, where customers pay for the service as they use it. The cost will be considerably less than the fees  contract customers pay monthly to use an iPhone— once you get past the upfront price of the phone itself.
Customers who opt to buy an iPhone with a prepaid plan will have to spend $650 for the iPhone 4S, or $550 for the older iPhone 4. But the baseline $30 monthly fee includes three hundred minutes, unlimited data, and unlimited text messages. By contrast, AT&T and Verizon no longer offer unlimited data plans, and their contract customers pay upward of $90 a month to use an iPhone.
The Virgin Mobile deal follows in the footsteps of Leap Wireless, which also recently said that the iPhone would be available on its prepaid service, called Cricket.
Why is Apple suddenly making the iPhone available with these prepaid service plans? Tero Kuittinen, a mobile analyst and vice president of Alekstra, a company that offers services to help phone customers lower their monthly bills, has a theory. He said he had heard from smaller carriers that Apple was upset with the expensive plans offered by Verizon and AT&T. By making the iPhone available with cheaper plans, it hopes to put pressure on the big carriers to cut their prices, he said. “AT&T and Verizon have expensive iPhone monthly packages, and now that Sprint and T-Mobile are fading so badly, they feel no pressure,” he said. “America is in danger of devolving into a carrier duopoly.”
In January, AT&T raised the minimum price of its data plan to twenty dollars for three hundred megabytes of data from fifteen dollars for two hundred megabytes of data. Verizon charges smartphone customers thirty dollars for two gigabytes, fifty dollars for five gigabytes, or eighty dollars for ten gigabytes.
So if the prepaid plans are so much cheaper, why aren’t as many people buying them? Kuittinen said a prepaid phone’s network coverage is only as good as the carrier its service provider is piggybacking on and, in the case of Virgin Mobile, they’re using Sprint’s network. He said that, in the long term, customers could save at least $600 if they went the prepaid route, but not many people do the math, so they choose to get a lower-price phone and pay higher monthly fees instead. “They’d rather pay $100 upfront and then overspend $2,000 over a two-year plan,” he said.