Sprint?s Virgin Mobile is placing big bets on the no-contract smartphone market by rolling out as the second prepaid carrier to offer Apple?s iPhone.

Virgin Mobile will begin selling iPhone devices at an unsubsidized price, which includes an unlimited data plan on June 29. The news comes on the heels of a similar announcement last week that Cricket?s Leap Wireless would begin selling pre-paid versions of the Apple device.

?We expect a colossal shift away from contract offerings to our model given the unbridled value our plans offer compared to the rest of the industry, and we welcome those new customers with open arms,? said Ron Faris, head of brand marketing at Virgin Mobile, Warren, NJ.

?It?s all part of our higher calling strategy to be a different kind of phone company ? we?re all about giving people what they want,? he said.

Untethered users
Virgin Mobile will sell iPhone 4 and iPhone 4S devices. The iPhone 4 will sell for $549 with the iPhone 4S retailing at $649.

To make up for the steep price of the devices, Virgin Mobile users will be able to choose from three different monthly contract prices, all of which include unlimited SMS and data.

A $35 plan offers 300 monthly minutes while a $45 plan includes 1,200 minutes. Consumers can also choose a $55 plan for unlimited minutes. Additionally, users can receive a $5 discount for registering for automatic bill pay each month.

Consumers who choose to go with a two-year contract from Sprint can buy an iPhone 4S or iPhone 4 device for $99 or $199.

Although the price of the devices is cheaper with a two-year plan, the aim of Virgin Mobile?s pre-paid offerings are clearly aimed at giving users a more flexible and cheaper monthly plan.

Similarly, last week Leap Wireless announced that it would begin selling pre-paid iPhones on June 22 that would be included in the carrier?s fixed $55 unlimited text, data and minutes plan. Leap Wireless plans to sell iPhone 4S phones for $500 and iPhone 4 models for $400 (see story).

Therefore, Virgin Mobile will go head-to-head with Leap Wireless to entice consumers with other pre-paid carriers most likely following suit.

?There is definitely a barrier for some consumers to shell out $250 more upfront the first time,? said Neil Shah, wireless device strategies analyst at Strategy Analytics, Newton, MA.

?But if you calculate a contract-free $55 unlimited everything iPhone plan for example, Leap proves to be a cheaper choice for consumers in the long run compared to a contract-based $90 unlimited everything plan on a regular tier-one carrier. A consumer can recover that $250 in just five to six months,? he said.

Carrier battle
The Virgin Mobile announcement heats up the battle between pre-paid and post-paid carriers vying for mobile phone contracts.

AT&T, Verizon Wireless and Sprint have all banked on the iPhone as a way to cement contracts up until now. Although users are locked into a two-year obligation, the discounted price of the phone has traditionally been enough to persuade users to sign up for contracts.

However, with pre-paid carriers now in the picture consumers have more options, meaning that carriers have to step up what they offer to consumers.

Additionally, Mr. Shah believes that Apple has a lot to gain with offering its devices to pre-paid carriers. Beginning in the third quarter of this year, the manufacturer will have a stake in six of the top eight carriers in the United States.

?Apple is now thus exercising its Plan B by going after scale to generate profits in wake of rising pressure from Tier 1 carriers to reduce iPhone prices in order to reduce the above average subsidies that Apple demands,? Mr. Shah said.

?Mobile marketers will gladly welcome this move from Apple enabling them to gain access to wider iPhone user base, especially those who have apps on iOS platforms can also drive more scale,? he said.

?For prepaid carriers such as Virgin Mobile, iPhone will help reduce churn mainly due to two-fold subscriber stickiness to its network: ?iPhone? and ?unlimited data plan.??

Final Take
Lauren Johnson is editorial assistant on Mobile Marketer, New York