With full fourth-quarter results in for the top two U.S. wireless providers, one thing is clear, Apple Inc.’s iPhone is still playing a large role in AT&T Mobility’s success. The carrier posted 2.1 million net adds during the fourth quarter and 1.9 million 3G iPhone activations, 40% of which were new to AT&T Mobility. Since it launched last summer, AT&T Mobility has activated 4.3 million 3G iPhones, which Pete Dailey, program manager at Stratecast, finds impressive.
“In slightly less than two full quarters that’s a lot of units for any device,” Dailey said. “That really drove the results for AT&T. They had an advantage against all other carriers.”
Verizon Wireless’ attempt to possibly offset any iPhone sales with Research In Motion Ltd.’s first touchscreen device, the BlackBerry Storm, seems to have missed its target. The industry’s largest carrier added 1.4 million new subscribers during the fourth quarter, it’s slowest quarter since 2003.
“Verizon Wireless attempted to hit back at AT&T’s iPhone success, with the introduction of the BlackBerry Storm in 4Q08. However, Verizon Wireless indicated sales numbers have not measured up to those posted by the 3G iPhone,” said Ken Hyers, senior analyst at Technology Business Research Inc. “While 3G iPhone sales were down sequentially in 4Q08, that device continues to set the bar for smartphone sales in the US, and to bolster AT&T’s wireless subscriber numbers.”
Dailey noted that moving quickly to get the Storm out before the holiday season not only didn’t return the results that Verizon Wireless had hoped for, but it may have convinced even more subscribers to go with the iPhone.
“AT&T took more numbers from Verizon than they gave to Verizon,” Dailey said. “It’s an unfair hurdle or expectation for the Storm to have numbers anywhere near what the iPhone had, and there were problems with the device.”
While Verizon Wireless may not have the most sought-after data handset, they do lead in data revenues, posting nearly $14 in average data revenues per user during the quarter. Don’t count out AT&T Mobility in that department yet though; the carrier posted data ARPU of $13.50 during the fourth quarter.
“AT&T is catching up for Verizon in terms of their customers that are subscribing to 3G service,” Dailey said.
But, AT&T Mobility and Verizon Wireless couldn’t be more different in both promotion and management of their networks.
“Verizon Wireless’ philosophy is ‘if we build it they will come’ and they put a lot of money into the data network before demand really materializes,” Dailey said. “This is great if you’re a customer. AT&T has the idea of not providing the capacity until the demand materializes. They will provide just as much capacity as the subscribers demand, the day after they demand it. This is good for the business side. But, Verizon Wireless is effective because their churn is lower.”
T-Mobile USA Inc. is seeing similar delinquencies; a few months prior to Verizon Wireless’ release of the Storm, T-Mobile USA launched its own iPhone killer, HTC Corp.’s G1 that runs on Google Inc.’s Android platform.
“The G1 was not as successful as some had hoped, or as some have claimed. HTC CEO Peter Chou forecast 1 million units of the T-Mobile G1 sold by year-end 2008,” Dailey said. “Either T-Mobile is sitting on a lot of inventory and that number was ‘sell-in,’ not ‘sell-through,’ or Mr. Chou was off the mark.”
Dailey expects more solid G1 numbers to emerge when T-Mobile USA releases its remaining fourth-quarter earnings in mid-February.
T-Mobile USA’s said it added 621,000 subscribers during the fourth quarter, which was one of its slowest quarters in history. In fact, the carrier added more prepaid customers (355,000) than it did postpaid (267,000) during the quarter.
“The economy makes prepaid a nice option, and T-Mobile has an attractive device portfolio,” Dailey said. “Because of the economy, the consumer market is bifurcating. T-Mobile has a hard time playing in the top end of the market because they are so far behind in 3G deployment.”
If customers signing up for prepaid services are any indicator of the bad economy, AT&T Mobility is cashing in on the money-saving trend. The carrier, who rarely publicizes its GoPhone prepaid offerings, added 1.3 million customers in the space.
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