AT&T posts record smartphone sales
AT&T set a record when it sold over 10 million smartphones in the fourth quarter, with demand for iPhone and Android devices boosting holiday sales. The second-largest U.S. wireless carrier reported that the last quarter’s results eclipsed the fourth quarter 2011 record high sales of 9.4 million.
During the third quarter, AT&T added 151,000 subscribers, or just a tenth of the 1.5 million net subscriber additions its biggest rival, Verizon, booked for the same period. The Dallas-based company is catching up with Verizon in rolling out a Long-Term Evolution, or LTE, network, a new technology allowing for faster data downloads.
AT&T Mobility division President, Ralph de la Vega, said the company’s strategy is to gain more smartphone customers, because they use more data, thus generate more revenue, than regular phone subscribers. They generate twice as much average revenue per user, or ARPU, compared to other customers.
Verizon and smartphones
Verizon Wireless, Verizon’s mobile phone branch, added 2.1 million monthly contract users during the fourth quarter of 2012. Nearly 90% of them signed up for smartphones such as the iPhone. 6 million iPhones flew off shelves during the last quarter, almost double the number sold during the third quarter of 2012. Besides the iPhone, Verizon has been widening its offerings with other popular high-end smartphones running Google Inc (NASDAQ:GOOG)’s Android or Microsoft Corporation (NASDAQ:MSFT) Windows Phone 8, with recently re-named Research In Motion Ltd (NASDAQ:BBRY)‘s Blackberry 10 coming soon.
The advantage of offering smartphones is that these devices also make it easier to surf the Web, stream music, and watch video, activities that require a higher data usage than with regular mobile phones. Obviously, this also translates into higher monthly bills and more profits for Verizon. Such a growth of data usage contributed to a rise of nearly 7% in Verizon’s average monthly bill for contract users. The carrier is attracting new smartphone users through publicity of its LTE network, a technology in which Verizon has a one-year lead over its biggest rival, AT&T. Another strategy being used is targeting heavy data users with its Share Everything Plan, which lets customers share a common data plan between up to 10 devices.
Analyst Avi Greengart of Current Analysis said, “It’s a big upfront cost on smartphones and a short-term hit. They have to offer enormously expensive phones at affordable prices to move customers onto higher-priced plans.” However, this is starting to show its profit potential even in the short term, as such an increase in wireless revenue helped offset the loss from slower sales to business and landline customers.
