During its earnings reports today, AT&T posted numbers that easily beat Wall Street’s expectations. Yes, profits were down, but we’re in a down economy, and there’s simply no denying that things would have been much, much worse without the iPhone.
First of all, AT&T announced that it had a net gain of 1.2 million subscribers for the quarter. That’s solid, but guess why? It also announced that it had gained 1.6 million new iPhone activations. Some of those were existing customers, but 40 percent of them were new to AT&T. Without the iPhone it seems fairly likely that AT&T may have lost customers for the quarter. It certainly wouldn’t have gained over 600,000 new iPhone ones, and given the numbers, you can imagine that a good number of existing customers would have left had they not upgraded to the iPhone.
Perhaps even more incredible though is that AT&T actually saw a 38.6% increase in overall wireless data revenue. And that’s despite the fact that AT&T actually activated less iPhones for the quarter than it had the previous two quarters. But clearly, existing data usage for customers is going through the roof, which again is led by the iPhone.
It’s also led by text messaging, which, despite continuing to be a colossal rip-off, saw usage double from a year ago. Over 90 billion text messages were sent on AT&T’s network in the first quarter. That’s incredible, and is bringing in AT&T a hell of a lot of money.
So I think it’s pretty clear why AT&T wants to extend its deal with Apple through 2011. Without the iPhone, AT&T’s quarter would have likely been a very bleak one. Reports are that the company is revamping its network in time for the next version of the iPhone, probably coming at some point this summer, but there continues to be a lot of talk of how bad the network is. Those of us who were at SXSW experienced it firsthand, but again yesterday, the network was having major problems in the San Francisco Bay Area. If AT&T wants to know why non-iPhone customers are leaving, that’s the reason.
[photo: flickr/visual.dichotomy]
AT&T really does need to step up their game on this. Before the iPhone came out I switched to Verizon from AT&T and I won’t go back until I hear it has markedly improved, even though I really want an iPhone.
I truly hope the iPhone becomes available for other carriers, I just think that it has become the flag bearer of mobile Internet and it would spark tremendous competition from carriers to provide the best mobile Internet coverage.
I had to call my wife 25 times yesterday to get a 3 minute phone call. I just replaced the phone so it’s not the phone.
Further, I went about 3 weeks without getting any voicemails & only 1/4 of my calls. After 3 weeks in which I powered it off & had it exclaimed at the Genius bar, it turned off & WHAM! I got almost 3 weeks of voicemails. I ended up losing a major client because of that.
I’m in a large city which AT&T should be able to cover (esp, since they’re in San Antonio). However, I’ve had to walk blocks to make a call.
It wasn’t the phone. It was AT&T.
Pathetic.
The ONLY reason why I’m on AT&T for my cell, home phone, and DirectTV is b/c of the iPhone.
I’m very certain I’ll be unlocking it in the next couple weeks.
And if Apple isn’t smart, the iPhone won’t be enough to keep people on given the competition (I know that’s blasphemy).
Open the damn thing up!
Advice: If you’ve got to have the iPhone, unlock it. If you’re happy w/ something else, stick with it. Better to not be addicted to an awesome phone that you can’t actually use to, um, MAKE PHONE CALLS!!
More bars? More like more barriers. desh.me
doh. *exclaimed = examined.
sorry. just exclaiming too much to type straight.
Quit crying. This blog isn’t on pussycrunch. Tell it to someone who cares, I’m sick of you whiny pussies
You must be an ATT exec, right?
I agree. I cannot use an iPhone until they offer it on other carriers. AT&T has the worst coverage in Southern California. I switched several years ago to Verizon and have continued to be impressed with their coverage, pricing and support. Plus, AT&T is constantly promoting RIM so why should Apple stay in an exclusive?
But the real question is: does Apple need to extend the deal? Do you think they could make more by improving their contract with AT&T (as they are in a favorable negotiating position) or by the volume utilizing other carriers would bring?
It’s definitely in AT&T’s interest a lot more than Apple’s but Apple gets some benefits too, namely a sweet subsidy deal and not having to deal with all those other carriers for the App Store, etc.
yea. good points. But with the way everything is headed towards mobility, it might be worth the headache now — to work towards cornering the mobile space the way microsoft owned the computer market
I agree, but I believe there is much more money to be made by Apple by dealing with ALL carriers. I know many people who won’t switch to the iPhone because they love Verizon or T-Mob.
I’m one of the customers who switched to AT&T just to get the iPhone and then returned to Verizon out frustration.
In the end, the main thing I want my phone to do is make calls and as much as I loved the device and all the apps, it just didn’t make up for the more spotty cell phone service.
sigh. what’s verizon got?
I used Verizon for about a week and returned it, they are pompous-asses on the phone whenever I’d call in to get any sort of help,;and the coverage was worse for me (Henderson, Nv area) – not MUCH worse, but I had about the same amount of dropped calls, but the data was horribly slow in all las vegas and henderson areas. I gave the blackberry storm a try, and will never use Verizon again even if the iphone is exclusive to Verizon.
The RAZR, I believe.
A decent network…
I hope the exclusive deal ends soon or changes are made to the current policies…
Losing your iPhone is way to costly, especially given the fact they refuse to allow you to buy the insurance, which I’ve had on all my previous phones. Between them getting lost, stolen, or falling in water there’s just too many things that can happen in 2 years.
Since I’ve lost my iPhone, I’ll be switching back to Verizon. The money saved on a phone by activating a new 2-yr agreement with Verizon out weighs the cost to break AT&Ts contract. Go figure :) I’ll be jumping on the new Verizon Blackberry when it hits stores.
You know, if Verizon gets an iPhone, that’s basically going to cripple AT&T (assuming they continue to build out their network in the present manner).
There was a total iPhone blackout at Outside Lands in SF last year. It was a joke. No phone calls, no web access, texts getting to people 40 to 50 mins late. AT&T needs to get on their game.
Yeah I had no service for a couple hours in Palo Alto — then again up in the city.
As much as I love the idea of an iPhone (or any premium phone for that matter), the idea that you’re tied to a network is mindbogglign to me. Give me an iPhone let me go to the service provider I want. In a few years I feel this will be a non-issue.
(BTW: Where’s the FTC on this?)
I’m already planning my next phone to be unlocked so I can choose my carrier. That’s the way it should be!
It would be a literal biblical parting of the red sea if Verizon got its hands on a CDMA Iphone (Apple does not make one). Verizon uses CDMA so you probably would not see an IPhone for them anytime soon. However if they did get one, AT&T would be screwed as people would be changing carriers asap. Not to mention it would cause some plan competition that would bring down prices slightly.
I have Verizon and I get about 3 dropped calls a year and I have yet to wander to somewhere I did not have coverage. I would gladly change from my EnV to an IPhone if it were a choice. For now I am switching to either the Omnia or the HTC Diamond.
I switched from Sprint to AT&T for the iPhone. My contract was up and I needed something that could make international calls. I looked at the Storm and the G1 and I thought they were clunky and not intuitive. As a first-time smart-phone buyer I think I was the target audience for this phone and I think it absolutely smokes everything on the market. I have used many Blackberries and the G1 extensively as my company owns them for testing purposes and I still think the iPhone is the best phone on the market for web browsing. The email needs some love, though.
I get comparable coverage to Sprint and while I have had some of the issues people have mentioned above (dead zones for no reason, delayed email), I don’t see rebooting a phone as a huge inconvenience. If I don’t have 3G service, I reboot. It’s a simple way around a known-issue.
I will sing the customer service praises for AT&T all day long when put next to Sprint, but I’ve only had experience with these two companies.
I have neither an I phone or a blackberry, but the growth potential for these companies is huge. AAPL is immune to the recession http://iamned.com/blog/
MG
No offense, but here is where I struggle with a post like this that makes such an obvious statement and offers little, if any, original analysis or insight. Full marks to you for reporting ATT’s numbers, which by the way I gor from the NYT or the Journal. But I am struggling to see what infinite wisdom did you display in leading to the obvious conclusion that clearly these are the reasons why ATT would want to renew / extend their exclusivity with Apple? I do share your sentiment on the text messages. Also, your point about a higher than normal churn absent the iPhone is a useful one too. Still. This is one area that I struggle with a lot when reading many of the blog posts these days. Tell me something I don’t know (Dr. Gregory House.)
Here’s something you don’t know. You don’t have to read the blog if you don’t want to.
Wait for an Apple tablet type device. Not like the MS version, but an AAPL version with the quality and intuitive feel that we would expect from Apple. I would LOVE a device like this.
“Over 90 million text messages were sent on AT&T’s network”
Shouldn’t that be 90 billion?
Yes, thx. fixed.
I’ve had AT&T for years now – I left Verizon years ago – their customer service is horrible. I dumped home service and cell service. I had more problems with them and I would NEVER go back. I have NEVER had a problem with AT&T. I recently got the newer iPhone and gave my Fiance my old one. It’s been great. Not a problem. I’m in North Jersey and even took the phone to Grand Cayman two weeks ago – no problems.
I agree, but I believe there is much more money to be made by Apple by dealing with all carriers. I know many people who won’t switch to the iPhone
I hate always being the downer voice of reality, but AT&T has over 70 million subscribers. No matter how you want to slice and dice the numbers for the quarter, there is absolutely no way that 600,000 new iPhone subscribers this quarter really would have changed the numbers one way or another in any perceptible way.
I know that you guys love giving Apple credit for everything, but just roll that number around in your mind for a second. They have more than 70 million active subscribers!! That means that those 600,000 new iPhone subscribers were less than 1% of their total subscriber base. Do you still really want to talk about how much trouble they would be in without the iPhone?
That’s crazy that you guys are having service issues in large cities! I live in Jackson, MS and have never had issues anywhere in the state. (MS = Mississippi….seems like my state would suck the most…not CA or TX….lol)
I must be the only one on the planet not interested in the iPhone.
I far prefer WinMo devices.
I switched from Verizon to AT&T for the sole reason of upgrading my service to get the iPhone. I have liked the iPhone overall, but recently I have been facing a dilemma. My phone randomly shuts off and it takes 5-10 minutes to restart it. Has anyone else had this problem, or know how to fix it?