Is the iPhone Cramping AT&T’s Style?
AT&T (NYSE:T) said on Wednesday that 4.7 million of its 6.1 million smartphone activations in the third quarter came from Apple’s (NASDAQ:AAPL) iPhone. The 77 percent split was way more than the share reported last week by Verizon (NYSE:VZ), which said 45.6 percent of its smartphone activations in the quarter involved the Apple device. AT&T was Apple’s exclusive iPhone carrier partner for almost four years before Verizon and Sprint (NYSE:S) joined in last year.
Of the 4.7 million iPhones activated in the quarter by AT&T, only 18 percent were new to the carrier. AT&T said supply constraints related to the iPhone 5 were a major factor in a “vast majority” of iPhone sales in the quarter going to existing customers. Verizon had also mentioned iPhone 5 inventory constraints, adding that 650,000 of the 3.1 million iPhones sold in the quarter were the new Apple device.
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However, AT&T added there was “considerable pent-up demand” for the new phone and that the device had set a sales record during the first few days of pre-orders. AT&T Wireless chief executive Ralph de la Vega said during the company’s post-earnings conference call that it was seeing between 5,000 and 10,000 more net adds per day when Apple delivered iPhone 5 units to its stores compared to days where it had no supply of the smartphone. On Thursday, Apple is scheduled to report its own quarterly results and an overall figure of iPhone 5 sales.
The iPhone is also known to crimp on carriers’ margins because of its very high subsidy of about $400 per device and de la Vega said that the company was trying to increase its share of smartphones that come with a lower cost, such as Nokia’s (NYSE:NOK) new Lumia devices.
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