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AT&T activates at least 3.7M iPhones in Q2, more than half of 6.8M total smartphone sales

post #1 of 19
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AT&T, the second largest U.S. carrier by subscribership, posted its earnings for the second quarter of 2013 on Tuesday, meeting Wall Street expectations while selling a record 6.8 million smartphones.

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For the second quarter of 2013, AT&T activated at least 3.7 million iPhones. The exact number isn't known, however, because executives declined to get specific during their quarterly conference call on Tuesday, despite the fact that the carrier has offered such data in the past.

But the company did reveal that iPhone activations grew year over year. It is known that total iPhone sales reached 3.7 million in the June quarter of 2012.

The nation's No. 1 carrier, Verizon, announced last week that it activated 3.8 million iPhones. Apple's smartphone accounted for more than 50 percent of both telecoms' smartphone activations.

AT&T noted that the previous three-month period saw record Android handset sales, while smartphones as a whole accounted for 88 percent of postpaid phone sales for the quarter.

AT&T added 551,000 postpaid customers, the company's best performance in that sector since 2008, while 35 percent of those were LTE-enabled smartphones. As for the telecom's data network performance, per device usage was up 50 percent year-over-year, a number that will likely grow as AT&T builds out its LTE capabilities throughout 2013. By year's end, the network is expected to cover almost 270 million POPs, and will be largely complete by mid-2014.
post #2 of 19

So Verizon sold more iPhones than AT&T for the first time ever. This is partly due to upgrades for the first wave of Verizon iPhone customers. But will this trend continue?

post #3 of 19
More of their smartphone sales are iPhones. Yet another nail in Apple's coffin 1tongue.gif
post #4 of 19
Quote:
Originally Posted by ankleskater View Post

So Verizon sold more iPhones than AT&T for the first time ever. This is partly due to upgrades for the first wave of Verizon iPhone customers. But will this trend continue?

Seems you didn't read the article. We are not told how many iPhones were sold, just that it is more than this quarter last year. I suspect Google put the breaks on AT&T reporting those huge, iPhone numbers and making Android look like it was so far behind. You know, the truth.
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post #5 of 19
Quote:
Originally Posted by nagromme View Post

More of their smartphone sales are iPhones. Yet another nail in Apple's coffin 1tongue.gif

That's always been the case. At one point it was approximately 80% of smartphone sales were iPhones, that's a pretty big drop. Could be that AT&T salespeople are also pushing Android phones for that fat commission check.
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post #6 of 19
Quote:
Originally Posted by Mac Voyer View Post


Seems you didn't read the article. We are not told how many iPhones were sold, just that it is more than this quarter last year. I suspect Google put the breaks on AT&T reporting those huge, iPhone numbers and making Android look like it was so far behind. You know, the truth.

Only someone with a narrow bandpass filter in his optics would believe that is the reason that AT&T has declined to report this number for the first time.


Edited by ankleskater - 7/23/13 at 6:37pm
post #7 of 19
Quote:
Originally Posted by ankleskater View Post

So Verizon sold more iPhones than AT&T for the first time ever. This is partly due to upgrades for the first wave of Verizon iPhone customers. But will this trend continue?

 

Don't forget.  Carriers report activations, not sales.

 

As you noted, Verizon would have extra activations this past quarter, due to the older phones sold or handed down by people getting upgrades for the first time.

post #8 of 19
Quote:
Originally Posted by dasanman69 View Post

That's always been the case. At one point it was approximately 80% of smartphone sales were iPhones, that's a pretty big drop. Could be that AT&T salespeople are also pushing Android phones for that fat commission check.

Commission is the same on all phones. It's considered an upgrade/gross add. Much like people who spend money on apps in iTunes, they are just as much likely to spend more to get insurance, cases, accessories, etc.
post #9 of 19
Quote:
Originally Posted by ankleskater View Post

Only someone with a narrow bandpass filter in his optics would believe that is the reason that AT&T has declined to report this number for the first time.

I think you meant to say "I must have overlooked that in the article. You're right- AT&T did activate more phones than Verizon this quarter" before your insult.

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post #10 of 19

AT&T profit drops because it is subsidizing a lot more Android smartphones!

post #11 of 19

Interestingly, I see that CNET is claiming that AT+T sold more Android phones last quarter than iPhones:

 

http://news.cnet.com/8301-1035_3-57595177-94/android-crowned-king-at-at-t/

 

The commenters are pointing out that's quite a trick, when 

 

1) AT+T says sales/activations of iPhones were up Y/Y in the quarter,

 

2) They had previously reported 3.7M iPhone sales in Q2 2012,

 

3) AT+T said they sold/activated a total of 6.8M smartphones this past quarter, and

 

4) 3.7M is 54% of 6.8M

 

Maybe CNET's definition of "more" has changed.

post #12 of 19
Quote:
Originally Posted by pdq2 View Post

Interestingly, I see that CNET is claiming that AT+T sold more Android phones last quarter than iPhones:

http://news.cnet.com/8301-1035_3-57595177-94/android-crowned-king-at-at-t/


The commenters are pointing out that's quite a trick, when 

1) AT+T says sales/activations of iPhones were up Y/Y in the quarter,

2) They had previously reported 3.7M iPhone sales in Q2 2012,

3) AT+T said they sold/activated a total of 6.8M smartphones this past quarter, and

4) 3.7M is 54% of 6.8M

Maybe CNET's definition of "more" has changed.

Not all activations are as a result of a sale. They're also counting preowned iPhones that get activated on the network whether it's a handed down or private sale. They didn't release any sales number and they're going by what the CEO said.
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post #13 of 19
Quote:
Originally Posted by dasanman69 View Post


Not all activations are as a result of a sale. They're also counting preowned iPhones that get activated on the network whether it's a handed down or private sale. They didn't release any sales number and they're going by what the CEO said.

 

Cross-posted from the comments at CNET by someone who claims he is quoting the conference call transcript:

 

 

Quote:

Here's Ms. Reardon's mistake.  The following is a quote from AT&Ts conference call transcript.

"We also set another second quarter smartphone sales record of 6.8 million, an excellent performance in a very competitive environment. This helped drive record Android smart smartphone sales, both in total number of phones sold and in the highest percentage of total sales."

This means they set a record for the most Androids they've ever sold in a quarter.  They've also set a record percentage of Androids vs. overall smartphones.  Neither of these records indicate that Android outsold iPhone in the quarter.

In fact, Ralph de la Vega goes on in the next breath to say, "Now we did this while also selling more iPhones than we did a year ago."

So a little research uncovers that AT&T sold 3.7 million iPhones in Q2-2012.  Since they sold more iPhones this quarter than the same quarter last year, that means they sold at least 3.7 million and one iPhones this quarter.  Let's round down to 3.7 million.

 

...and then the maths as above.

 

I think the CNET writer probably misinterpreted "record Android smartphone sales, both in total numbers and in the highest percentage of total sales" as Android phones having the highest percentage of AT+T sales overall, but he doesn't actually say that, and it appears to be incorrect

post #14 of 19
Quote:
Originally Posted by pdq2 View Post

 

Cross-posted from the comments at CNET by someone who claims he is quoting the conference call transcript:

 

...and then the maths as above.

 

I think the CNET writer probably misinterpreted "record Android smartphone sales, both in total numbers and in the highest percentage of total sales" as Android phones having the highest percentage of AT+T sales overall, but he doesn't actually say that, and it appears to be incorrect

 

That commenter at CNET was me.  It's even more interesting than this ... now that Sprint just released their iPhone numbers.

 

Take a look at this article posted at All Things D a few weeks back.  When I read it, I was take aback that this research firm (CIRP) had estimates for Q2-2013 since, neither Apple or any of the US carriers had released any information.  So I took it with a grain of salt, but since it was the only piece of information that was available at the time, I used it in my Excel model that I created for following AAPL stock.

 

So when VZ announced earnings and indicated that they activated 3.8 million iPhones, I used the CIRP data and came up with an estimate of how many iPhones were sold in the US ... which I use as a proxy to estimate the number of iPhones sold world wide.

 

The assumption that I made was that the 4 carriers only sold their version of the iPhone, meaning that you could not buy a Verizon iPhone at an AT&T store.  I think this is a pretty safe assumption for estimating purposes.  Next, I assumed that the percentage breakdown of the different carrier models at the retail stores mirrored the percentage breakdown between the 4 carriers.  I'm less confident in this assumption, but I had no other basis.

 

OK, going back to VZ's announced 3.8 million iPhones activated ... this indicated that Apple would had sold 11.9 million iPhones in the US for the quarter.  With a breakdown as follows.

 

  • AT&T - 44.7% share - 5.3 million
  • VZ - 31.8% share - 3.8 million (actual)
  • Sprint - 11.4% share - 1.4 million
  • TMobile - 12.1% share - 1.4 million

 

So when AT&T announced their earnings and chose to not disclose their iPhone activations, I had to scramble to dig deeper.  The CNET article lead me to read the Conference Call transcripts as I couldn't believe what CNET was indicating.  That led me to realize the author misinterpreted the CEOs statements.  Furthermore, without any other data, it made it hard to determine the exact number of iPhones that AT&T activated in the quarter.  We know it's more than 3.7 million and less than 6.8 million.  That's a big gap, but without any more data, that the only safe assumption to go on.

 

So my table now looks like this.

 

  • AT&T - 35.8% share - 3.7 million (quasi-actual)
  • VZ - 36.7% share - 3.8 million (actual)
  • Sprint - 13.5% share - 1.4 million
  • TMobile - 14.0% share - 1.4 million

 

So here's where it gets interesting.  Sprint announced this morning that they activated 1.4 million iPhones.  Hmmm, I was fully expecting to have to update my model, but Sprint came in right where the CIRP data had indicated they would.  So 2 out of the 3 carriers that announced matched the CIRP data and AT&T doesn't match, because they didn't give actual figures.

 

So I'm left to wonder if AT&T did actually activate closer to 5.3 million iPhones in the quarter.  I haven't done my homework to see what "a record percentage of Android phone" means.  Nor did I research what "a record number of Android phone" means either.  If no other types of phones were sold, other than iPhones and Androids, a 5.3 million iPhone number means 1.5 million left for Android (it also means 22% share for Android).  I'm pretty sure that Android phones on AT&T have seen higher than that.

 

Unfortunately, Apple doesn't breakdown iPhone sales by region ... and even if they did, I think they would mix in Canada.  If TMobile comes in at 1.4 million as well, then it would lead one to believe the accuracy of the CIRP data and one could argue that AT&T activated closer to 4-5 million iPhones than 3.7 million. 

post #15 of 19
Quote:
Originally Posted by ftaok View Post

Unfortunately, Apple doesn't breakdown iPhone sales by region ... and even if they did, I think they would mix in Canada. 

 

You can get some hints, though, from analysts using various sources:

 

http://www.fool.com/investing/general/2013/07/24/apple-barely-grew-international-iphone-sales.aspx

 

As for your other numbers, remember that you cannot mix activations and new device sales.  It'll mess you up every time.  They're two different things.  Activations include used devices.

 

A rule of thumb that seems to work out pretty accurately, is to assume that for most quarters, 11% of Verizon and AT&T activations are used devices.   So, about 89% of their activations are new device sales.

 

(Only start the 11% for Verizon the past two quarters.  That's when the first two year contracts came due for upgrades.)

post #16 of 19
Quote:
Originally Posted by KDarling View Post

As for your other numbers, remember that you cannot mix activations and new device sales.  It'll mess you up every time.  They're two different things.  Activations include used devices.

 

A rule of thumb that seems to work out pretty accurately, is to assume that for most quarters, 11% of Verizon and AT&T activations are used devices.   So, about 89% of their activations are new device sales.

 

(Only start the 11% for Verizon the past two quarters.  That's when the first two year contracts came due for upgrades.)

 

I realize that activation and sales aren't the same thing.  I'm not a pro and only use these numbers to develop estimates to get an idea of where AAPL is heading.  Using the carrier reported activation numbers have been a decent proxy to estimate iPhone sales for the quarter ... up until now.

 

Anyways, my point is that the interesting data is the information that CIRP put out a few weeks ago.  They had data supporting that AT&T sold more iPhones in their stores than Verizon did.  Right now, using Verizon's number as the baseline, Sprint's reported number matched the CIRP data, but AT&T's "number" did not.  If T-mobile's number falls in line with Sprint and Verizon, then one could argue that perhaps AT&T activated more than 3.7 million for the quarter.

post #17 of 19
Quote:
Originally Posted by ftaok View Post

Anyways, my point is that the interesting data is the information that CIRP put out a few weeks ago.  They had data supporting that AT&T sold more iPhones in their stores than Verizon did. 

 

If it helps any, I believe that CIRP found the opposite of what you're using.

 

http://www.businessinsider.com/verizon-customer-retention-rates-2013-6

 

says that 75% of Verizon iPhones were bought from Verizon stores, whereas 63% of iPhones used on AT&T were bought from AT&T stores.

 

Regards.

post #18 of 19

Thanks for that link.  It's very interesting.  I'm unsure as to how to correlate it with the chart that CIRP put out on 7/18.  That chart implied that AT&T sold more iPhone in AT&T stores than Verizon did in Verizon stores.  Then you take this data showing that only 25% of Verizon activations take place outside of VZ stores, compared with 37% for outside AT&T stores.  This would lead one to believe that there were more AT&T iPhones sold in the quarter than VZ iPhones.

 

It does lead one to question how relevant the CIRP data is.

 

ft

post #19 of 19
Quote:
Originally Posted by ftaok View Post

Thanks for that link.  It's very interesting.  I'm unsure as to how to correlate it with the chart that CIRP put out on 7/18.  That chart implied that AT&T sold more iPhone in AT&T stores than Verizon did in Verizon stores.  Then you take this data showing that only 25% of Verizon activations take place outside of VZ stores, compared with 37% for outside AT&T stores.  This would lead one to believe that there were more AT&T iPhones sold in the quarter than VZ iPhones.

It does lead one to question how relevant the CIRP data is.

ft

Activations include old iPhones of which AT&T has a great deal more than Verizon.
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