AT&T’s quarterly earnings call for the last quarter of fiscal 2011 revealed that the iPhone 4S isn’t just setting records with Apple.
According to a story from ZDNet, AT&T reports it has activated more than 1 million iPhone 4S units since the phone’s launch last Friday, Oct. 14. It’s the best launch of an iPhone AT&T has ever seen. That’s saying something, considering that AT&T is the only provider that has carried every single iPhone and, for a long time, was the only provider carrying the iPhone at all. The iPhone 4S is doing so well that even with the options of two other carriers in Verizon and Sprint, and now with C Spire joining the march, AT&T still had a record-breaking iPhone launch.
It seems the success of the iPhone 4S is pretty much massive and universal. Apple reported last week that it had sold 4 million of the devices since it began taking pre-orders (the first million were sold within the first 24 hours of pre-order availability).
But those sales didn’t fall within AT&T’s fiscal third quarter of 2011. In fact, AT&T saw a decline in iPhone sales during the third quarter, dropping to 2.7 million iPhones from 3.6 million during the same period last year, Mashable reports. Apple reported a similar drop in iPhone sales during its last quarter (before the iPhone 4S went on sale), which it blamed on customers waiting for the 4S, rather than purchasing the aging iPhone 4 during that quarter. For Apple’s part, it moved some 17.1 million iPhones, but that was down from 20.1 million during the same time last year. It caused Apple’s stock to drop about 6 percent, despite the success of its new phone model.
For AT&T, there are a few things at work, it seems. One is very likely the rumor mill that Apple blamed for driving down iPhone 4 sales during the quarter, as well as anticipation of the launch of a new device. Increased competition might be another, with Verizon for the first time selling iPhones alongside AT&T during 2011. And finally, there’s AT&T’s own push to grow its business beyond just reliance on the iPhone, something with which it has struggled. AT&T said during its earnings report that it has activated 2.1 million Android phones and other smartphones as well as the 2.7 million iPhones, which puts its total sales at an almost even split between the two operating systems.
Overall, AT&T’s profits for the just-closed quarter were down quite a bit from the same time last year, down to $3.6 billion from $12.3 billion last year. AT&T says part of the reason was a big one-time tax settlement that significantly boosted its profits in 2010, according to Engadget. But another part is surely the loss of its iPhone exclusivity to other carriers.
It seems AT&T is doing well to diversify its business so it doesn’t suffer too greatly at the loss of the iPhone, but it also seems as if the company needs to do more. With Sprint now entering the game, as well as at least one smaller regional carrier, all bets are off as far as the iPhone is concerned, and AT&T can no longer lean on the crutch of just having the phone. Now it has to offer customers some good reasons to choose its iPhone (or Android devices) over its competitors. Sprint has the right idea in maintaining its offer of unlimited data service, but AT&T already cut that offer, in part because of the big strain on its network from so many iPhones. The company will need to come up with some other cool offers to help keep its numbers up in the future, but certainly the iPhone 4S is going to help.
