13 Comments

Summary:

Thanks to several Droid handsets, Verizon is doing just fine without the coveted iPhone. Droid devices are sold out and those in use are helping to drive wireless data revenues up for the largest U.S. carrier, which added 665,000 net postpaid subscribers in the past quarter.

Despite AT&T’s impressive subscriber gains, Verizon Wireless remains the largest U.S. carrier in terms of subscribers, according to the company’s quarterly results, announced this morning. The carrier has 92.1 million customers, up 5 percent from a year ago and slightly ahead of the 90.1 million subscribers AT&T announced yesterday. Even without an iPhone to offer, Verizon actually pulled further away from AT&T for the overall subscriber lead by adding more postpaid customers in the quarter than its close competitor did.

How is Verizon driving such subscriber growth? There are several reasons, but in a word: Droid. First with the Motorola Droid in late 2009 and now with the HTC Incredible Droid and new Motorola Droid X — both of which are sold out — Verizon no longer lags behind AT&T in terms of competitive handset offerings. Pairing powerful Google Android handsets with a solid 3G data network retains and adds customers: Verizon gained 665,000 postpaid subscribers, while postpaid churn was 0.94 percent. It likely didn’t hurt that Verizon increased its ETF fee to $350 last year either — fewer customers will defect when the barriers to do so become more costly.

Those Droid customers are data hungry, too. Verizon recently said Droid X customers are using five times the data that Verizon sees on other handsets. Given the large display, which I found great for browsing on my review unit, I’m not surprised the device is a data hog. With Droid X and the like hungry for data, Verizon says average data revenue per user is up 4 percent over the prior quarter and overall wireless data revenues increased 23.8 percent from a year ago. A closer look at Verizon’s numbers show a net loss, but the company took $2.3 billion in pre-tax charges associated with various divestment and workforce reduction activities.

We keep hearing constant rumors of a mythical Verizon iPhone and in a recent survey, a majority of Verizon customers indicated they would buy such a unicorn. But it’s safe to say that after three quarters of Android offerings, Verizon has found a way to survive and grow even without Apple’s coveted handset.

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  1. Looks like android has really helped VZ. It will be interesting to see if Android based phones catch up with the Iphone phenomenon. AT&T already announced pay per usage for data, will Verizon move away from “all you can eat” model as well ?

    1. Verizon has already said that tiered pricing was in the future – likely with LTE.

  2. Droid X users consuming 5x the data used by users of other handsets. A week after launch. Could have been written as “users consume lots of data as they download initial apps onto their new phones.”

    1. Kevin C. Tofel Paul Friday, July 23, 2010

      That’s true enough, although the Incredible should be part of that comparison, in which case the same logic would apply. Hard to say without more info over the longer term, but good point.

  3. Just a small correction, when AT&T says they have 90.1M subscribers, they are including all connections, including phones, data cards, tablets, e-readers, etc. Verizon’s number includes phones & data cards, if you include all connections such as tablets and e-readers, Verizon has 99.7M total “connections.”

    http://finance.yahoo.com/news/Verizon-Reports-Strong-prnews-3535568806.html?x=0&.v=1

  4. AT&T activated 3.2 million iPhones…no word from Verizon how many Droids they activated last quarter?

  5. Fandroids Not Customers Friday, July 23, 2010

    Fandroids are data hungry customers. I am glad I got the unlimited data plan on my Droid. I am not sure how long those unlimited data plans are gonna be around as more customers get turned into fandroids.
    http://tech.mynucleus.org/story/2010/07/23/data_hungry_droids_grow_verizon_rev

  6. Like Voice, US Telcos Losing Broadband Subs Too Friday, July 23, 2010

    [...] quick take: phone companies are too busy chasing the higher margin wireless and wireless broadband revenues that they are leaving their core businesses open to [...]

  7. Lutz Engelhardt Sunday, July 25, 2010

    Sorry, but “HTC Incredible Droid” is wrong and dangerous. Droid is a brandmark of Motorola. Don’t risk to be suited bei Motorola or HTC for this!

  8. From an ethics standpoint, data caps suck. When I bought my droid in March, I was actually just looking for a regular phone. But, to my surprise, there were only 3 or 4 phones in the store that did NOT require a data plan.

    So, with a bit of prodding from the salesman, I took the leap into the world of smartphones.

    Forward ahead 3 months…

    My once blistering web browsing speed has been brought to a crawl; verizon admitting that my area was suffering from overcrowding on the network.

    So, we can point the blame at verizon, and even arrive at the conclusion that this was verizons plan all along.

    So, regardless of our situation, the only fair way to decide who gets the data use is to let the market decide. Its fairly simple economics. And I can damn sure bet that once data comes with a price, those of us who need to use it (for work, rather than video games,) there will be no more “overcrowded networks.”

    Just my 2 cents

  9. Android Saves Motorola Mobile Devices, Helps Boost Sales, Profits Thursday, July 29, 2010

    [...] Starting with the original Droid in November, and more recently with the Droid X (see our review here), Motorola’s adoption of Google’s smartphone platform is the primary contributor to Motorola’s continued turnaround. Motorola can’t rest on its laurels, however, else it risks repeating its RAZR complacency. For now, though, Droid is a winning play. The initial Droid sold an estimated million units in its first 74 days of availability and the Droid X quickly sold out. Motorola can thank Verizon as well as Google, because the largest U.S. carrier has backed Motorola’s Droid handsets with marketing dollars to help raise consumer awareness. It’s a win-win since data-hungry Droids are growing Verizon’s revenues. [...]

  10. McGuire’s Law » Blog Archive » Observations: Devices – August 5, 2010 Thursday, August 5, 2010

    [...] Data Hungry Droids Grow Verizon Revenues [...]

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