iPhone sales show no sign of abating at Verizon

Verizon iPhone 4

Verizon iPhone 4Despite Verizon’s evangelizing push to convert its subscribers to 4G LTE, the 3G iPhone remains king at the country’s largest operator. At its second-quarter earnings call on Thursday, Verizon reported selling 2.7 million iPhones, compared to 2.5 million 4G Android phone sales.

Those iPhone sales represent a 17 percent increase over the 2.3 million Verizon sold in last year’s second quarter, its first full quarter as an iPhone distributor. In the first quarter, Verizon sold 3.2 million of the devices. But at the beginning of the year the iPhone 4S was still relatively new, while in the spring and early summer anticipation started building for the new iPhone being released this fall.

Verizon’s results almost certainly prove wrong William Blair analyst Anil Doradla’s report that Motorola’s Droid Razr was outselling the iPhone 4S at Verizon, making it the carrier’s top device. Unless a disproportionate number of Verizon customers eschewed the iPhone 4S in favor of the iPhone 4 or the vast majority of Android smartphone sales were for the Razr Maxx, the math just doesn’t work.

Though the iPhone remained dominant, Verizon still made a lot of progress toward migrating its customer base to 4G. Verizon activated 3.2 million LTE devices in total, including tablets, modems and hotspots; and 42 percent of all smartphones sold contained an LTE radio. Verizon CFO Fran Shammo said 18 percent of Verizon’s smartphone base now is on the 4G network. And given that Verizon’s smartphone penetration is now 50 percent, that means it has managed to convert nearly 10 percent of its subscriber base to 4G in a little more than a year.

On Wednesday, Verizon added another 33 smaller markets to its 4G footprint and expanded its networks in 32 markets, bringing its total coverage to 337 cities and roughly 75 percent of the U.S. population. Verizon plans to close the year with 400 markets covered.

As Shammo pointed out on the call, LTE is a far more efficient mobile broadband technology than CDMA, offering not just greater speeds but much more overall capacity. But if LTE is really Verizon’s future it will need to accelerate its 4G conversion rate, which will be awfully difficult until Apple ships an LTE version of the iPhone. It doesn’t help either that Verizon is making exceptions for old friends like RIM, which just introduced a new 3G-only BlackBerry on Big Red’s network.

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