That’s because of the 1.8 million iPhones the carrier sold, 40 percent of them went to new customers that came to the carrier for the iPhone. We knew the iPhone was fairly popular on Sprint’s network — the carrier sold out of its stock of the iPhone 4S the first day it was available back in October.

Although 1.8 million iPhones may pale in comparison to its competitors, it was Sprint’s first quarter selling the iPhone, after all. AT&T sold 7.6 million iPhones during the quarter, but the carrier had a nearly four-year head start on Sprint. Verizon, meanwhile, sold 4.2 million iPhones last quarter.

While new customers may be coming in the door, it’s still costing Spring some extra dough. The carrier said Wednesday that the costs of subsidies it paid during the quarter went up from $1.2 billion to $1.7 billion in the last year, which was ”primarily due to the launch of the iPhone 4 and iPhone 4S, which on average carry a higher subsidy rate per handset as compared to other handsets.”

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Maynard Um of UBS sent a note to clients late Wednesday night saying that based on AT&T’s exuberant report that the carrier is on its way to selling more iPhones than it ever has, he is upping his estimate of iPhones sold during this quarter from 28 million to 30 million. AT&T says it has sold 6 million iPhones this quarter already, so even with more than three weeks left in the quarter, its executives felt comfortable predicting it would easily surpass its current record of 6.1 million iPhones sold.

But even then, Um said his estimate is still conservative and that the actual number of iPhones sold could go even higher this quarter. He writes:

We believe that there is a general strength across the board for iPhone demand and are raising our CY4Q [estimates] to 30mn from 28mn units. We continue to believe that our [estimates] are conservative as these revised [estimates] are still below where expected build plans are. We conservatively leave our out [sic] qtr ests though we believe China launches could drive upside.

Apple, on the other hand, was the opposite of conservative when it forecast this quarter. Back in October, just after the iPhone 4S went on sale, Cook stated, “I’m confident that we will set an all-time record for iPhone this quarter,” and Oppenheimer put a bold forecast out there to match: $37 billion in revenue for this quarter — up 38 percent from the $26.74 billion of the same quarter last year — and earnings per share of $9.30, up from $6.43.

We will find out mid-January just how bold — or conservative — that call was.

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For the fourth quarter of 2011, AT&T has already seen around 6 million smartphones sold: already near its previous record of 6.1 million smartphones during a single quarter. With only a month left to go in the fourth quarter (December, one of the busiest shopping months of the year for smartphones), it definitely isn’t a case of counting chickens before they hatch to say AT&T will pass the 6.1 million mark this time around.

In its official statement, AT&T singled out the iPhone 4S when talking about how it managed such strong smartphone sales, calling attention to its earlier announcement of more than 1 million iPhone 4S handsets activated in the first five days of its availability. It also said iPhone 4S sales “remain strong” for the carrier, two months after its initial release in the U.S. A lot of those sales come from a very high number of handset upgrades from AT&T customers who were eagerly awaiting new hardware according to AT&T, so pent-up demand resulting from Apple releasing this year’s iPhone upgrade later than usual could have helped boost sales even more than with previous launches.

AT&T’s account of strong iPhone 4S sales suggests analyst predictions of a very strong quarter for Apple’s smartphone are right on track.

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In a statement, the company said:

We stopped supporting CarrierIQ with iOS 5 in most of our products and will remove it completely in a future software update. With any diagnostic data sent to Apple, customers must actively opt-in to share this information, and if they do, the data is sent in an anonymous and encrypted form and does not include any personal information. We never recorded keystrokes, messages or any other personal information for diagnostic data and have no plans to ever do so.

Sprint has admitted to receiving data from CarrierIQ’s software, but it denies using it to track its customers, as has AT&T, which says it uses the information for network management. Verizon, on the other hand, has denied using the software, as has Google on any of the Android phones it makes.

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One of the chief complaints against AT&T for as long as it has had the iPhone has been its tendency to drop calls with alarming frequency. The new study by Metrico, a wireless performance measurement company, indicates that AT&T’s call failure rate of 2.8 percent was actually better than Sprint’s (3.7 percent), though it was worse than Verizon’s (2.1 percent). Metrico tested call performance in five major unnamed U.S. cities it says are “representative” of the overall country, and used more than 6,000 voice calls to get its results.

The iPhone 4S performed poorly in general in terms of call failure rates when compared to the competition in terms of Android and BlackBerry devices, which could be attributable to the fact that it packs both CDMA and GSM support into a device originally designed to work with just one or the other, but did much better than average in terms of data performance.

Data and web browsing was where AT&T really shined. It managed more than double the average download speeds of both Sprint and Verizon, with 3210 Kbps vs. 1071 Kbps for Verizon and 581 Kbps for Sprint. Sprint’s low score echoes user complaints that prompted the network to tell reporters it’s “taking the reports of problems [...] seriously.” It’s no surprise that AT&T dominates when it comes to data scores, since it’s the only iPhone carrier to offer HSPA+ speeds thanks to its upgraded GSM network, which the 4S supports.

Despite the difference on paper, Metrico rated all three major U.S. iPhone carriers very highly in terms of their ability to deliver full data reliably to customer devices. Still, comparative web page load times might give those still deciding between carriers something to think about: AT&T devices loaded pages in 1.29 seconds on average, compared to 2.6 seconds on Verizon and a relatively sluggish 6.44 seconds on Sprint.

Sprint took the lead when it came to voice quality when speaking, however, though AT&T wasn’t far behind. Out of a possible maximum score of five, Sprint ranked 3.95 when speaking, while AT&T was next at 3.85 and Verizon came in third at 3.5. In terms of voice quality when listening, AT&T was highest with 3.82, with Sprint second at 3.72 and Verizon last at 3.55. Metrico uses an algorithm to score call quality objectively.

Metrico stresses that the study isn’t meant to delineate a winner among the three iPhone 4S carriers, and suggests that users will have a different preference based on needs. But in a smartphone market where data and data services are increasingly replacing voice calls both in terms of usage trends among users and revenue drivers for carriers, AT&T’s data performance could actually make it the best among the three for the average smartphone user. That might not be the case for long, however, since a future iPhone could well include LTE support, which is an area where AT&T lags behind Verizon considerably.

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Speaking to MarketWatch, AT&T President of Emerging Devices Glen Lurie said that “churn [the number of customers who cancel their services] has not moved at all.” That’s pretty much in keeping with what we saw in a third-party report from analytics firm Localytics earlier this month.

Lurie went on to praise Apple and its flagship smartphone, noting the record-breaking numbers AT&T saw in terms of iPhone 4S sales so far. AT&T is also still having trouble keeping up with demand, Lurie said, with customers currently facing a week or two delay in order to get their hands on a 4S when ordering from the carrier.

Network speed is one of AT&T’s primary advantages over the competition with the iPhone 4S, and it could be one reason users aren’t eager to switch providers. It’s the only carrier that can offer HSPA+ speeds on the device, and subscribers on Sprint have complained of slow browsing on 3G connections.

Still, AT&T’s competitors also appear to be happy with the iPhone’s sales performance on their networks. Sprint confirmed early on that the iPhone 4 and 4S beat its previous one-day sales record by a wide margin, and Verizon said during its most recent quarterly report that iPhone 4 and 4S sales remain strong. In other words, it doesn’t look like anyone has to lose in order for AT&T to win in this case.

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The unlocked iPhone 4S only works with GSM carriers, so it won’t be compatible with the CDMA-based networks of Verizon or Sprint in the U.S. All sizes and colors are available, with the 16 GB version priced at $649, the 32 GB for $749 and the 64 GB for $849.

Apple’s factory-unlocked devices can be used with any GSM provider worldwide, provided you have the necessary micro SIM. They also have the advantage of coming without any contract commitment, and they can be more easily resold on the international market.

Apple’s retail stores have been selling unlocked phones since the launch of the 4S in the U.S. back in October, according to customer reports, but now buyers can get them officially via online ordering instead of just chancing it at Apple’s brick-and-mortar sales locations. The 4S has been available unlocked directly from Apple since day one in many international markets.

Anyone planning on picking up an unlocked device direct from Apple? What are your reasons for doing so?

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Localytics found that of the iPhone 4S devices running apps using its popular analytics platform, 56 percent use AT&T for voice and data services, while Verizon comes in second with 32 percent, and Sprint is a distant third with just 12 percent of all iPhone 4S impressions.

Judging by the numbers, Sprint seems to have taken more customers from Verizon than from the market-leading AT&T, since the iPhone 4 split between AT&T and Verizon is 60/40. Localytics points out that the differences may be attributable to the fact that AT&T has a larger pool of existing subscribers who are eligible for contract renewal, and therefore subsidized pricing on iPhone hardware, whereas Verizon’s iPhone customers have just locked in to two-year contracts as of earlier this year, when the iPhone 4 made its debut on the network.

AT&T boasted earlier that it had signed up 1 million iPhone 4S users in just its first four days of availability, more activations than for any previous iPhone launch. During its last quarterly earnings call, Verizon said it activated 2 million iPhones during its last complete fiscal quarter, which is close to the 2.7 million activations AT&T claimed during the same period, but the Localytics data suggests the 4S could be widening the gap once again.

AT&T is also the only U.S. carrier that can offer HSPA+ speeds for the iPhone 4S, since both Verizon and Sprint’s networks use CDMA tech, which doesn’t support the boosted 3G network capabilities. Faster data speeds could be especially attractive to customers considering a device like the iPhone, which has a strong focus on data connectivity, but a lot of AT&T’s advantages at this point can probably still be attributed to its early exclusivity deals and strong existing iPhone customer base.

As we enter the holiday season, which usually see strong numbers in terms of iPhone sales, it’ll be interesting to see how the carrier distribution landscape continues to change.

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It’s the additional speed that AT&T is citing as the reason for its success so far. “It’s no surprise that customers are clamoring for iPhone 4S and they want it to run on a network that lets them download twice as fast as competitors’,” said Ralph de la Vega, President and CEO, AT&T Mobility and Consumer Markets in a press release from the carrier. Both Verizon and Sprintonly support CDMA 3G technology for the iPhone 4S.

AT&T is also the only carrier to offer simultaneous use of phone-based voice and data services, since its GSM network allows for that while the CDMA networks of the other two carriers don’t.

AT&T had already announced a record number of iPhones activated on its network as of Monday, and said then it was “on-track to double [its] previous record for activations in a single day.” The company also revealed in its earnings report Thursday that during the quarter ending in September, more than half of the smartphones activated on its network were iPhones.

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AT&T sold 4.8 million smartphones during the third quarter, which accounted for an impressive two-thirds of all post-paid sales. Android device sales also more than doubled vs the year-ago quarter, and non-iPhone devices now account for nearly half of AT&T’s smartphone sales.

While the iPhone actually lost ground from the same time the previous year (5.2 million activations during the third quarter 2010), the fact that Apple’s 16-month old iPhone 4 and reduced-priced older models, could still show such high numbers this year vs last when the iPhone 4 would have been only a few months old is very impressive.

It’s also worth noting that the iPhone was still an AT&T exclusive in Sept. 2010, whereas this year, Verizon began selling the device in February. So, to recap, with the addition of another major U.S. carrier as competition, and with hardware that’s more than a year old, iPhone sales on AT&T only slid by 400,000 units. I can’t help but think the brand new iPhone 4S with both its hardware and software improvements could significantly slow the ability of non-iOS smartphones to play catch-up again next quarter.

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Open Signal Maps doesn’t have data on every state (sorry, people of Idaho, Montana, Wyoming, the Dakotas, Nebraska, Iowa, Maine, Vermont and New Hampshire). While AT&T took 31 states, Verizon would be fastest for iPhone 4S owners in six states. Sprint didn’t test fastest in any state. At least they’ve got that unlimited data plan going for them?

Open Signal Maps does include the caveat that this is not a comparison of the three carriers’ networks vis-a-vis each other. Rather, this is a test of how the iPhone 4S only operates on each different network. Here’s the explanation:

What’s the difference? Well, the iPhone 4S is a dual-mode phone that supports AT&T’s 3G network, which uses HSPA technology, and Verizon and Sprint’s 3G network, which runs on EVDO. AT&T has recently upgraded their existing HSPA network to HSPA+, which offers almost double the speed of their original 3G network, and the iPhone 4S supports this newly upgraded technology. Verizon and Sprint aren’t actually far behind: have both rolled out next-generation 4G networks, and Verizon’s LTE network in particular was blazing fast in our recent testing. But since the iPhone 4S doesn’t support those networks, they’re not included in our analysis.

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We’ve gotten tips and seen on Twitter that some folks are running into trouble using AT&T’s upgrader. Specifically, they’re seeing a message suggesting that their unlimited data plans won’t carry over with the purchase of an iPhone 4S. Luckily, that’s not true. If you ordered through Apple, you probably didn’t even run into any trouble; its site makes fairly clear that those upgrading can keep their unlimited data.

If, however, you went through AT&T’s site, you may have encountered a notice telling you you require a different Data Add-on Plan, as in the image below from tipster Chris Guthrie. You sort of do, but in name only. If you continue through the process on AT&T’s site, you’ll be fine. AT&T admits the site is a bit confusing, but are working on making it better.

It’s understandable that people would covet their unlimited data plans, since like an exotic species of rainforest flower, there might be a time soon when they go completely extinct. The iPhone 4S might be even more data-dependent too; new voice-activated personal assistant app Siri requires an active internet connection to do its thing, according to Apple promotional materials, and though it should only really sip data, a lot of sipping could add up.

If you’re still uncertain about whether or not your unlimited data plan will survive, feel free to give AT&T’s support department a call, but they’ll tell you the same thing: your plans are safe, mobile data fiends.

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Case Mate's iPhone 5 designs were live on their site briefly in September before the company pulled them.

AT&T retail stores are reportedly taking delivery of iPhone 5 cases a little early, according to a new report. Photos obtained by MacRumors show boxes of new cases allegedly delivered to one AT&T store late Thursday. The cases feature a tapered back design and what appears to be a mute switch opening on the opposite side of the phone relatively to where it’s currently located.

A tapered back redesign is in keeping with some other early case leaks we’ve seen from Chinese accessory makers and other vendors, although separate rumors have suggested we’ll see a new iPhone that closely resembles the previous generation. One theory is that Apple will unveil two new models of iPhone on Tuesday during its special media event, one of which is a modest evolutionary upgrade of the iPhone 4 as a low-cost option, and the other a complete redesign.

The cases could be fake or based on an uninformed, just-in-case ordering decision on behalf of AT&T or this store in particular. Some have pointed out that the packaging seems unrealistic, but AT&T retail is known to repackage products from accessory-makers in generic packaging. And considering how close we are to the iPhone 5′s reveal — Apple is holding an iPhone launch event on Oct. 4 – it’s more likely that important partners like AT&T would be privy to some knowledge of the next iPhone’s actual design.

Personally, I think we’ll see redesigned hardware, and the tapered look seems to be garnering the most support. For Apple to wait 16 months just to introduce a minor refresh would not go over well with consumers, as we’ve seen from recent survey results.

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The original report comes from Japanese IT news site PC Watch (via MacRumors), which photographed a slide from a presentation by China Unicom VP Huan Wenilang. The slide lists the iPhone models to date, along with the wireless network technology each phone supports. The iPhone 5 caps the list, and while there is no image of the device, its network capabilities are listed as “HSPA+,” with speeds of “21 Mbps.” China Unicom is currently Apple’s only carrier partner in China, although talks are reportedly in progress between Apple and China Telecom and China Mobile, too.

In June, rumors surfaced that the iPhone would gain HSPA+ support, providing AT&T with an advantage over its competitors in terms of potential network speed for this generation of Apple smartphones. While AT&T markets HSPA+ as “4G,” it’s actually more like faux-G, since current-gen LTE should eventually hit around 100 Mbps in theory. Unlike LTE, however, HSPA+ is already widely deployed in many markets around the world, which would make it more useful to a broader subsection of customers in an iPhone 5 than true 4G support.

Given Apple’s track record of waiting to introduce new network technologies until its deployment actually covers a wide range of customers, I think HSPA+ inclusion in the iPhone 5 is a safe bet. As to whether or not it will provide a significant competitive advantage for AT&T, I think that’s a lot less certain. Mobile users seem not to place too high an emphasis on network speeds when making buying decisions, after all.

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Sprint has also reportedly asked employees not to schedule any time off during the first two weeks of October, and Apple is said to have blacked out retail employee vacations for Oct. 9 through 12, and also Oct. 14 and 15. Mid-month has also been suggested as a possible window for the iPhone’s release by other sources, like France Telecom CEO Stéphane Richard citing Oct. 15 as the official release date, and a new report from Japanese site Macotakara this morning that pegs Oct. 14 as the launch date in five initial countries, including the U.S., France, Germany and Japan.

BGR’s source also claims AT&T has six new stock listings in place internally for the new iPhone. That could be an indication we will see two new distinct iPhone lines from Apple going forward, as some rumors have suggested. It might also be that Apple will simply offer two different colors of a new iPhone device in three different storage capacities.

We won’t have to wait long to find out when the iPhone 5 will actually be available to consumers. Apple announced Tuesday a press event for Oct. 4 to talk about the device. In addition to expected hardware changes and new software features, it would be nice if they also immediately started pre-orders, especially given how long Apple fans had to wait for this latest iPhone revision.

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Nikkei Business Online (via TechCrunch) is the source of the report, and also notes that the iPhone 5 will support CDMA as well as GSM, which could open up the possibility that NTT DoCoMo, Japan’s largest mobile carrier, might also be able to get in on the action sometime down the road. Japan is one of the last major markets where iPhone availability is still limited to one carrier. China, another lucrative market where that’s currently the case, also seems to be on the verge of entering a partnership with a second provider.

A growing trend

Early this year, Apple opened up iPhone sales to a second provider in the U.S. when it introduced the CDMA iPhone 4 on Verizon’s  network. It also started selling the iPhone 4 factory unlocked, so iPhone buyers could take their business (albeit minus 3G speeds) to T-Mobile, which it turns out has a very high number of customers using Apple’s smartphone.

Apple’s trajectory with exclusivity reflects a very smart and elaborate plan which helped make the iPhone the success it is today, and now that exclusive carrier deals are ending, Apple stands ready to reap the rewards it has sown.

Why exclusivity used to matter

In the beginning, exclusivity served to help Apple gain concessions from cellular providers it might otherwise not have been able to negotiate; the iPhone carries no on-device carrier branding, unlike most other phones, and also doesn’t come with a lot of pre-installed bloatware from network operators, the way most non-iOS phones do. Apple essentially cut carriers out of the software and services side of the equation, and even though it had its marquee brand and the success of the iPod backing up the potential success of an iPhone, it wasn’t necessarily a “sure thing.”

Aside from appeasing carriers, exclusivity also made it easier for Apple to guarantee a uniform experience across all its iPhone devices in the early days, but more importantly, it helped promote an air of scarcity around the phone. The iPhone is by no means a limited edition collectible, and Apple was doubtless happy to sell as many as it could produce, but making it available on only one carrier at launch helped it feel like a rarity without any artificial limitations on production numbers.

Why exclusivity no longer matters

But exclusivity has exhausted its early usefulness. Carriers no longer need convincing that Apple’s model can be lucrative for them, even if it does mediate their relationship with customers to some extent. Apple doesn’t need to make concessions to negotiate with carriers anymore; if anything, the reverse is true.

Also, the illusion of scarcity is no longer necessary to make Apple’s products appealing in the eyes of buyers; even after more than a year since introduction, the iPhone 4 is the highest selling Apple smartphone in the U.S. and iPhone owners are the most likely to stay with their handset maker more of any smartphone buyers.

On the flip side, ending exclusivity across most major markets opens Apple’s business to a huge number of new potential customers. Android devices are available in more markets and on more networks than Apple’s iPhone. Anything that helps narrow that gap should help Apple win back market share from Google’s mobile OS.

The staged ending of exclusivity also means that Apple effectively gets a brand new launch every few years. An iPhone might not be totally new anymore, but it’s new to a network’s subscribers if an exclusivity deal was previously in place on a competing network. That will help it appear more attractive to customers tied to their carrier who’ve been watching and waiting as their friends on other networks had all the fun. Restricted access breeds interest; Apple likely anticipated that when it penned the original iPhone exclusivity deals with AT&T and others around the world.

Everybody wins

In the end, we all benefit from Apple’s approach to exclusivity. Consumers get a pure iPhone experience, mostly unadulterated by carrier demands, software and restrictions. Apple gets more control over its product, and a staged global rollout of its handset that keeps momentum rolling in its favor. Carriers, too, benefit. Even those that suffered as rivals rode the early success of the iPhone now get a chance to steal some of that thunder at the expense of their competitors; Verizon has AT&T’s history of sub-par iPhone service in major urban areas to parlay into switched subscribers, for instance.

The iPhone 5 will be a massive hit when it arrives (most likely next month), but if it also comes with expanded availability thanks to the continued erosion of exclusivity deals with carriers worldwide (and at home in the U.S., too), sales of Apple’s latest smartphone should easily smash previous records. This is definitely the one to watch.

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