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iPhone, Shift to the Wireless Web Boosts AT&T

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Earlier this morning, AT&T (s T) announced that it activated 2.4 million new iPhones during the second quarter ending June 30, 2009 — what the company called its “best-ever total” since it exclusively started Apple’s (s AAPL) hot new device two years ago.

Thanks to the brand-new iPhone 3G S and lower-priced $99 iPhone 3G, the company is continuing to print money off its partnership with Apple. As I’ve pointed out earlier, AT&T makes roughly $95 a month from each customer that owns an iPhone vs. about $59 from the average non-iPhone customer, so it’s in the company’s best interest to get more of its users to upgrade.

As you all remember, earlier this year I broke up with the iPhone because of AT&T’s network problems and since then a growing chorus has lamented those problems as well. Ma Bell cannot turn a deaf ear on these issues, for they are likely losing a lot of revenues because of them.

In a survey conducted by, the company asked about 2,400 respondents why they had chosen to wait or not purchase the iPhone 3GS, and nearly 34.32 percent said they don’t want to switch to using AT&T as a service provider. If that is indeed the case, both AT&T and Apple are leaving money on the table.

That said, it was a good quarter for AT&T from a wireless perspective. The company added 1.4 million new wireless subscribers, and said it now has 79.6 million subscribers in total. AT&T also said that it had a record low postpaid subscriber churn, at 1.09 percent, which I would attribute to people switching to the iPhone and finding themselves stuck with 2-year deals.

AT&T activated about 3.5 million devices that qualify as higher-end smart devices – i.e. devices with QWERTY or virtual keyboards in addition to voice functionality. What that shows is that even its current customers are upgrading to the higher-end phones. This shift is proving to be a big boon for AT&T, which saw a 37.2 percent increase in wireless data revenues to $3.4 billion.

But it’s also part of a larger shift we’ve been writing about: the rise of mobile broadband as a platform, which brings with it numerous opportunities. (Mobilize 09, our mobile Internet conference scheduled for September 10 will focus on many of these opportunities.)

Earlier today, Pew Internet came out with a report that shows that more Americans are now using the wireless web.

“Use of the Internet on mobile devices has grown sharply from the end of 2007 to the beginning of 2009,” with 56 percent of Americans saying that have “at some point used wireless means for online access.”

It’s safe to say that the iPhone has been the catalyst for this shift to the wireless web. Maybe it’s time for me to update my post about how the iPhone will change the wireless business.

8 Responses to “iPhone, Shift to the Wireless Web Boosts AT&T”

  1. why is AT&T still wasting time trying to compete on content and all the other crap? it’s the network…stupid. build the best darn wireless network in the USofA. get out of your meetings that go nowhere and shore up the freakin’ network!!!

  2. irritated

    Oh yeah AT&T is just raking in the dough, are you nuts? Hey Om, did you happen to read the article in the WSJ reporting that RIM and Apple had 35% of cell profits with 3% of profits? Why do you think that is??? Maybe the $400 subsidy ATT coughs up? Larger than any other device. The phone is a loser on ATT balance sheets for at least 18 months. But idiots like you in the press continually lambast “ma bell” and give apple nothing but glory. Remember Verizon turned down the deal that made the phone cheap enough for consumers to afford. AT&T gave in to Apple not the other way around. Take your network issue pity party out of the public forum. You are letting your personal experience get in the way of good reporting.

  3. @Om,

    Though I agree 100% with your comments about the iPhone and its’ value to AT&T, I think the larger opportunity in mobile broadband lies in laptop data plan adoption. I think if AT&T (as well as the other carriers offering mobile broadband) eliminate data caps and go to flat rate pricing which is easy to understand, I think they’ll see an explosion in usage of mobile broadband data that will simply dwarf the iPhone as well as all the other smartphones combined.

    My $.02.


    • Robert Wickus

      I agree with you that a flat price rate for laptop data plans will certainly cause a huge increase in their use, but I don’t think this will dwarf the iPhone or other smart-phone usage. I find that more and more I’m depending on my iPhone rather than lugging my laptop around. Certainly there are times when you need the larger, more powerful machine, but when we can I think we will opt for smaller, lighter, and more manageable devices like the iPhone.

      Like Om, I was falling out of love with my iPhone because of problems with AT&T, but over the last month I’ve seem major improvements in my connections with them and have had almost no issues at all with calls or data. This caused me to move up to the 3GS in the last week and that was a huge improvement over my 1st Gen iPhone. As has been stated by many, I think AT&T was simply overwhelmed by the success of the iPhone and it has taken them some time to play catch up.

      Carriers certainly want to make as much money as they can and do with their pricing policies. They need to adopt a strategy that allows us to access the network seamlessly with whatever device we want at any given time at a reasonable price. Moving from your smart-phone, laptop, touch pad, or to whatever tool you need to accomplish a task, without jumping through too many hoops.
      I don’t mind the hoops, but the problem is currently the hoops you have to jump through are on fire.