AT&T just confirmed it’s seeing the same trend we saw with the iPhone and Verizon last week: iPhone activations lost momentum last quarter. In a note to clients, Wells Fargo analyst Maynard Um noted that it’s the second quarter in a row that AT&T’s iPhone activations have dropped.
AT&T this morning reported that it activated 3.7 million iPhones in the June quarter (with 22% new to AT&T), down 14% [sequentially]. Verizon Wireless last week indicated it activated 2.7 million iPhones, down 15.6% [sequentially]. The two US operators’ activations combined were slightly below our expectations, accounting for 20.3% of our forecasted 31.5 million versus the March & December quarters where the two accounted for 21.4% and 32.1%, respectively.
So both Verizon and AT&T, Apple’s two top carriers in the U.S., still say that iPhones account for a majority of their smartphone activations each quarter, but their respective results show that the percentage is slipping from quarter to quarter since the iPhone 4S debuted last fall. And it’s not a huge mystery why.
Apple chooses to update the iPhone once a year, and that means it gets one gigantic bump in new iPhone activations every year. After a couple quarters that momentum will peter out, especially when rumors of a new iPhone start to circulate widely — a phenomenon Apple executives pointed to during its October 2011 earnings call. While Apple competitors continue to introduce multiple models of smartphones each year, and thus can have somewhat more consistent momentum with carrier activations, Apple doesn’t. We saw this with a dropoff in iPhone purchases in the third quarter last year, and we’re seeing it again with its two major carriers here in the U.S. during the second quarter.
Comparing the two operators’ performance this year to the same part of the sales cycle last year, however, paints a different picture. In the second quarter of 2011 — Verizon’s first full quarter of offering the iPhone — it activated 2.3 million units, meaning year-over-year Verizon’s iPhone sales increased 17 percent. AT&T also saw a slight year-over-year bump of 100,000 activations.
But, as Um cautions, the carriers activation figures aren’t “necessarily a pure read to iPhone units,” since there are plenty of other carriers and sales outlets to consider.
Apple will give us a true picture of how the iPhone did during April, May and June when its quarterly earnings are released around 1:30 p.m. PT.