Bloomberg Businessweek
Go To Businessweek.com
During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
Money Moves, 5/24: Chocomize Co-Founder Fabian Kaempfer talks with Bloomberg’s Deirdre Bolton about the business of customizing chocolate
The president's campaign has a new rule—no cell phones allowed
In honor of remote control inventor Eugene Polley, we recognize other influential but neglected inventors who have felt the sting of stolen glory
Forget Adderall. Traders now pop chia seeds to stay focused and energized
The Italian automaker and others are adding hybrid technology to elite cars
The storied bridge that links San Francisco and Marin County changed the face of California
Schools cultivate ties with startups before they're big successes
Dave McClure's traveling venture capital show scours the world for promising startups
Looking earlier today at the continued loss of customers at T-Mobile, I pointed out that things might be different if the carrier had an iPhone to offer. Sascha Segan, an excellent writer who covers the mobile sector at PC Magazine, quickly tweeted that he thought I was placing too much emphasis on the iPhone as a "magic silver bullet" device.
Sascha raises a good point, rightly suggesting that Verizon grew without an iPhone.
The answer to the question "what drives carrier sales" is clearly: both the network and the devices on offer. If an operator can offer the "complete package" of stellar devices and a superb network (along with marketing to plug them and solid support, as needed), we have a winner. Devices do vary by carrier and there are occasional exclusives by which a device is available to only one carrier for at least a limited period.
Network needs change, based on where people work, play, and travel—as opposed to where mobile coverage is available. Network speeds, pricing, and usage all vary as well, so consumers still pick different networks, depending on their needs and budgets.
However, I’d generally argue that today’s devices trump network coverage, which in turn trumps network speeds. And while we’d all like unlimited data, promising it isn’t a magic sales tool. Here’s why I believe this to be true:
• Unlimited data is overrated for most. Sprint is the only major U.S. carrier that still offers truly unlimited data, yet the carrier lost 101,000 postpaid customers in the most recent quarter. Net growth in subscribers, a whopping 1.2 million, came from prepaid and wholesale customers. This quarter wasn’t unique. Sprint has generally been growing subscribers through all but postpaid customers for several quarters. We’d all like unlimited data, but do we want it on the devices that Sprint sells? Some are great, but there are too few of them. Even the best don’t get replaced for ages: The HTC Evo was a top-selling device for nearly a year; the same can be said of its successor, the Evo 4G.
• Early iPhone woes for AT&T didn’t hurt sales. It may be an overstated issue because of bad experiences in a few areas (such as San Francisco and New York) but how many consumers chose to deal with network challenges at AT&T in order to use an iPhone? Without a doubt, the iPhone drove much of AT&T’s growth in subscribers and revenues; consumers had to have the phone. Exclusivity helped, yet out of all the iPhones sold last quarter worldwide (when exclusivity wasn’t a factor), AT&T still accounted for 17.7 percent of the total: Apple sold 20.34 million iPhones and AT&T reported 3.6 million iPhone activations in the most recent quarter. Although AT&T is investing in its network to help meet data demand, the percentage of iPhones sold on a network that has experienced problems is amazing.
• Help from 2G and Wi-Fi. I’m astounded at the more than 1 million iPhone users on T-Mobile’s U.S. network. If correct, this accounts for 10 percent of all T-Mobile’s current 3G/4G smartphone users, which is very telling. These folks are choosing the device and are willing to deal with T-Mobile’s pokey EDGE network at a time where we’re using smartphones far more for Web access and connected apps than we are for voice calls. I’d be especially curious to see how fast iPhone usage grew on T-Mobile’s network vs. official sales of smartphones by the carrier. Across all carriers, Wi-Fi can supplement both gaps in network coverage as well as data caps. Thanks to VoIP apps, it’s becoming easier to use Wi-Fi for voice services, too.
