AT&T (
T
), which primarily competes with Verizon (
VZ
) and Sprint (
S
) in the wireless business, continues to see growth in the number
of iPhone activations.
During Q3 of 2010, AT&T witnessed nearly 5.2 million iPhone
activations, the highest ever for any quarter. This represents an
increase of more than 60% over the previous highest quarterly
record of 3.2 million subscriptions. Nearly 1.25 million of the new
iPhone subscribers were new to AT&T's network as well. These
increases are expected to help improve
AT&T's market share
in the US mobile phones market as well as drive
data ARPU
growth.
Despite the possibility of the iPhone being available at Verizon
stores in the near future and AT&T's network issues due to high
data usage, AT&T continues to attract iPhone lovers both from
outside as well as the company's existing customers who are
migrating to the device. We discuss this in more detail below.
iPhone Halo Effect and AT&T's Efforts
The Halo Effect is generally used to explain why a customer has
a bias towards a certain product because of a favorable experience
with another product at the same company. In this case,
according to the technology research and consulting firm Yankee
Group, customers view on the quality of service provided by
AT&T is influenced largely by their love for the iPhone
as a device . In the survey results, Yankee Group noted that
iPhone customers generally have a higher satisfaction rate compared
to the overall AT&T customers.
This is not very intuitive considering that AT&T has had
issues in the past with its network due to higher data usage by
iPhone customers. Since iPhone users tend to access higher amounts
of data compared to an average AT&T mobile phone user, they
tend to use up large portion of AT&T's network capacity. As a
result, AT&T's network has suffered from issues related to
dropped calls, delayed texts and voice messages and slow download
speeds.
AT&T has been continuously focusing on improving services to
its customers. It has upgraded its 3G network with HSPA software to
improve 3G speeds and improve consistency in accessing data
sessions. The company has done the right thing by not rushing into
the next generation 4G network, Long Term Evolution (LTE) as they
focus on improving services to customers so as to avoid any network
related issues due to high data usage. Had AT&T not done this,
dissatisfaction amongst its users would have likely increased
causing them to switch networks.
As a result of these measures, customers are preferring to buy
the device from AT&T at current prices with a 2-year contract
rather than waiting for Verizon to introduce the iPhone. This
is a good sign for AT&T and suggests that impact on AT&T of
losing iPhone exclusivity may be limited.
You can see
the complete $37.84 Trefis price estimate for
AT&T's stock here.