Apple (AAPL) iPhone only ordinary

Posted Aug 15th 2007 7:30AM by Douglas McIntyre
Filed under: Analyst Reports, Consumer Experience, Apple Inc (AAPL), AT and T (T)

According to a report in Barron's, Bernstein Research looked at how effective the Apple (NASDAQ: AAPL) iPhone was for bringing new customers to AT&T (NYSE: T) Wireless. The answer was that the new handset had only ordinary numbers.

In the second quarter, AT&T said that 40% of iPhone customers came from other wireless carriers. But, research from Bernstein show that 40% to 50% of new handsets are sold to customers that are new to AT&T. As the firm said "the iPhone is rather unexceptional in this regard.".

The does not mean that the handset does not have benefits. AT&T makes more money on the phone than with most handsets and the calling plan for the iPhone is typically much better than it is for the average cell phone.

But, the news does raise a problem for Apple. The company is currently working on finding partners in Europe, and, eventually most countries in Asia. Apple will attempt to set up exclusive deals with carriers that give it preferred terms on handset pricing and getting a portion of the money from calling plans sold with the iPhone. If it is not viewed as a champion of bringing in new customers from competing carriers, Apple's negotiating position becomes weaker.

For Apple, it must be tough to be just ordinary.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Tags: AAPL, Apple, featured, iPhone, T

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Reader Comments (Page 1 of 1)

8-15-2007 @ 8:48AM

ET said...

I have the iPhone - and it's fantastic. I have a Blackbery as well - and it doesn't come close to my iPhone - nowhere remotely close i.e. functionality, ease of use, reliability - get it? FYI - AT&T is lame; AT&T is about as useful as tits on a bull.

8-15-2007 @ 10:55AM

Michael Mays said...

1.) AT&T did not sell 12.4 million new phones to customers. They gave away or discounted 12.4 million minus the 140 thousand +$500 iPhones they sold at full price. Big difference.

2.) AT&T increased its NEW customer base by >2% with the sell of the iPhone for that quarter {(140,000/(12,500,000*.25)}. How many other phones did or could drive a 2% increase in new customers in a quarter. And how likely are the other 2.5% AT&T iPhone
users likely to switch?

8-15-2007 @ 9:31AM

CJ said...

You're extrapolating from figures for one and a half days of sales! How weak an article is this?

So AT&T says they converted 40% and Apple says they sold to 40-50% new customers (a figure hard to believe as they didn't ask that question while selling the phone to me nor to anyone else I've heard of).

At the same time, you don't indicate "ordinary" switching rates for any other phone in your article, so it all comes off as brash speculation. I know the iPhone is better at switching customers than most of the crappy phones the carriers sell.

And if it's ordinary by comparison to the RAZR's initial numbers, I'd say that's a success in anyone's book, especially for a company never before in the phone business.

Gain some perspective, man, before you dis what you don't understand.

4-17-2008 @ 4:14PM

peter said...

This is why it's important to pay attention in math class. Suppose, just suppose Apple had sold 100 million phones in two days, and the percentages of new customers were 40%. Bernstein would reach the same conclusion stating how ordinary the impact of iPhone is since other phones are also attracting 40% new customers. But as Michael Mays shows the impact would be that ATT will end up with 40 million new customers. And other providers will lose half their customers. I exaggerated the numbers to make a point that comparing these percentages, and therefore Bernstein's conclusions, are meaningless.