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How many iPhones will T-Mobile USA sell?

From the initial product launch until the end of 2012, AT&T has activated 72 million iPhones. Verizon began selling iPhones four years after AT&T and managed to activate 26 million since. Sprint began nine months after Verizon and has activated 8.5 million.

In proportion of their subscriber bases, the activations are shown in the following graph.

Screen Shot 2013-03-28 at 3-28-12.50.06 PM

 

I identified the reported iPhone activations with blue areas while the sum of green and blue areas represent total subs at the end a the given year.

I also took the liberty of forecasting 2013 data in order to try to estimate T-Mobile’s contribution.

The method used was to look at the percent of total subs that each operator has been activating. Accounting for the limited sales period for Sprint in 2011, the sales patterns are consistent across the carriers. The longer the product is available, the higher the activation rate.

Screen Shot 2013-03-28 at 3-28-1.01.35 PM

Therefore I estimated that in 2013 T-Mobile USA will sell about 10% of its subs base an iPhone. That would make its contribution to iPhone sales about 3.4 million.

It would also imply US sales among the top operators of 53 million iPhones in 2013.

That itself is 17% of 320 million subs.

Screen Shot 2013-03-28 at 3-28-1.02.25 PM

So perhaps it’s time for Apple to celebrate. This year, after six years, Apple will have completed entry into its first major phone market. The rest of the world will not be as quick.

  • Micromeme

    Hi Horace, I may be confused but isn’t activations as you graph them a per year (in each year) figure i.e. a flow and current subscribers a stock? Could you graph against overall phone purchases each year? Or perhaps add a dotted line to show that?

    • http://twitter.com/asymco Horace Dediu

      I don’t have access to data that shows overall phone purchases per year.

      • Micromeme

        I thought when att reports iphone purchases or actvations by quarter they also report other smartphone and feature phone actvations by quarter.. I see att had 10.2m smartphone activations in q4 and said that was 89% of all postpaid. Oops maybe thats postpaid dollar sales not units. However we have 10.2 m smartphone unit sales and 69.6% of subscribers are smartphones. So at least for att the dashed line for smartphone subscriber stock and smartphone unit sales might be available. Considering how difficult these companies make it you do remarkably well aggregating data.

      • bloftus

        It is a lot of work but I believe Micromeme is correct that ATT, Verizon, and Sprint have been reporting smart phone sales along with iPhone activations each quarter. The running totals could also be compared with totals from Comscore to get some idea of the turnover of iPhones as well.

      • http://twitter.com/asymco Horace Dediu

        I found US phone shipment estimates from Strategy Analytics for 2012: 167 million. This is about half of the install base as would be expected assuming a 24 month life for a phone. It gives Apple about 26% share.

  • http://sumocat.blogspot.com Sumocat

    The math is sound, but there are several new variables at play compared to other iPhone debuts.

    1. This is the first time a major US carrier has introduced the iPhone with all three current models and price points. Verizon (and AT&T) started with one, Sprint with two.

    2. The upfront pricing of those iPhones (except the 4) is lower than other carriers.

    3. Their new pricing strategy presumably is intended to stimulate business.

    T-Mobile’s iPhone ramp-up should differ significantly from those of previous carriers. That difference should be taken as a measure of the success (or failure) of the “uncarrier” strategy.

    • nizy

      Whilst I generally agree, I wouldn’t say “should differ significantly”. Might would be a better word as we just don’t know how the strategy will play out.

      • http://sumocat.blogspot.com Sumocat

        “Might” does not convey intent. You don’t adopt a new strategy because it “might” change the outcome. You do it because it “should” change the outcome. That, of course, doesn’t mean it will or that it will change in the way you want, and that’s where we’ll see how it plays out.

    • http://twitter.com/asymco Horace Dediu

      True but at the same time there are many T-Mobile customers who already are using the iPhone. That was not true for Verizon or Sprint.

      • http://sumocat.blogspot.com Sumocat

        About 1.9M as of January, but that seems to favor their chances of faster ramp-up. Those 1.9M are unlocked, which means they could upgrade anytime. Most are probably older iPhones as there was little reason to take an LTE-equipped iPhone 5 to T-Mobile until this week. None are able to take advantage of T-Mobile’s faster HSPA+ networks. T-Mobile’s existing iPhone customers have plenty of reason to upgrade, which should give them a “running start” on that ramp-up. (Also, shouldn’t they be counted in your 2011 and 2012 graphs?)

    • obarthelemy

      I think it can go both ways:
      On the one hand, many T-Mobile subscribers presumably already have smartphones, so won’t be in as much of a hurry to buy a new one as people switching from dumbphones a few years ago.
      Also, T-Mobile phone prices are transparent now, so people stretching their current phone for an extra year or buying a cheaper one *will* see a difference in their monthly bills ($20/mo for the “stretchers”). It’s actually a good test of whether price transparency has the impact on iPhone sales (and more generally on premium models) that I think it has.
      On the other hand, T-mobile is launching all iPhone models. And for comparatively cheap prices for phone+contract, so people may think they should/can transfer the money they save on their contract to higher-end hardware.

      • lurch

        It cuts your bill in half and gives you the freedom to trade whenever.

    • http://sumocat.blogspot.com Sumocat
  • http://www.isophist.com/ Emilio Orione

    17% in 2013, plenty of room to grow, but I wonder why Apple increase in distribution is so slow?
    Six year for the four major carriers?
    Why so long and why only major carriers.
    Compared to Samsung less than 50% of the carriers that work with Samsung sell iPhones.
    Carriers are generally satisfied by iPhone contracts, it makes a lot of money for them, why is Apple growing so slowly in acquiring carriers distribution contracts?

    I don’t think it is a problem of onerous contracts or the proverbial difficulty in dealing with Apple, if Apple really want a deal, if it is strategic to increase distribution, they will do it.
    Can it be a manufacturing problem? Can Apple be choosy because it is still production limited?
    It can be but production can be increased if needed, Samsung sells more phones than Apple, the production can be increased.

    It is their business model that wants only the cream, the best carriers that give the best user experience and don’t care about the others.
    But if it is like that, why T-Mobile with their limited network?
    Are the announced T-Mobile network improvements part of the deal with Apple?
    Is iPhone so powerful to force network improvements by carriers?
    If it is, Wall Street should listen to this and rethink its strategy quite quickly.

    • abugida

      Since late 2011, a number of regional and smaller US carriers have started to offer the iPhone as well. Apple now lists 21 carrier partners in the US, a list that doesn’t even include T-Mobile yet. http://support.apple.com/kb/ht1937

      • http://www.isophist.com/ Emilio Orione

        In other post Horace sad that there are almost 600 carriers in the world, more than 500 work with Samsung, while Apple iPhone is distributed by about 250 carriers and this number is almost stable.
        There is room to increase distribution, is a matter of will.

      • Tatil_S

        Among the remaining 350, I suppose only one really matters, China Mobile.

      • http://twitter.com/asymco Horace Dediu

        They all matter. Otherwise why would all the other vendors bother? (Case in point: DoCoMo is the largest carrier in Japan and it does not carry the iPhone).

      • Tatil_S

        I know, I know, it was a tongue in cheek comment.

      • abugida

        I think Horace also answered that question in other posts. This post here is about the US, and it’s the first country where Apple has added a big number of minor carriers besides the major carriers. The US was not the first country to have all major carriers offering the iPhone. I think France had that distinction in 2009. In fact, the US is one of the last.

      • Richard Hamilton

        At no point in the last six years have they had a surplus supply of iPhones. Asking why they haven’t grown their distribution is similar to asking why they haven’t lowered their prices. They have more demand than they can meet already.

      • http://www.isophist.com/ Emilio Orione

        I don’t think so, I mean it is true they have more demand they can deal with but they could deal with a supply increase if they want to, very difficult but doable.

        For one thing they could increase investments to increase production, they could start ramp production in advance, they could switch to a six months new product release to decrease the ramp, they could phase the new product country release so to better manage the ramp and on and on and on.

        The problem due to an increase of demand are good problems, everyone is happy to have them and they can be managed.
        I can’t believe a company stop distribution to maintain lower demand.

        It is that giving selected carriers (best in user experience) the opportunity to have the iPhone and negating that possibility to other concurrent carriers, they can make better deals with the carriers they choose.
        They want to be premium even for carriers.

        The news here is that it can be that part of the deal with T-Mobile was about improving their network.
        The iPhone is becoming a very powerful product if it can do that.

      • Mark Jones

        Each of your suggested improvements also has downsides. Apple has to consider both sides,

        “For one thing they could increase investments to increase production,” —- Apple is doing that, but demand for each phone has grown even faster.

        “they could start ramp production in advance.” —- Apple does that already as they have about 2-4 weeks supply at launch; the earlier they ramp production, the earlier the phone’s design is frozen, the less advanced the phone will be.

        “they could switch to a six months new product release to decrease the ramp,” —- The more rapidly they release a phone, the less of a distinctive gain each phone would have. As it is, each iPhone release is already being criticized as being too small of an advance. A six months schedule would be quickest for any product Apple makes.

        “they could phase the new product country release so to better manage the ramp and on and on and on.” —- this is what Apple used to do. The downside is the black market; people buying phones in the US, smuggling them out of country, and charging exorbitant prices.

      • http://www.isophist.com/ Emilio Orione

        Downside yes, impossibility to increase the current level of production no.
        The point is that selling is a good thing and so the downside are compensated by sales.

        PS for our discussion about expanding distribution, note Horace answer below. They all matter.

      • Mark Jones

        Not all selling is a good thing, see $99 RIM Playbook or HP TouchPad. And “compensated by sales” could create a short-term lift but at a longer-term cost, see Dell and Nokia, who cut their prices/outsourced their design for short-term sales/profit, and then could never get their margins back.

        Of course all distributors matter, and the more the better, but only on your threshold terms. And obviously, as of today’s known contracts, the extra carriers don’t matter enough for Apple to change their business model and strategy.

        Look, some of the arguments you’ve made, I’ve made them before. But Apple’s results to date has shown I was often wrong. Apple has been different and super-stubborn many many times before — 99 cent singles required, no FM radio, no Flash, curated iTunes App Store only, 30% cut and no customer data released on subscriptions, no netbook, no optical drive, not budging on margins, one-handed-use iPhone sizing — and has been shown that they were right. Not always proven right (DVD-RAM drives, original iPhone pricing, smaller iPad) but often. So I listen carefully to everything Apple says and try to understand the trades they’re making. Apple isn’t always spinning or misdirecting; they often say or write exactly what they think is important.

        Apple is pragmatic and patient. They take what sales they can get while holding to their principles/vision, and prepare new products to meet new segments of the market or new markets.

        “China Mobile Waits on Qualcomm Chip for TD-SCDMA iPhone (June 2012)China Mobile chairman Xi Guohua disclosed recently that the company’s timetable for offering a TD-SCDMA iPhone is not dependent on decisions made by either Apple or China Mobile, but rather hinges on when Qualcomm can provide a chip to Apple that supports TD-SCDMA. At the same time, Xi emphasized that China Mobile is even more interested in working towards the successful completion of its TD-LTE network, which the iPhone can use.”

        Qualcomm MDM9225 and 9625 chips supporting both TD-SCDMA and TD-LTE are being produced. TD-LTE network is in trials in China, and the WSJ reports China Mobile is spending $7B to get it approved by year end. So does this next iPhone come to China Mobile by fall?

        As for reaching the next price tier of the market (and US prepaid market), I think Apple will release a new-wow-design good-margin but lower-cost $350 unsubsidized (free when subsidized) iPhone (A5-chip capabilities) and discontinue the iPhone 4 and 4S. That should appeal to many more carriers.

      • http://www.isophist.com/ Emilio Orione

        “Not all selling is a good thing” is nonsense.
        If your money comes from selling you have to sell.
        With this kind of basic understanding every discussion is useless.

      • http://twitter.com/asymco Horace Dediu

        The demand/supply imbalance is seasonal, I believe. The problem is dealing with an instantaneous supply to more than 100 operators within one quarter. The alternative is to sanction supply selectively which creates (a) a black market (b) customer dissatisfaction (c) violent launches. Off-season supply is greater than demand. Such is the nature of the market.

      • Sacto_Joe

        Exactly. Like so many other companies, Apple is becoming more and more seasonal. Production capacity needs to cover the highest demand seasons. Ergo, excess production capacity for the rest of the year.

        This is why people like Robert Paul Leitao of postsateventide and braeburngroup have been proposing including a six month minor upgrade cycle across the product line.

    • handleym

      “But if it is like that, why T-Mobile with their limited network?”

      One thing T-Mobile does is act as real (somewhat…) competition to ATT, VZW and Sprint. As long as T-Mobile is desperate and willing to go along with things Apple might propose, Apple has some leverage over the big three. A first example of this might be Apple providing a voice-only FaceTime — one more step to the carriers being only a data pipe.
      It’s also in Apple’s interest to see how the non-subsidy/non-contract model plays out; it is popular in the US, and should that inform how Apple positions its future self?

      • Walt French

        One interesting feature in the T-Mo deal is that iPhones will be able to use the “HD Voice” G722.x standard; the codecs have been built into at least the iPhone5 but haven’t had a US carrier willing to provide modern codecs at the receiving end (or perhaps they fear extra bandwidth requirements). Reports are that the call quality is much better. The iPhone’s ability to reduce ambient noise (somewhat?) could mean that the higher quality, newer standards don’t even use that much more bandwidth.

        I can’t imagine many users would say they don’t favor better call quality: better ability to understand accented speakers, to recognize the caller’s voice, to get voice to stand out from noise better.

        Here’s hoping you’re right.

      • handleym

        Good point; I’d forgotten about that.
        Certainly I deliberately use Skype to talk to people when I can, in preference to the phone [land line or cellular], not for cost reasons (it’s all more-or-less free given large buckets of minutes) but because the voice quality is so much better.

        It will be interesting to see if T-Mobile push the voice quality angle in their ads. If I were them I would, but it’s tricky to make the point in a way that is both true (we have better voice quality) AND that doesn’t dilute the point by conceding that, yes, it only works if you stick to our network. Maybe make a big deal about how good the voice quality is for the friends-and-family plan, and leave the details unstated?

    • http://twitter.com/OgreDennis Dennis Baker

      “I wonder why Apple increase in distribution is so slow?”

      ——————-
      Apple is very stringent with carriers. They are picky about the carrier’s network capacity and they force carriers into agreements that commit them to selling a set number of handsets based on the total number of subscribers the carrier has. DoCoMo’s executives suggest Apple asked for them to commit to buy enough phones to equip 20% of their total subscriber volume. Whether those specific numbers are accurate or not, there is definitely a commitment and that causes a lot of carriers to hesitate.

      For Apple’s part, ensuring the carrier commits to a specific unit volume helps Apple with planning. Unlike most other phone manufacturers, Apple has a base number of units that are guaranteed to sell. This lock-in is one of the factors that allows them to commit to massive manufacturing initiatives.

      • http://www.isophist.com/ Emilio Orione

        Yep, you are right. The point here is if the iPhone has gained more power and allowed Apple to force not only a commit to buy a prefixed number of devices but also to improve the network to allow a better user experience (adopting LTE for instance and void HD)

    • http://twitter.com/WalterMilliken Walter Milliken

      I think a lot of the timing of Apple’s rollout to the four major US carriers is easily explained as a combination of politics and technology.

      I think Apple started on Cingular/AT&T in the US because (a) it was GSM and thus the phones could be sold widely around the world to other carriers and (b) it was desperate enough for a market advantage it was willing to give up customer control. Verizon would have been the other obvious launch partner, but the phone would have worked in many fewer places worldwide, and Verizon’s corporate culture basically doesn’t allow negotiating with suppliers — it *dictates* to them. Apple’s view of what it wanted was 180 degrees from what Verizon’s view would be. And at the initial launch, Verizon would have seen no advantage to giving Apple any concessions. Without Verizon as a CDMA phone customer, Sprint, also CDMA, probably wasn’t big enough to be worth launching with.

      Note also that AT&T *did* get a long period of iPhone exclusivity — not unreasonable since they took a big risk in giving Apple what they wanted. Overall, it seems to have worked out for them — they went from a probably-dying carrier hemorrhaging customers to a strong #2 breathing down VZ’s neck. But that meant Apple couldn’t sell to other US carriers for a while, even if it wanted to (or they wanted access to the iPhone).

      After several years it became clear that Verizon couldn’t hold onto customers without the iPhone, despite heavy promotion of smartphone alternatives, including Android, they appear to have been forced into conceding to Apple’s model of customer ownership. Also, the AT&T exclusive deal was up. Once Verizon was willing to sign up, Sprint was probably inevitable, and may have been delayed somewhat either due to VZ semi-exclusivity contractual requirements, or simply due to prolonged contract negotiations and potentially high investment making it hard for Sprint to get to the point where it could close the deal. (Watching VZ’s customer base stabilize once the iPhone was there probably was a big motivator, too.)

      T-Mobile was a special case of technology issues, I think — they used an oddball frequency band, so needed a different radio setup than the AT&T/world GSM model. Apple would have had to make another special model just for them, and the customer base just wasn’t worth it, I think. What’s different now? T-Mobile is moving its radio frequencies around to be more like other GSM 3G providers, so Apple’s regular GSM models now work properly on T-Mobile in many cities. That lets Apple sell the regular GSM model on T-Mobile without worrying about customers complaining about crippled data speeds (2G vs 3G). Apple does seem to have made a minor concession to support T-Mobile’s odd AWS band in the iPhone 5, I suspect this may be due to the availability of a more flexible RF part that can be reconfigured to handle that band. But older iPhone 5s apparently lack the necessary RF hardware.

    • http://macsmiley.tumblr.com/ MacSmiley

      Slow? Have you perhaps forgotten that, by necessity, Apple had a five-year exclusive deal with AT&T (originally Cingular), because none of the other carriers wanted to cede control over the features they would permit on their phones or give up charging monthly subscriptions for apps and music? Verizon was initially approached and turned Apple down. Apple needed elbow room to INNOVATE.

      Don’t forget your history. When the iPhone was announced in 2007, Steve Jobs said they would be happy if Apple captured 3% of the market. I think they’ve done pretty well since then.

      • http://www.isophist.com/ Emilio Orione

        So the “slowness” was due to a cautious distribution model: only one exclusive deal.
        They changed the model as soon as the success of the iphone was clear, now exclusiveness is no more an option for carriers, but not all carriers are equal and only selected carriers can wish to sell the iPhone.

        More than a low price iphone Apple could need to change this policy and allow the iphone a wide distribution to flood the market.

    • JohnDoey

      They are slow because they don’t have to be fast. They have 75% of the profits by doing things their own way.

      Remember that Apple is not in crisis. Remember that Samsung has been in phones a very long time.

      • http://www.isophist.com/ Emilio Orione

        So you think that if you are doing well you don’t have to try to improve?
        There is always room to improvements and business is a restless effort.

      • Mark Jones

        Who says Apple isn’t trying to improve? Apple said its philosophy is to go where it thinks the puck is going; not to chase behind where the puck is now. That’s how it made an iPhone instead of a Blackberry-clone. That’s how it made an iPad instead of a netbook-clone. Apple was asked repeatedly on quarterly financial calls why they hadn’t made a netbook; they sure looked slow. That’s how it made a MacBook Air with SSD instead of a $500 plastic brick. Don’t you think if Apple cut its laptop margins to 10%, they would increase market share?

        What looks like slow could simply be because we don’t know enough to know where the puck is going. We often don’t know enough about soon-to-arrive technologies, for example, liquidmetal or wifi geolocating or flash memory signal processing. We often don’t know enough about changing business models and threshold margins, for example, music (streaming), a la carte video on Internet (breaking cable), cellular (dumb pipes), or payment processing. Apple could be waiting for the market to adapt to its business model/margin requirement (as it has in the past with music pricing/DRM, App Store fee) because its confident that conditions (i.e., piracy, declining user base) will lead them to. Apple is aiming at some point in the future, when it thinks markets and technology converge to make some product not only viable but successful.

        Via Horace’s and others work, and discussions, we can learn more about how Apple works, what it thinks successful means, what the trends are, etc. And of course, Apple could be wrong about where the puck is going; on this point, I think Apple misses Steve Jobs.

      • http://www.isophist.com/ Emilio Orione

        I was speaking about improving iPhone distribution, that is increase sales. It is not in relation with the puck, it is not about innovation or a new product, it is about selling the product you already have.
        Apple like any other company has to sell its products. They are different in many ways from other companies, they are unique, but one point is in common: the all are in business and the result of their effort must be money.

      • Mark Jones

        Again, who says Apple isn’t trying to improve? Signing up additional distributors involves those distributors agreeing on a price and other conditions for the phones. China Mobile and NTT DoCoMo, among others, don’t want to pay the prices Apple has set for various levels of volume commitments, and agree to the same conditions (no pre-loaded carrier apps, Apple iTunes registration-App Store, Apple marketing control, Apple warranty service, etc). Given the constant ASP over the five years, and Tim Cook’s comments, these prices/conditions would be in the same range as prices/conditions Apple has used for its contracts with other carriers.

        Are you saying that it would be in Apple’s best interests to lower the price, change some conditions, and/or in some cases, make special phones, to get those distributors at this time? If so, why? In the particular case of China, given the gains China Telecom and China Unicom have made over the last few years (and which they attribute partially to iPhone), and the need for Apple to make a TD-SCDMA/TD-LTE iPhone, isn’t it worth it to wait, at least until TD-LTE is out of trials?

      • http://www.isophist.com/ Emilio Orione

        Yes and no.
        Yes I am saying that numbers speak for themselves and Apple distribution is inferior versus its competitors, so it must be improved.
        No I am not saying this improvement should come by lowering the price.
        The contract with DoCoMo was not only about the price but also about volume and network quality. Price x volume was the money required from DoCoMo, so lowering the volume could have the same effect than lowering the price.
        The point is: why Apple has less distribution than competitors and most of all: can Apple afford to be so less distributed for further time?
        Phone is a voluble market, enough users that cannot access the iPhone could be satisfied with alternatives and never come back.
        The iPhone is still the best phone on the market, no doubt about it, and most of all the best ecosystem by far, very far, but that is the compelling reason for Apple to increase distribution while it is in advantage. Attack competitors when you are stronger is the winning strategy, rest on your success and you will loose.
        Every carrier count and Apple is also missing some big carrier of the world, there is a lot of room for improvements.

        Being with the best carriers is a must for the best phone, no doubt about it. I understand Apple wants to be the stronger of the deal, but leaving opportunities to competitors is also a damage.
        The big push to Android was from Verizon for instance. Since the exclusive deal with AT&T forced them to be without an iPhone, they could not tell their customer: we don’t have an alternative and so Android got the marketing it needed to be noted.
        Apple will have to close a lot more deals with carriers when the next iPhone will arrive on market. It is a strategic necessity, not a tactic one, that is it is not due to lack of current success, but to close the door for future in-success.

      • Mark Jones

        You assert that Apple distribution is inferior because there are fewer distributors. If there was only one chance to win over a customer (and then the customer stays permanently with the brand for life), then I’d agree with you. But instead, I’d agree with Apple that there are more frequent opportunities to win over a customer with smartphones than there was with PCs, given the still dominant mentality of getting a new phone every 2 years.

        Apple seems to have data that shows people are switching from Android and other smartphones to iPhones far more often than switching in the other direction (see Schiller’s recent comments). Apple claims that people, who have and don’t have smartphones, “aspire” to own the Apple products. Tim Cook has talked about how people buy non-Apple tablets and smartphones and then are disappointed and don’t use them much after the first few days. If this is the case, then Apple sees other smartphones as just a stepping stone, an introductory product, and Apple plans to win them over the next time, or the time after. It’s more important to Apple to maintain its brand, its price, its principles in any distribution contract. It’s less important to get more distributors.

        Also, Samsung sells phones across the full range, from $30 to $800. Not all distributors are interested in the top end product because they have very few high-end customers

      • http://www.isophist.com/ Emilio Orione

        You seem to imply that the phone market is made by end users. That’s not true, simply like that.
        The market is made by carriers that make contracts for a large number of phones for a given time.
        Every other consideration you make is not based on reality.
        Apple has the force to attract individual users, true, but numbers this large are made by contract with carriers, not enough final user buy phones outside carriers’ stores.

        I agree that some carrier may not be interested by the iPhone (and that can also be seen as a defect of Apple offers, since Apple has got low price iPhones, the older models), but apple is not missing a few of minor carriers, it is missing more than half of the worlds carriers and some big carrier in the lot.
        That can not be a wanted situation or one to be comfortable with, Apple has got to improve and that’s a general rule always true and more true if your competitors are better than you in that field.

      • Mark Jones

        Duh, of course, carriers buy phones, and people buy phones mostly from carriers. But there’s no lock-in with carriers. They will sell whatever they think people buy (assuming they still make a profit). Apple has proven it can succeed by using end user desires and demand to drive carriers into a different way of doing business. To say otherwise (as you do) is to completely miss what Apple has done. Let me say it again, to say otherwise (as you do) is to completely miss what Apple has done. As Horace has written before, Apple has been smart enough to set themselves up as a premier smartphone salesman for the carriers.

        If Apple can’t make a sale to you today because of its products price, or its principles, but it believes it can still make a sale to you two years from now, either because you’ll want something better, or because it’ll have something cheaper, then it’s okay with that. You’re not locked in for life, so Apple will come back another day. Apple is not driven by maximizing market share or revenue today; it’s purpose is to make great products.

        By the way, the lowest price iPhone is $450 unsubsidized. In the current smartphone marketplace that is not “low price”.

        We’ll have to disagree on whether the AT&T contract was a mistake. I would say it clearly was not a mistake since Apple achieved most of its goals such as having a direct customer relationship (direct activations via iTunes, preloaded App Store, Apple warranty service); maintaining its brand – no carrier modifications to the phone, Apple setting the price; etc, the AT&T contract was a success, It established a new way of doing business; one which allowed Apple to escape from being a dumb vendor led around by the carrier king, and thus reap a greater share of the mobile profits Rather, the carriers are slowly being turned into dumb pipes led around by the ecosystem/platform king. Apple has shown that its aim is for carriers to be like broadband providers, where iPhone owners can choose which carrier to use purely based on price and network quality, on a per call/connection basis.

        Finally, again, you keep saying “Apple has got to improve.” Exactly, concretely what do you mean by that? Please give examples. Apple is improving their phones – both hardware and software – with new useful capabilities. It’s improving its supply chain and production capability, including ramping. It’s improving it’s retail and online stores and service, It’s becoming more efficient. What are you proposing they do to improve?

      • http://www.isophist.com/ Emilio Orione

        You really believe that not having a contract with a contract with a carrier, for instance DoCoMo, is for Apple advantage?
        There is not discussion with an opinion like that, everything Apple does is perfect end of the story.
        Every carrier has premium customers that in this way are not served by Apple.
        The 450 price is set from Apple to end customer to avoid conflict with carriers. The price each carrier pay for an iphone is a matter of the deal with that carrier. Apple can set the price at will since they have very high margin at 450. It is a matter of will to be with more carriers or to be with only half of them.
        The more the better since the reachable user base is greater. I aspect you to agree with that.
        You seem to imply that the low distribution is due to the impossibility for Apple to lower its standards or for carriers to pay the iphone price. I don’t think this is true.
        Apple devices are access points to Apple ecosystem, an unique one, and every carriers know that the iphone makes the money for them since users pay higher contract to have them.

        It is not only a matter of money it is that Apple wants to use only the best carriers that give the best user experience.
        There is room for improvements in distribution. Apple has to lower its standard for the network quality, the money part of the deal is doable.
        Doing so the user experience will not suffer that much and the competitors will have to fight harder without niche of non competition with apple.

      • Mark Jones

        You wrote: “You seem to imply that the low distribution is due to the impossibility for Apple to lower its standards or for carriers to pay the iphone price. I don’t think this is true.”

        What evidence do you have that this is not true? Apple said AT&T was the only US carrier to agree to its many business requirements in 2007. Apple said it did not lower iPhone pricing for Verizon or other carriers that signed after exclusive contracts ended. Dennis Baker above said Apple wouldn’t budge on volume commitments for NTT DoCoMo. All evidence points to Apple refusing to lower its business model requirements.

        By standards, you seem to think I meant network quality. I didn’t. Network quality seems to matter little to Apple; it values many more other important things such as control of the customer relationship. iPhone is sold by many small US carriers, whose quality is questionable. Even AT&T network quality wasn’t very good — Steve Jobs talked about this in interviews.

  • r.d

    Band IV (W-CDMA 1700 or Advanced Wireless Services) in the United States (T-Mobile USA), Canada (WIND Mobile, Mobilicity,Vidéotron) and Chile (VTR Movil, Nextel Chile)

    NTT Docomo is on Band VI (800), IX (1700), XIX (800).
    EMobile is on Band IX (1700).

  • abugida

    How can you correlate this with the Comscore figures of US installed smartphone base that you’ve tracked for a while? Last year Apple picked up about 7 points there, going from 29.6 % to 36.3 % of all smartphones in use. Will they be able to keep that momentum, based on your forecast for the big four carriers?

    • handleym

      One figure is percent of SMARTPHONES. One figure is percent of SUBSCRIPTIONS (which include dumbphones, along with, I am guessing, various smaller categories: tablets, dongles for laptops, non-mobile cellular, specialist auto subscriptions like On-Star, etc).

    • JohnDoey

      All the smartphone metrics are BS because the definition of smartphone keeps changing. The only market share number that matters is “phones.”

  • Pingback: Horace Dediu: How many iPhones will T-Mobile USA sell? - 3.4 Million | TheTechStorm

  • http://financial-alchemist.blogspot.com Turley Muller

    I think you need to focus on post paid subscribers. Not total subs. Total subs include machine to machine accts

  • David White

    T-Mobile phone prices are now visible so that the people pulling for an additional year or a cheap buy your monthly bill difference in their existing phone. IPhone sales price visibly is exactly what it is that I think it is (and premium models in general) is a good test to have an impact.

  • sbono13

    TMobile just announced their results– 500K iPhone 5’s sold among 2.2 million total smartphones sold (23% market share). Note: iPhone was only available for a month during the quarter.

    https://www.otciq.com/otciq/ajax/showFinancialReportById.pdf?id=103887

    Incidentally, Horace, the cumulative total of carrier activations in the US tops 100m. How do you reconcile that figure with the Comscore findings, the latest of which suggest that the current installed base of iPhones in the US is about half that? From what I could tell by spot checking a few timepoints, carrier activations are actually slightly less than the shipments that Apple delivered into the US, per the Samsung/Apple court docs.

    Is it just a lot of retired phones? We know that the 100m cumulative total is backloaded (probably 75 million activated within the last 2 years). Surely, most of those should register on Comscore?