Verizon iPhones

Verizon reported iPhone activations of 6.2m, 9.8m total smartphones and ~11.4m retail postpaid phones sold in the December quarter. That means that iPhones were 63% of smartphone activations and 55% of all postpaid phone volume. This is obviously much higher than the iPhone's global share, due to the unique pricing environment in the USA. 

Interestingly, this is the highest share that the iPhone has ever had at Verizon. Share did spike last year with the iPhone 4S launch, but not by as much. 

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Verizon also said that half of the iPhone sales were of old models, a surprisingly high figure. It may be that both this and the dramatically higher sales are a little exceptional: December was the first quarter in which Verizon was selling an older iPhone model discounted to zero (after subsidy), since this was the first quarter that the last-but-one model (the iPhone 4) was available in a CDMA version (the 3GS was GSM-only)*.

In other words, a surge in pent-up demand for a 'free' iPhone at Verizon (and, by extension, Sprint) would result in a surge in demand focused on the older model, that would not be replicated globally. This means there's little likelihood that the sales of the lower (absolute) margin iPhone 4 are increasing more generally. On the other hand, we cannot yet tell how much of the higher share is a one-off and how much the continuing availability of the 'free' iPhone on Verizon will mean ongoing higher share. Probably a bit of both. 

Overall, smartphones carried on growing as a percentage of sales, though at over 85% of total phone sales there's only so much more room for growth. 

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(This chart has been changed: originally I based it on total 'connected device' sales rather than just phone sales for VZW Q4.)

*I was reminded of this by Daring Fireball

iPhone impact on Verizon

(This is another extract from a report I published a couple of weeks ago for Enders Analysis)

As most people know, for the last couple of years Verizon Wireless aggressively promoted Android, while AT&T had an exclusive agreement to sell the iPhone. How well did that work? 

Well, neither company discloses Android share, but in Q4 2010 smartphone penetration of Verizon Wireless’s base was 25% versus 34% at AT&T. Not good. 

However, by Q1 2012 it had risen to 44%, catching up with AT&T. What had changed? 5 quarters of iPhone sales on Verizon, as the bestselling handset, and two quarters of 50%+ sales. Not as high as AT&T, where the iPhone is utterly dominant, but still pretty strong. 

VZW discloses iPhone unit sales and the total smartphone base (as does AT&T), which allows us to calculate the proportion that the iPhone makes up of the total VZW smartphone base. It appears that the entirety of this catch-up in smartphone penetration (with accompanying ARPU growth) was due to the iPhone, which is now around a third of Verizon’s base and still growing. 

So, even on the carrier that largely created Android and created the Droid brand, iPhone is substantially outselling Android. Verizon does not disclose Android sales, and so that ‘non-iPhone’ category includes RIM and Windows Phone, but it seems quite possible that there are already more iPhones than Android phones on VZW’s network.