Did AT&T's Apple bet pay off? 1 million iPhone 4S activated

AT&T says it has activated more than one million iPhone 4S handsets, the most successful iPhone launch in the company's history, it said.

If you thought that the Apple iPhone's eventual appearance on Verizon and now Sprint would spell trouble for AT&T, think again.

The company on Thursday announced that it had activated more than one million iPhone 4S handsets, the most successful iPhone launch in the company's history, it said.

The news comes even as the wireless carrier doubled its Google Android handset sales and and overall increased the diversification of its hardware offerings.

"We saw iPhone churn decrease, a tremendous vote of confidence in a very competitive environment," AT&T Mobility CEO Ralph de la Vega said during a conference call today. "It seems like a long time ago when the issue how we would perform with iPhone competition was top of mind.

"I think and believe that our results speak for themselves. These results speak volumes about our wireless business. New customers are choosing AT&T and existing ones continue to stay with us."

Why the strength? There's no single clear indicator.

My take:

  • The halo effect from being the first carrier to offer the iPhone persists. The association remains strong.
  • More consumers are upgrading from feature phones, and AT&T is their carrier. Why not the new iPhone?
  • AT&T's wide nationwide availability is not to be underestimated. The company didn't release a geographic breakdown, but I'm willing to bet that new pockets of the country are waking up to smartphones.

Speculation, but that's my opinion. Again, the 1 million figure is specifically for the iPhone 4S -- I'm sure plenty of iPhone 4s and iPhone 3GSs were sold at their new, lower $99 and free price points, respectively.

The amazing thing in all of this is how well AT&T has weathered the initial storm of having the iPhone in the first place. The company came under fire in early tech adopter hubs San Francisco and New York City for dropping calls left and right as consumers adopted the smartphone in droves; it received so much general criticism that it created a series of advertisements just to push back after Verizon turned its coverage map against it.

In other words: AT&T's big, what appeared to be lopsided early bet with Apple may actually be paying off.

In all, the 1 million figure is upside for everyone involved: AT&T gains wireless data customers without putting all of its eggs in Apple's basket; Apple gains sales across the board; consumers gain access to an iPhone at every price point.

"Data revenues are now a $22 billion annualized revenue stream for us growing at 18 percent year-over-year," de la Vega said. "Compare that to just four years ago when the mobile broadband was just beginning to emerge. Back then it was just a $7 billion annualized revenue stream, so we have tripled that number in just four years.

"We have come a long way, yet we're still just getting started."