Rubicon’s eye opening iPhone analysis

by alec on April 2, 2008

Let's say for the sake of argument that you didn't believe my assertion on Monday that reasonably priced data plans would lead to higher revenues in the mobile world.  Or maybe you're a business analyst at one of Rogers, Telus, or Bell looking for proof that a cut in rates will increase your bottom line.  If either of those is the case, check out Rubicon Consulting's study on iPhone, released at the beginning of this week.   Among the many gems is this piece of analysis:

Based on the findings of the study, AT&T is probably getting about $2 billion in incremental yearly service revenue due to the iPhone deal, and that figure will increase as more iPhones are sold.

Here’s how the $2 billion figure was calculated:

Total number of iPhones activated by AT&T to date: 3,000,000
 
Number switching from other operators (47%): 1,410,000
Annual revenue increase from switchers (@ $97/month): $1.64 billion
 
Number upgrading current AT&T accounts (53%): 1,590,000
Annual revenue increase from upgraders (@ $19/month): $360 million
 
Total revenue increase per year: $2 billion

An unannounced part of that revenue gets shared with Apple, so not all of it goes to the bottom line for AT&T. But it is still a substantial source of growth in a US mobile phone market that is saturating, and doesn’t have many new users available.

Another gem in this report: the most heavily used functions on the iPhone were email, text messaging and web browsing.  Music was #4.  

People switched from other carriers to use iPhone and its flat rate data.  Moreover, AT&T customers traded up to plans that included data, in order to use iPhone.  Rubicon estimates a 24% increase in ARPU as a result of AT&T's choice to deploy iPhone. 

And to think that the critics thought that AT&T gave too many concessions to Apple when the deal was announced. 

For Canadians, the conclusion is inescapable:  A reduction in Canadian data rates would be good for consumers, enterprise, and the carriers shareholders.   

{ 1 comment… read it below or add one }

Thomas Purves April 2, 2008 at 9:25 am

That and it probably solves the debate of who's not answering who's phone calls. Ted Rogers would probably give his liver to gain those kind of numbers in Canada.

And data rates sigh. Then again, with 95% of revenues coming from voice and SMS, do the canadian carrier execs even remember that they offer data? Data, what's that?

Did "talking on the phone" score anywhere on the top applications for the iphone?

see also today: http://wirelessnorth.ca/2008/04/02/solving-canada

Reply

Leave a Comment

{ 1 trackback }

Previous post:

Next post:

Alec on LinkedIn Alec on Twitter Alec on Facebook Calliflower on Youtube RSS Feed Contact me