Smartphone sales drive AT&T's profits, shape future usage

AT&T reported another strong quarter, strongly backed by smartphone sales. The iPhone continued to dominate the carrier's lineup occupying over 60% of smartphone sales, while Android, BlackBerry and Windows Phone accounted for the other 40%. But what's interesting is that these devices are in the core of shaping AT&T's future. 

The carrier has estimated that nearly half of its subscribers have smartphones, a trend which is set to continue. In the second quarter alone, monthly data plan activations more than doubled among users when compared to the same period last year. Why is this important? First of all, a monthly data plan adds revenue, but it also forms the habit of consuming more and more data. 

But a smartphone has another effect in that it boosts the convenience of using various services, not only data. We might argue all we want about overpriced texts and even more overtaxed MMS messages, but both services grew by an impressive 24% to 190.8 billion for SMS and by 54% to 4.0 billion for MMS on the carrier. Smartphone users consume more of everything, further proven by the fact that average revenue per smartphone customer was 1.8 times that of a feature phone user.

The smartphone growth however is double-edged for carriers: on one hand you have the additional revenue from data plans and services, but on the other, they bring the need for huge investments in data. AT&T plans to spend up to $20 billion on enhancing its network. Will this ultimately pay off? Verizon is already enjoying a quickly growing LTE network and will report quarterly results that will reflect LTE adoption in mere hours. But one thing seems certain - smartphones have pushed the change to happen faster.

source: GigaOm