Verizon narrows AT&T’s smartphone lead

Verizon AT&T Smartphone Analysis

Earlier this week, AT&T (T) announced it had activated 10 million smartphones in the fourth quarter of 2012, up from 9.4 million in the same quarter a year earlier. On Wednesday, Verizon (VZ) announced it activated 9.8 million smartphones last quarter. This is just 200,000 units below AT&T. But more importantly, it’s up a robust 2.1 million units from the 7.7 million smartphones Verizon activated a year earlier.

The two U.S. mega-carriers closed the year running neck and neck in smartphone activations. It’s fascinating that Verizon has been able to improve its competitive position relative to AT&T so much in just one year.

It is worth pointing out that the iPhone represented 55% of Verizon’s smartphone activations in Q4. Verizon also announced that in this past Christmas quarter, its smartphone growth was “stimulated by a higher mix of Apple (AAPL) smartphones.” It sounds like the iPhone may have topped 60% of Verizon’s total smartphone units.

After the iPhone debuted at Verizon in February 2011, the immediate impact on the Verizon-AT&T rivalry seemed to have been muted. It took some time for the iPhone boost to kick in for Verizon. During the years when AT&T held iPhone exclusivity, Verizon built up reasonably strong fan bases for Android models built by Samsung (005930), Motorola and HTC (2498).

Now that iPhone makes up most of Verizon’s smartphone sales, it still gets that extra boost from being the leading Android operator. Motorola’s DROID RAZR models are solid performers at Verizon right now.

The tightening smartphone competition between Verizon and AT&T inevitably raises the question of how the carriers will treat the new BlackBerry and Windows Phone models launching in 2013. AT&T has initially been far more supportive of Windows Phones. Will the Verizon surge give AT&T an incentive to throw serious marketing money behind BlackBerry 10 and Windows Phone models this spring? Is Verizon going to remain chilly towards Microsoft (MSFT) and keep the focus on its strong Android-Apple stable?

The allocation of marketing resources has rarely been as important as it will be in the second quarter of 2013.

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