Apparently growing tired of its reliance on Apple's iPhone to generate revenue, AT&T is adopting a new three-platform strategy that will push higher-margin, less-subsidized Android (News - Alert) and Windows smartphones, according to a new report from Technology Business Research (TBR).
As reported earlier today, AT&T posted better-than-expected first quarter earnings on Tuesday, powered by a strong customer retention rate and, ironically, a decline in iPhone sales. Carriers that sell Apple's (News - Alert) iconic handsets must absorb huge upfront costs and then make the money back over the duration of a two-year contract.
Lower-subsidized Android and Windows smartphones, meanwhile, don't cost carriers nearly as much in upfront capital and provide a more immediate ROI. As the sole carrier of the handset for several years, AT&T relies more on iPhone (News - Alert) sales than any other competitor. Of the 5.5 million smartphones AT&T sold in Q1 of 2012, 4.3 million were iPhones.
In an effort to reduce its dependency on the iPhone, AT&T is now looking to diversify its smartphone portfolio – a move that TBR believes will not only lower its average device subsidy, but also help drive subscriber growth.
The new strategy began to take shape earlier this month when AT&T launched the Windows-powered, LTE-capable Lumia 900. The carrier spent roughly $150 million advertising the new handset as part of its push to drive more attention to Windows smartphones.
“This Windows device, along with new Android device launches will help increase AT&T’s non-iPhone net additions in 2012 and thus begin to reduce the dependency on the iPhone,” says TBR.
In order to meet capacity requirements for the expected growth, AT&T is encouraging lower-tier subscribers to transition from its 2G GSM network to the company’s HSPA+ network. TBR says that AT&T will then reallocate the spectrum to high population markets.
Even with the added airwaves, AT&T will still need to acquire additional swaths of spectrum to meet ever-increasing data demands. Available options include purchasing spectrum from Dish Network, MetroPCS or even rival Verizon (News - Alert), which said last week that it would agree to sell its block of 700 MHz airwaves if the FCC (News - Alert) approves its proposed $3.6 billion acquisition of wireless spectrum from a consortium of cable companies.
Edited by Jennifer Russell