Strong results from Verizon Wireless but do they need to diversify?

By Chris Umiastowski on 18 Apr 2013 11:59 am EDT
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This morning Verizon Communications posted a great set of financial results for Q1. In the wireless business, Verizon added 667,000 new subscribers, activated 7.2 million smartphones and posted an 8.6% year over year rise in wireless service revenue.  

Out of the 7.2 million smartphones, Verizon disclosed that 4 million were iPhones.  This means the other 3.2 million were some other platform, and we know the majority of these were Android phones, with a smaller mix of BlackBerry and Windows in there.

What’s interesting is to see that iOS share has risen in the last year at Verizon.  I don’t have last year’s numbers handy but iPhone accounted for 56% of Verizon smartphone sales this quarter.  According to Tavis McCourt, an analyst with Raymond James (who’s views I respect), this ratio climbed versus last year.  

“We believe the important analysis for iPhone trends is that it is still taking y/y share. Again, this is only one carrier, but shows that, at least in the U.S., the ecosystem strategy is working”

Obviously price competition among Android handset vendors is pretty good.  Each vendor mainly competes on hardware rather than by offering an entirely enclosed ecosystem like iOS or BlackBerry.  

Yet iOS share gains continue to happen inside of Verizon.  This begs the question, “Will Verizon push harder to diversity?”  If they do, it bodes well for BlackBerry.  We already know Verizon has been more aggressive than AT&T with respect to BlackBerry Z10 promotion, and I think this will only accelerate when the Q10 arrives.

Whatever the case, it’s clear that BlackBerry is still fighting a battle.  But I can see why carriers would be on their side, helping them to regain some of the lost share.  It’s not necessarily a good thing to have 56% of your smartphone sales coming from the most heavily subsidized brand on the planet.  It’s expensive for carriers to subsidize handsets to such a large degree.

Reader comments

Strong results from Verizon Wireless but do they need to diversify?

64 Comments

Ya the Q10 is definitely gonna do much better for the carriers than the Z10 did for the hardcore BlackBerry users.

Posted via CB10

I think the Q10 will be adopted only by current BlackBerry users, it will help the conversion of some BB7 to BB10 but I dont think this device it will sell in great volumes, at least I dont think it's going to win people back from iOS or Android.

Eager BB fans already purchased the Z10 some of them will buy the Q10 but only a small percentage.

Bottom line BlackBerry has to work its was back in the smartphone business winning market share day by day but it will be a slow process and it will take a few years if delivered successfully. I'd call it a success if BlackBrry can take a niche of 10% of the whole market.

It's possible some Android and iOS users switched to those platforms because of the inferior browser, camera, and app selection on the BB7 devices, yet they really prefer a physical keyboard. The Q10 solves the majority of problems hindering BB7 devices.

Posted via CB10

I second this. I have a three year old Palm Pixi, and am looking forward to the Q10 (if I can find some way to afford it). I would think some people have settled for that Motorola keyboard phone they made (still selling for 70 at Sprint with contract) and other keyboard phones (Motorola Photon slider). Keyboard isn't completely dead and business users want a solid phone, which the q10 could deliver to them.

We're talking about irrelevant numbers, people that wants a keyboard are still with BlackBerry never left. I might be wrong but Q10 sales will be 95% made to current BlackBerry users converting from legacy devices.

From "only" current BB users will buy Q10, to "95%" sales will be to current BB users... Quite an irrelevant number, yes ;) I hope you don't work with numbers TOO much. (All in good fun!)

I like your point, though.

Well I have to disagree with you, since by my experience and own research among friends and blogs, they are way more people waiting for the Q10 whom are currently iPhone or android users than I've seen switching to the Z10. All of my ex-BB friends who are now in iOS or Android, are waiting for the Q10 ! cheers

Yes! If they made more BB *friends*, it would in turn bring more people to use a BB. I'm really ticked they haven't sent us an update.

Does this include phones that were bought through amazon wireless or another 3rd party for Verizon?

Posted via CB10

Counterpoint: Apple = golden eggs, and having a basket of those ain't too shabby. But, yes, diversifying seems like a good idea (not a business person here, haha)

Apple is only a golden egg for Apple though, as was mentioned in the article, the iphone is the most heavily subsidised phone on the market so it is actually in the best interests of the carrier to shift those ios users they have gained since they got the iphone onto different platforms.

A clearer example of how Apple is not the golden egg, look at how Sprint are struggling because they had to commit themselves to too large an order just to get the iphone and now they are losing out on people who want models they have chosen to skip such as the z10, most android devices or even wp8 phones.

Good point. I actually forgot about the subsidizing when I commented. The idea is that they subsidize Apple phones to bring in customers that pay 70-120 a month to have a cellphone plan. If Apple helps a carrier achieve that, then it would seem like a good financial move. But, Sprint isn't losing millions of customersbecause of no Z10, so perhaps, then, having Apple is a good idea?

However, Sprint is losing customers, (i think that's what their last statement reported) which means that Apple didn't save them. Maybe if the Softbank (or Dish) deal goes through, they use some of that cash to finish off their contract with Apple.

Apple has managed to skim all of the profits out of that monthly contract, leaving Sprint with much less of it for their efforts. Brilliant....for Apple.

From my sweet BB10 Neutrino powered Z10 :D

First they should update the Damn Z10 then they could start thinking of promoting the Z10 cuz promoting a unfinished and not stable phone is not a nice way to boost a company profit.

Posted via CB10

I think as badly as the vz z10 needs an update, it's not as behind as we may think. Just because it has a lower build number still could be it has some of the battery updates and such. Vz is the only coma version I know of so it's entirely possible that BlackBerry added features to the version its on now to bring it on par with other versions. Some people on vz are experiencing great battery life or on par with other smartphones. I am no vz apologist by any means lol, but do think it's possible its got some updates more than gsm versions at the same build.422

Posted via CB10

Its not that bad. Its ok. But if the update came out the z10 would be that much better. It would be nice but its not like its frustrating. Its just a small annoyance instead.

I'm still waiting for either Att and or TMobile to come out with and Ad for the Z10. It took Tmobile about one day to come with their Iphone ad. I'm guessing both Verizon and Sprint will push the Q10 hard and it will sell very well,

Relax Always, it's not unfinished. It's a new ecosystem, it has bugs, and it needed to get into people's hands to figure those out. 10.1 is on the way and is taking care of a lot of the issues that people are having already.

Posted via CB10

I say push what sells. I dont know if a high iphone marketshare is a bad thing other than your point of the high-subsidy. 56% could become 76% or 36% by next quarter. I'd bet on being close to the later. We know a lot of what sells is based off marketing. To me we are on the tail end of apples marketing dominance. I also think the US and iphone will prove to be an outlier. Other markets aren't as married to to the platform and the iphones ecosystem has been more tailored for the american market.

I don't think we are behind on anything. It wasn't like anybody anticipated an iphone killer from the get go. Is blackberry good enough to dethrone apple phone wise I believe so once polished but unless they get themselves a juggernaut of a marketing team in house developers (to show off what qnx can do representation at flagship stores in the US. Bb10 CAN dominate in the corporate world and dare I say maybe take second (not from Android as a whole but from Samsung) for now I like what I see. People are coming to me with questions. Marketing just needs to push harder. Not to take down apple but to become relevant enough to be in the conversation

Feel free to add me 24EFEB55

The high-subsidy is the key point though. Apple charges a lot for its phone, but carriers know they will be in big trouble if they don't offer it.

Is the iOS result as a consequence of the sales push by Verizon? Over here in the UK, when enquiring about the Z10, I have been repeatedly directed to iPhone by sales people who have shown an indifference to BB and Android (except the S3). Is this due to salesperson incentives? As it is, I'm still going BB10, just waiting to try the Q10 before making a decision!

Perhaps, but the angle would be a negative one: e.g: carriers may be becoming worried about their reliance on the iPhone.

There probably won't be a reserve in those numbers until BlackBerry has truly redefined what it is to have a smartphone. They have a great start with the Z10 and the Q10 should prove to be even better but BlackBerry will have to show consistency they cannot drop the ball and think that by releasing 2 great new devices and a 3rd later this year they will win back the former BlackBerry fans that swapped to Android and iOS.

Posted via CB10

Well I switched to Verizon after nearly 10yrs with Sprint, just to get the Z10. I have to say, their promo and display models were in top shape running on their local wifi. The Verizon rep that helped me was knowledgeable about the device and even had one for his personal use. He even mentioned CB as being an excellent resource. I'm glad Verizon is doing good, I hope they keep it up.

Posted via CB10

I just wish that--for the love of God and all that is holy--PUSH A BLOODY UPDATE!!! I mean... WTF!?!?

I was also with Sprint for over 10 years (February 2003) and left for the Z10 on Verizon. I do NOT miss their terrible coverage and hate how they refuse to give customers a choice

I left VZW and will be moving another phone number from there soon. Why? Because I am internationalizing and Verizon network tech is [almost] entirely USA specific. I want a device that will work with good performance in many countries.

Given that VZW it taking their sweet time getting updates out for Z10, I'm feeling pretty good about my decision.

Hurds, I have a different opinion.

I think you push what is going to sell. what is selling is just that. You have to think long term. Pushing a product that is already established doesn't make sense in the long run.

Steve Jobs was a master at this. He didn't push to sell you what you wanted. He made it and then convinced you that you needed it.

So you mean build it and they'll come? No they wont! People bought in Apple because they didnt market products they marketed values and people bought into these values thus bought whatever products Apple was making. I think it's changing now though.

C'mon... We are not so pro-bb we can't admit that the iPhone is a good product are we :). No Z10, but its all right :)

One thing i don't get :
You said that advertising will be better for the Q10?
But isn't the Q10 for the hard core keyboard lovers?
Why would it needs advertising for?

Tks,

Posted via CB10

That's absolutely true.

Apple holds too much power and will be able to push Verizon around.

This definitely is good for BlackBerry.

Posted via CB10

How much of Z10 sales would be part of VZW Q1 results. I'm assuming these sales represent Jan-Mar and only include a few days of BlackBerry sales of the Z10.

Posted using my Z10!

If i was a company ceo, i would make it mandatory for all my employees to use physical keyboard (q10), its just so much more productive to work and write long memos and emails with.

Posted via CB10

Very, VERY few of these phones would be BlackBerry Z10s. Only because Verizon didn't launch the Z10 until March 28th, which was at most days before their quarter end.

Apple made a return to prominence by making great products. I just upgraded my trustworthy Mac mini with a core duo CPU to one with an i5.

The return of blackberry under Heins reminds me a lot of Apple a decade ago.

Those that pretend that Apple does not make good products are clueless.

Even the iPhone is great, it is just a little too dumbed down for me. That said, it is a great phone for many.

I love my z10 and I think 20% market share would be good in a couple of years.
More than half of peopld I know woth Andriod phones dislike them after a while. Most with iPhones are still happy.

Blackberry 10 could have 10 % share in 2 years.

Posted via CB10

I know it's hard for we here to comprehend because we keep hearing how bored folks are with their iPhones here, but in the USA go stand in an agnostic store like Best Buy or WalMart and watch what folks do. They aren't going in asking for assistance trying to figure out what phone the want, they are walking out with iPhones for the most part, and the numbers the carriers release confirm this, and contradicts the meme that folks are bored with iPhones.

More likely, they started with Android because it was cheap, fell in love with the smartphone experience, and fell out of love with the Android experience. Until very very recently, if you were 'over' Android, the only other place to go for a better experience was Apple. This isn't the case anymore. We now have choice, and choice is good for everyone :-)

My point was the theme here is "folks are bored with iPhones" which you don't address here. And, while folks may have been frustrated with Android I believe that too is a tired meme since ICS but now more than ever read the reviews from the Apple fanboys like Andy Inhatko about JB and Android phones, and again sales sort of back that up.

In any case you want to say folks didn't have choice in the last quarter - lets see what the next quarter brings - lets see if folks here in the USA even want the choice. I don't think you appreciate, as Honestabebread says below how folks come into stores wanting iPhone and won't consider anything else.

50% of new Z10 users came from Android and iPhone, but I bet those numbers in the USA are different, and consider BB lost a boatload of subscribers - where did they go? Net/Net - who won?

I can affirm as to what you say is entirely true. I've been with iOS since 2007. To explain this to someone who hasn't been exposed to iOS, extensively, and it's ecosystem, for a certain period of time, would be difficult since they don't have the same sense of experience as we do. They will just compare devices to another device as if they're apples to apples.

Been in the iOS unlocking and hacking scene so I'm still adjusting to the BlackBerry environment. It feels hackish, but it's still a work in progress.

I did in fact became bored and you addressed it. In other words I've done it all and now that I know how it works, I moved on to the next big thing.

I jumped on the Z10 bandwagon, not only abandoning iOS, but also shedding behind me their ecosystem because of their ridiculous control of preventing customers from downgrading their firmware and breaking apps that requires the new firmware.

Though iOS is a closed environment, as of now, the adventures of hacking and poking around iOS is more adventurous than the BlackBerry 10. It is a powerful platform, but the thing is no elite users are on it who seek to maximize their device's usability through jailbreaks. No I'm not talking about fanboys gloating over apps and leaks--didnt buy the device to get into that. Time will tell and we shall see what creative users come to BlackBerry 10.

Posted via CB10

Lets just hope BB has the helluva of breath to catch up with iOS and Android. BB should focusing 90% of their efforts to polish the software, otherwise the ghost of WebOS will catch up to BB :(

Posted via CB10

I can't stress the importance of word of mouth advertising. Everyone that has a Z10 should show off the product to the public. It's mostly what's cool that sells only in cell phone market.

@Chris Typo on the third paragraph, should have read...("Whose" views I respect). I would also like to know how it would be in Verizon's interest to diversify revenue from other platforms specifically from BB who are slowly killing off service revenues? Thanks. Great article as usual.

I will have to agree with this when it comes to Verizon being more aggressive selling BB10 I am an AT&T customer and you hear nothing or see nothing in the stores about the Z10. I bought mine 3 weeks ago and the sales person did not know how to use it at all. Once it was set up she just handed me the phone and said "Good Luck" Why am I still with AT&T? Maybe because I have 4 lines with them.

56% iPhone sales? Ouch. That's painful to hear. Verizon hates the iPhone but sells it because it's popular and because people buy tons of accessories for it. I remember back when I was a sales rep and the iPhone 4S had just come out. My manager was like, "I will always prefer you sell anything but an iPhone, but if it's right for the customer then do it."

The truth is Apple has crazy mindshare. People walk in and are like "Go get me an iPhone 5" without even thinking. You mention another platform and they scoff like you're trying to sell them cubic zirconia or something.

Have to disagree with the statement about Android not having an ecosystems or that BlackBerry had a better one. BlackBerry still has a long way to go to have a successful ecosystems, even borrowing so much from Android

Posted via CB10

Whenever one company is responsible for 50+% of product sales whether it's phones or boxer shorts you have to be concerned if your management. They start calling the shots or putting the squeeze on you, and lowering your margins. It's absolutely in VRn's best interest to push other viable platforms.

Posted via CB10