Just check out this logic ‘ AT&T is boasting that its network has twice as many smart phone customers as any rival? That seems good on the first reading, but as we think about it we’re not so sure.
There are historical issues here ‘ such as the company being a conglomerate of AT&T, SBC and Bellsouth, and AT&T may well have had a bigger enterprise base than anyone and so they take more smart phones. But also there is its entire approach. If AT&T sources more smart phones, then it will have more customers with them. By Sourcing we mean subsidize of part subsidize or just plain ‘buy.’
If AT&T is saying this, ‘We spent so much money buying in all the cool devices, we had none left to spend on making our network any good,’ then it’s definitely not something to boast about. Although AT&T also insists that its network is the best in the US which contradicts much recent publicity.
Its press release paints the opposite picture ‘ a queue of people a mile long which can’t wait to buy a smart phone at full price, because the AT&T network is so good at sending data from A to B.
It cites mobile e-mail and web surfing as the critical applications and talks about it having the nation’s fastest 3G network and nearly 20,000 US Wi-Fi hotspots and right there, in the hotspots, it may have a point. Most phones are still horrible to search the web on if you use 3G, but on Wi-Fi their performance is ‘acceptable.’ The release cites the BlackBerry Bold and the Nokia E71x as critical in the enterprise, and makes no mention of the oft touted iPhone ‘ perhaps that’s already had enough credit.
On the back of this AT&T is planning an ad campaign around smart phone leadership.
Right now there is a global trend to shift upstream in terms of capabilities, as handset vendors add Smartphone class features to what our investment partners at JRPG calls ‘Cool phones.’ Most conventional definitions (this year) of a smart phone focuses on it having a separate operating system. In the past it was a phone which had a handful from a long list of features including having a camera, GPS, push Email, a web browser which wasn’t WAP, noise cancellation on voice, an MP3 player etc’ But today there are many phones which have ALL of these which do not have a separate operating system.
But the enablement that a touch screen brings, to load more and more ‘intuitive’ applications onto a handset, and the arrival of user downloadable apps from an App Store (which everyone has these days), means that the goalposts are shifting once again in the attempt to define a smart phone.
We think that next year it will include the differentiator that a not so smart phone (Cool phone) will be able to have applications downloaded to it under the control of the operator/handset maker, whereas a smart phone will put this control in the hands of the user.
Anyway AT&T is simply pushing this trend towards smarter devices earlier and probably conveniently defines a smart phone around the devices it offers and not around industry definitions (although it did cite the OS thing in its Smart phone definition).
If you saw an ad campaign which said that a network had more smart phones on it, wouldn’t you be keen to get on another network, which didn’t have so much data traffic?
The truth is that cellco providers are selected on brand, help desk quality, retail reach and networks statistics, like coverage ‘ if they are selected at all, but most people go into a shop and ask for a particular phone. Given that most handsets in the US are sold in operator stores, they will have had to work out which shop sells the phone they want before getting to the store and if every network has that phone, chances are they go to the nearest store rather than make a conscious network selection.
AT&T also makes the point that it also leads in full-QWERTY phones which it calls “quick messaging phones” and together with smart phones it calls these ‘integrated phones’ presumably because they need network integration. It says that 32% of post paid subscribers use an integrated device and this is double any other network.
We have to say the definition looks laboured and US phones tend not to be as sophisticated as those attached to European networks, primarily because subsidy is higher in the 100% penetrated European networks so more people have smart phones. But probably not 32%.