Get ready for another big smartphone campaign. For AT&T, it'll be even bigger than the one for iPhone.
Why AT&T Is Spending More on Lumia Launch Than It Did on iPhone
"The bulk of the growth for carriers is coming from smartphone subscribers," said Chris Larsen, telecom analyst for Piper Jaffray. "They generate higher monthly recurring fees and more revenue."
In 2007, AT&T became the sole carrier of the iPhone and quickly amassed more smartphone subscribers than any of its competitors, including Verizon, (though Verizon had more total wireless customers on all devices). But AT&T is quickly losing its early lead.
In January 2011, before AT&T lost iPhone exclusivity, it had more than 24.7 million U.S. smartphone subscribers over the age of 13, according to ComScore. Verizon had only 17.8 million.
This February, about a year after iPhone became available on Verizon, its smartphone subscribers had increased 81%, to 32.2 million. Though AT&T's smartphone pool is still larger, it grew only 37% in the period, to 33.8 million.
Now that Verizon is nipping at its heels, AT&T needs another dog in the smartphone fight. That dog will most probably not be Android for AT&T, even though half of U.S. smartphone owners chose Google's mobile software. Verizon has practically become synonymous with Android thanks to its popular Droid line. While AT&T was busy promoting iPhone (which it did, heavily, before losing exclusivity), Verizon invented Droid and pushed it aggressively to sell that brand of smartphones. And it worked.
"You can tell when you walk into a Verizon store they've made a lot of money selling Android—that 's what they're promoting," said Forrester Research analyst Sarah Rotman Epps.
In February, 57% of Verizon smartphone subscribers had Android devices, more than the national average, according to ComScore. That compared with just 19% for AT&T. On the flip side, a whopping 63% of AT&T smartphone subscribers have iPhones vs. one-quarter of Verizon's.
That's where Microsoft's Windows Phone comes in. AT&T has secured a jump on distributing Windows Phone now that it is the exclusive carrier for Lumia 900, which reviewers call the best such phone to date. In addition to Nokia's campaign, AT&T will be running ads on national TV and in other media for Lumia. While there will be links between the campaigns, AT&T's effort will be aligned with its "Rethink Possible" brand positioning. Forrester has found that smartphone buyers consider the carrier first, software next and the manufacturer last, said Ms. Epps.
"We are taking North America and U.S. market very seriously," said Valerie Buckingham, Nokia's head of marketing-North America. "AT&T has a lot running on the success of 900 as well."
In a preorder promotion, AT&T enticed new subscribers with a free Lumia 900. The company has said the phone will receive "prime exposure" in its 2,200 stores. That's crucial for Nokia, as 80% of sales are made via the carrier, said Ms. Buckingham. AT&T salespeople are receiving special training on Lumia, including face-to-face sessions for 4,500 sellers, and the company has distributed an "unprecedented" number of the devices to sellers, she said.
"With our operator partners, we're seeing a lot of support and desire for a third ecosystem," said Ms. Buckingham. "We're definitely stepping up to the stage at the investment you need to be successful in this category. You will definitely be seeing this campaign."