AT&T's De la Vega: We've already taken 'hundreds of thousands' of iPhone 6, 6 Plus pre-orders
AT&T Mobility (NYSE: T) has already received "hundreds of thousands" of pre-orders for Apple's (NASDAQ: AAPL) iPhone 6 and 6 Plus in the few hours it has been selling the phone, according to top executive Ralph de la Vega.
De la Vega, who was previously CEO of AT&T Mobility and who is now serving as CEO of AT&T's Mobile & Business Solutions Group, made the comments at the Goldman Sachs Communacopia Conference.
Pre-orders for the new iPhones began today at 3 a.m. Eastern Time. Demand for the new phone is expected to be strong, and some customers reported that they were having difficulty accessing Apple's site and the sites of carriers for pre-orders. According to Apple's website, the 4.7-inch iPhone 6 is still available to be shipped Sept. 19, when the phones will be available in retail stores, but the 5.5-inch iPhone 6 Plus will be shipped in three to four weeks, indicating that Apple either has extremely strong demand for that model or fewer supplies on hand.
De la Vega said the he woke up early this morning and found out that the carrier had already taken hundreds of thousands of orders for the new iPhones, and that was great to see "before you even have a cup of coffee."
"It's amazing to see the volume," he said, adding that the "systems are rocking" and "everything is going well." He said demand for the new phones is "better than last year and they're better than the prior year [before that]."
"Every time there is a change in [iPhone] design, there's an uptake," he said. "I think this design is particularly good."
Like other carriers, AT&T is doing all it can to goose its iPhone sales numbers. Through Sept. 30, the company is giving customers up to $300 in trade-in credit when they trade in an iPhone 5s, and $200 when they trade in an iPhone 4, 4S, 5 or 5c. Also through Sept. 30, if customers purchase any iPhone with a new line of service on AT&T Next, the company's device installment plan, they will get a $100 bill credit. And through Sept. 30, if customers purchase an iPhone through Next they can get $200 off any iPad when they sign up for a two-year contract for the iPad.
At the investor conference, de la Vega touched on a wide range of hot topics for AT&T and discussed the broader industry. He said that AT&T is pleased with the shift toward Next and its Mobile Share Value shared data plans. De la Vega said the plans reduce the carrier's device subsidies costs, which is AT&T's biggest cost item.
In the second quarter AT&T said it had 3.1 million AT&T Next smartphone sales, compared to 2.9 million in the first quarter. AT&T said Next sales represented around 50 percent of all smartphone sales in the second quarter. That compares to around 40 percent in the first quarter (or 35 percent when taking out accelerated upgrades).
However, AT&T is also keen to make it easier for customers to add connected cars and cellular-enabled wearable devices to their shared data plans. Earlier this week AT&T said it will let customers add Audi cars to their shared data plans for $10 per month. The carrier also said customers will be able to add cellular smart watches to their shared data accounts, like the $400 Timex IronMan One GPS+ smart watch.
"Once you have that bucket of data I think it gives us the capability to add all kinds of devices," de la Vega said. "I "don't think customers want a different plan for their car, a different plan for their home." He said other carriers are embracing different models, with plans for different devices. "I think it's the wrong model," he said.
De la Vega said that if the company's deal to purchase DirecTV (NASDAQ: DTV) closes, AT&T plans to bundle satellite TV service with fixed wireless broadband service on dedicated spectrum, especially in rural areas. That would let the company deliver data at higher speeds, of at least 15 Mbps, he said. The company envisions launching that service in late 2015, he said. "Our people are chomping at the bit" to sell bundled satellite and wireless service on a nationwide basis.
"We think the video opportunity is huge," he said, noting that AT&T has partnered with the Chernin Group to create unique TV content. "We can take that unique content and spread the cost over a large customer base, and that allows us to deliver content in a unique way that will be difficult for others to do that don't have the scale."
The AT&T executive also said that AT&T will launch Wi-Fi calling in 2015 but that the carrier will use it only as a complement to Voice over LTE or 3G-based calling. "We don't have this burning desire" to use it to enhance coverage, he said.
The comments are notable in light of T-Mobile US' (NYSE:TMUS) announcement this week that heavily emphasized Wi-Fi calling and using personal routers to create Wi-Fi coverage areas in subscribers' homes.
De la Vega said AT&T will not be responding to every pricing move its competitors make, and that it conducts focus groups after each pricing change to see if or how it should respond. One thing he ruled out is providing a certain amount of data to customers for a limited time and then reducing it. That position is notable considering T-Mobile plans to do just that: Under T-Mobile's new family calling plan, customers get unlimited voice, texting and 2.5 GB of LTE data before throttling through the end of 2015. After that though, the data allotments per line will drop down to 1 GB per line before throttling.
"Those exploding offers, customers hate those offers," de la Vega said. "We will not offer those kinds of promotions."
The AT&T executive said the carrier expects strong growth opportunities in the connected car and home automation. Already, AT&T is expanding its Digital Life home automation platform to Europe through Telefónica. De la Vega said AT&T has seen interest in the platform from operators in the Middle East, Africa and Latin America.
De la Vega also touched on the changes AT&T has made to combine its mobile and business organizations, which he now leads. "We're changing the way we do business because mobility is changing the way business gets done," he said.
He added that businesses and consumers want seamless connectivity and "we'll be able to deliver it to them." A key focus is in providing secure and seamless access to applications that reside in the cloud. He noted that AT&T's NetBond solution, which provides a Virtual Private Network that lets businesses access apps in the cloud and store critical data, has been a major success. Microsoft (NASDAQ: MSFT), IBM, Hewlett-Packard, VMWare and others are using NetBond, and so enterprises that want to use apps and cloud services from those companies can do so in a secure manner. "It solves a major headache for every single company on the planet," he said.
- see this webcast
- see this release
- see this Variety article
- see this Light Reading article
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Correction, Sept. 13, 2014: This article incorrectly identified the minimum speed at which Ralph de la Vega said a potential fixed wireless broadband service could operate. It was 15 Mbps, not 50 Mbps.