AT&T's CMO explains why AT&T dominated iPhone sales in Q4

 

David Christopher, chief marketing officer of AT&T Mobility and Consumer Market

David Christopher

 
with David Christopher, chief marketing officer of AT&T Mobility and Consumer Markets

 

Many people predicted AT&T Mobility (NYSE:T) would suffer greatly when its exclusive arrangement with Apple (NASDAQ:AAPL) for the iPhone ended in early 2011. However, it's one year later and the company still sells more iPhones than competitors Verizon Wireless (NYSE:VZ) and Sprint Nextel (NYSE:S). In fact, in the fourth quarter AT&T activated 7.6 million iPhones, compared with Verizon's 4.3 million iPhone activations and Sprint's 1.8 million iPhone activations. AT&T Mobility CMO David Christopher talked with FierceWireless Editor in Chief Sue Marek about how the company avoided the potential pitfalls of losing the iPhone exclusivity, why the company recently introduced new tiered data price plans and what AT&T hopes to gain from being so involved in mobile developer outreach.

FierceWireless: A lot of people predicted AT&T would be hurt when it lost the iPhone exclusivity. It's been a year since it lost that exclusivity and AT&T doesn't appear to have lost customers. Why? What did you do to prepare for it?

Christopher: There were a lot of people calling for significant losses for AT&T and the demise of AT&T's wireless business once the iPhone went to Verizon. Frankly we had been preparing for the loss of exclusivity for years. We knew that we wouldn't keep the phone as exclusive forever so we were well prepared despite what others thought.

It was a multi-pronged effort by the organization. We always felt that we had the best smartphone portfolio in the industry but we doubled down on the other parts of the portfolio. For example, last year on Android we announced at the beginning of 2011 that we would launch 12 Android devices and we launched 24. Behind the scenes we were working very hard to create a best-in-class Android portfolio. Some of those efforts really paid off with some blockbuster products.

On the iPhone itself, we had always been close with Apple in terms of creating a best-in-class experience on the activation side. And also making it easy for people to check their upgrade status before the event and pre-order phones with AT&T was an important tactic.

Also, we have been rapidly moving to the mobile broadband world. We hadn't been as pointed as we needed to be about articulating our mobile broadband benefits and advantages. We worked hard to get those simple and understandable.

FierceWireless: Are you talking about the ability of the iPhone on AT&T's network to handle voice and data at the same time?

Christopher: It boils down to three things really--the big one is that we are a lot faster. Being a lot faster when you are interested in all things Internet is important. We substantiated a claim that we are three times faster than the other guys.

Second, making talk and surf matter. When you have it you realize how valuable it is. When you don't have it you don't understand what you are missing. If I'm talking to you on my iPhone and you send me an email, you and I can cover it right there. With the other guy, you have to hang up. Being able to represent that simply and clearly--a lot of work went into that.

Third, our phone works better internationally. For a certain class of user that travels a lot that was important. 

We also took a straightforward approach and were articulate about it in the market. On the other side, we were launching great Android products with 4G marketing. That was effective in getting people into our stores and reminding them that they would give up some of these benefits if they went with the competition.

Our sales team did a great job. We have a great store experience. Our job was to get people into the stores and their job was to close the sale.

FierceWireless: Looking back is there anything that you wish you had done that you didn't?

Christopher: I was pleased the way the year unfolded given these dire predictions of Verizon kicking our butt. It did not happen. I was pleased. If you look at the year, we sold more iPhones in the year than any of our competitors. In the fourth quarter we sold around 7.6 million iPhones and that was significantly more than the competitors. 

You can always do better but we felt pretty good about proving everyone wrong.

FierceWireless: You recently unveiled some new data price plans. What prompted these changes? 

Christopher: Smartphone users are using more data and we want folks to have a great experience. In the first two plans we gave people 50 percent more data for just $5. We thought it was a great value. Their overall cost per-megabyte of data declined so we thought it was a great deal.

We thought it was in keeping with the times of people using more data and being fair. In our marketing we talk about network benefits and device benefits and the value that we bring to the customer. We try to offer a great value. Those tiered pricing values are a good deal, we think.

Last year we rolled out a new feature: Mobile to Any Mobile. If you have our data plan with unlimited messaging, you can call any mobile phone in the U.S. for free. That's a strong value. It underscores the value in our data plan. That was a nice way to continue to add benefits for AT&T subscribers.

FierceWireless: You played a pretty prominent role at AT&T's recent developer event in Las Vegas. Why are developers so important to the organization?

Christopher: The developer community is extremely important to us. It gets more important every year. We think it's very strategic. In the world of the mobile Internet it's all about your data experience, the applications that ride on these smartphones over your network. Applications that are more secure and have a better data experience are good for us. And it's really good for developers.

The perception is that carriers aren't open. Our goal is to be the most open carrier out there. We want developers to come to us and have it be extremely easy to work with us. We want to give developers the capabilities that they can't get from anyone else. For most small developers they don't have the ability to get functionality like messaging, billing and location in their apps. For a small developer to be able to get that through our developer program and drop in-app billing in your app and have your back office settlement handled by AT&T is a really good service for them. It's a great experience for our customers too--one-click billing.

We made it a big deal and will continue to do so. It's a multi-pronged approach: the developer program, the APIs, the SDKs and the extensive technical support as well as business model support is all about helping developers go to market with their app.

Plus last year we opened three centers, these application centers, called the AT&T Foundry. There we can host developers, investors and have fast-pitches where in 20 minutes we can see an idea and provide feedback. This allows us to stay connected to the developer community and the venture capital community. We think there is a strategic advantage to this.

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