Definitive Proof That Apple Needs International iPhone Growth

Well done, Apple (NASDAQ: AAPL  ) . You have officially conquered the domestic smartphone market. Mission accomplished. It's time to move on.

Wireless carrier AT&T (NYSE: T  ) reported its earnings figures the day after Apple's own figures triggered an incredible 12% sell-off. Ma Bell had already previously warned it was taking a hit related to its pension plan, which was a large contributor to the net loss of $0.68 per share. The carrier had also previously disclosed that it activated 10.2 million smartphones in the fourth quarter, including a record number of iPhones. Investors also knew that the high subsidies on smartphone sales would weigh on results.

What remained to be seen was exactly how many iPhones the carrier activated over the fourth quarter, and now we know: 8.6 million.

Ever since AT&T was the first domestic carrier to offer the iPhone, its smartphone activations have continued to be dominated by the iPhone. That percentage of iPhones has now reached an all-time high of 84% of smartphone activations. That's a monster figure that leaves just 16% for rivals to divvy up among themselves.

When you include Verizon's (NYSE: VZ  ) figures, the picture is clear.

Carrier

iPhone Activations

Total Smartphone Activations

iPhone Percentage of Total

AT&T

8.6 million

10.2 million

84%

Verizon

6.2 million

9.8 million

63%

Combined

14.8 million

20 million

74%

Sources: Earnings releases and conference calls.

Between the two largest domestic wireless carriers, the iPhone comprised nearly three-quarters of all smartphone activations in the fourth quarter. If that's not domestic domination, then I don't know what is. That's even before we include iPhone figures from Sprint Nextel or Leap Wireless' Cricket brand.

With Apple's overall iPhone units disappointing investors yesterday, this goes to show just how badly Apple needs international iPhone expansion to satisfy investors' insatiable appetite for growth. The key there will be a lower-cost model to address unsubsidized market segments in emerging markets. It really is time to start an iPhone family.

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 25, 2013, at 7:38 PM, TimKnows wrote:

    Apple has nothing to offer in 2013.

  • Report this Comment On January 25, 2013, at 8:13 PM, JesusQuintanaJr wrote:

    If Apple has a hard enough problem making enough iPhone 5s to keep up with demand why should they roll out a lower margin cheap phone? That would just spread their strained resources even thinner.

    I know it is popular to criticize Apple right now but all of this talk of a cheap phone doesn't seem very practical.

  • Report this Comment On January 25, 2013, at 9:18 PM, ananth31 wrote:

    I hold some AAPL shares. The share is roughly down about 25% from my average price but decided to hold on and may add some more when the market opens on Monday and if the remains at this level. One because i have not seen in analysis is the impact of the corporate adoption of Ipad and Iphones and more healthcare sytems IT decided to support Apple products. Microsoft watch out. Ipad mini is big hit among the medical community and boy no one is talking about brand conscious developing countries like China, India and other populus countries in the world are huge untapped potential for AAPL. Samsung and the likes will take some to catch up. All AAPL need to concentrate on innvoation and keep coming out some kick ass products and fix supply issues quickly.

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