Definitive Proof That Apple Needs International iPhone Growth

Well done, Apple (AAPL -0.81%). You have officially conquered the domestic smartphone market. Mission accomplished. It's time to move on.

Wireless carrier AT&T (T 0.19%) 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 (VZ 0.03%) figures, the picture is clear.

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.