Sidecut Reports

I kid you not. Have a Barnes & Noble Nook and are looking for some LTE content to peruse? All you need to do is hit the Nook Bookstore and type “Sidecut LTE” in the search field and you will find us there, ready to fill your noggin with news and analysis with our 4G LTE Market Report for January, 2012.

Today’s news about Verizon selling 1.6 million 4G LTE phones is anticipated and explained in the report — for $2.99 put it in your Nook, it’s like a book, you can share it in a box with a fox. No rhymes, just a lot of reason. And I am outta here before I defile the memory of Dr. Seuss any further.

(Our thanks to the folks at Lulu for their e-book distribution system. Thumbs up from Sidecut Reports!)

It looks like Sprint’s strategic decision to focus on the iPhone has finally allowed Verizon Wireless to sell more 4G phones than Sprint, according to financial numbers released Tuesday. According to Verizon the company sold 1.6 million 4G LTE smartphones during the quarter, as well as another 700,000 4G devices like USB modems and Wi-Fi hotspots. And while Sprint never calls out its 4G numbers its 4G partner Clearwire today pre-announced some Q4 metrics including 900,000 new 4G wholesale activations, which you can pretty much translate into being mostly Sprint 4G smartphones and a small number of other devices, like hotspots and USBs.

(Editor’s note: You won’t find the 4G LTE device breakout numbers in the Verizon press release; the numbers were discussed during the conference call, and a quote with the figures was provided to us by Verizon.)

What’s the 30-second analysis on all this? Sidecut Reports sticks by the premise of our latest report, the 4G LTE Market Report for January, 2012, in which we conclude that 4G LTE phone sales for all providers, including Verizon, are going to stay essentially flat until we see an LTE-capable Apple iPhone hit the market. As proof of the iPhone’s continuing popularity look no farther than Verizon’s Q4 numbers: 4.3 million iPhone activations vs. 1.6 million 4G LTE phone activations. Almost a 3-to-1 preference for the 3G iPhone vs. any 4G LTE choice.

And while Verizon’s 4G LTE phone activation numbers might look nice at first glance, remember that the company was in full 4G LTE promotion mode from November on, offering double-data packages to new customers as well as deeply discounted prices on handsets. And Sprint had largely conceded the 4G race back in October when it announced it would de-emphasize its 4G WiMAX phones in favor of the 3G iPhone. The result? Verizon finally beat Sprint for a 3-month sales period, though by our unofficial ongoing tally Sprint won the 4G smartphone market title for 2011 by almost a million and a half, with 6.1 million activations to Verizon’s 4.7 million total.

And Sprint’s 4G lead may remain for some time to come, since Sprint and Clearwire had activated something like 3.3 million other 4G devices throughout 2010, before Verizon launched its LTE network. Again, these numbers are somewhat fuzzy because Sprint has consistently failed to break out 4G numbers during any of its financial calls. That’s too bad for market watchers and investors, because it will be interesting to see what happens to Sprint’s churn this spring when a lot of those initial 4G phone contracts start coming up for a 2-year renewal. Ahead for 4G market watchers is AT&T’s conference call Thursday and Sprint’s call on Feb. 8.

Editor’s note: Conspiracy theorists, start your engines. Just a few days after we noticed AT&T’s switch to make its smartphone customers pay $45 a month for a 4 GB data plan AT&T announced a further change that would mirror Verizon’s plan and now require a $50, 5 GB plan to use that mobile hotspot feature on your phone. All the analysis from the original post below still holds. More on this topic soon.

I haven’t paid attention to the AT&T 4G LTE site for a few months, so I was surprised by a new twist in AT&T’s top-network data plans. If you want to use the snazzy portable Wi-Fi hotspot feature found in almost every new top of the line smartphone, you’ll have to throw down on the “DataPro 4GB” plan, a $45 per month data plan which includes 4 GB of downloadable data and access to the hotspot feature. Don’t want to buy the big plan? Then you aren’t going to be able to use the hotspot feature, according to an AT&T rep I just had an online chat with.

On one hand, I think this pricing is pretty smart, especially for AT&T. If you are planning on using the mobile hotspot you are probably a Type-A geek who knows why you would want to use one and as such are ready to siphon down data to your laptop, your iPad or even a friend’s or business partner’s PC as well. So you were probably already headed to the highest data plan AT&T offers, which is the 4 GB one. Not having to pay an extra fee or buy a separate data plan for the hotspot, which Verizon used to require, is a welcome relief and part of the double-discount price check that we predicted all the major carriers were bound to go through with their new 4G networks this year.

On the other hand, it hurts AT&T to turn off the hotspot functionality for customers who choose the lower data plans because it makes AT&T seem like it is trying to shove you into the top tier of plans even though you may only need the hotspot functionality on a sporadic basis, like when traveling. Another downer is that if you are buying one of AT&T’s three 4G LTE capable smartphones, you will only get the super souped up LTE speeds in 26 markets for the time being. At AT&T’s recent developer summit in Las Vegas there was talk of some LTE-capable Windows phones from Nokia coming later this year, but no talk about network expansion. For that reason we are sticking with the calls we made in our recent 4G LTE Market Report for January, 2012, in which we say smart things like “Verizon will keep and extend its LTE lead over AT&T and Sprint in 2012.” Want more smart analysis? Buy the report. It’s worth the $1.99 downloaded from the site, or $2.99 on Kindle or at the iTunes store.

For what it’s worth, a brief test of AT&T’s LTE network in Las Vegas during the CES show last week saw us with smokin’ fast download speeds, even inside the convention center and even in new hotel rooms with silvered windows, the kind of architecture that sometimes brings Clearwire’s WiMAX network to its knees. Thanks to the AT&T folks who were kind enough to lend us a mobile hotspot to kick the tires on the LTE network. In a marked departure from AT&T’s struggles with 3G, it appears Ma Bell has pounded a few 5-hour energy drinks while putting up its LTE network. Privately we were told that performance was one reason why AT&T’s rollout of LTE is more conservative than Verizon’s aggressive LTE push, which showed some strain in December. We’ll be watching closely through the start of 2012 to see if AT&T can outperform Verizon on the LTE front.

We still don’t expect the LTE phones from any carrier to sell well, though, since they are still priced at a premium or at basically the same price as the iPhone 4s. As our report says, 2012 is really a race to see who can build out a network wide enough to handle the iPhone 5 and its expected LTE chip. Need more info now? Buy the report!

UPDATE: Looks like Verizon has introduced new data plans that mirror AT&T’s hotspot decision — aren’t you glad we have “competition” in the wireless market? Verizon’s seem to offer a bit more data for a bit more money but the bottom line looks the same — if you want to use the mobile hotspot feature you are gonna pay the piper. Will circle back tomorrow to see if this is just for new phones or if old plans are going to be put under these new “hotspot caps” as well.