ThoughtPiece: The State of the US Market

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Last night, like many of you, I’m sure, I was glued to the TV for the midterm election results (ok, I was following the Daily Show’s coverage). Those states are in a state of flux, as is the state of the BlackBerry within those states. This week, Thought examines the state of the US market.

The US Market: Will Verizon Become #1?

In the last two weeks, both the #1 cellular carrier in the US, Cingular Wireless, and the #2 carrier, Verizon Wireless, have released their 3rd quarter results. The numbers from this quarter and prior ones show an undeniable trend: Verizon is on a solid track to overtake Cingular as the #1 carrier in the United States.

Consider these numbers over the last 4 quarters for net customer additions:

Verizon
3Q06 1.9 million
2Q06 1.8 million
1Q06 1.7 million
4Q05 2.0 million

Cingular
3Q06 1.4 million
2Q06 1.5 million
1Q06 1.7 million
4Q05 1.8 million

As of the end of Q3, Cingular was still the leader in the US market with 58.7 million subscribers, with Verizon having 56.7 million customers. However, as seen in the statistics, Verizon has added approximately 1 million more customers than Cingular over the last year, and they are accelerating in their pace of closing the gap. Verizon may very well replace Cingular atop the US market either in late 2007 or sometime in 2008.

Verizon also makes more money per customer than Cingular. In the 3rd quarter, Verizon averaged $51.21 in monthly revenue per customer while Cingular averaged $49.76 per customer. I know some of the Verizon critics who complain about their high prices are snickering, saying “of course”…but from a business perspective this is a very healthy sign. Then there is the fact that Verizon customers are the most loyal: Verizon has the lowest churn (or customer loss) rate of 1.24%, while Cingular is at 1.8%.

So Verizon is in a pretty sweet spot in the US market: they are adding the most customers, making the most money from those customers, and are best at keeping those customers happy. But what does that mean to RIM?

  • mistermix

    RIM isn’t the only GSM-heavy phone company – I do hope to see more CDMA blackberries, but let’s face it, there are a ton of cool GSM-only phones.

    Also, I wonder if it works both ways – that VZW isn’t that keen on RIM, and therefore doesn’t push RIM as hard on CDMA devices as, say, Moto. With Win devices, VZW doesn’t have to pay a per-subscriber fee for push email. I think VZW was hoping that the Q would be a blackberry-killer for consumer/small business (i.e., BIS not BES user).

  • mistermix

    RIM isn’t the only GSM-heavy phone company – I do hope to see more CDMA blackberries, but let’s face it, there are a ton of cool GSM-only phones.

    Also, I wonder if it works both ways – that VZW isn’t that keen on RIM, and therefore doesn’t push RIM as hard on CDMA devices as, say, Moto. With Win devices, VZW doesn’t have to pay a per-subscriber fee for push email. I think VZW was hoping that the Q would be a blackberry-killer for consumer/small business (i.e., BIS not BES user).

  • Thought

    mistermix: Some great comments.

    No doubt that Sony Ericcson, for instance, only releases on GSM.

    Your question regarding VZW and RIM is an interesting one. I certainly hope that VZW is not de-emphasizing BB’s due to the per subscriber fee. To me, that would not be a smart move, because VZW really caters to the enterprise segment. Plus, I believe that VZW only pays the fee to RIM if the client uses BIS…and not BES.

    Either way, I believe that for the good of the profits of both VZW and RIM, that RIM needs to release its CDMA versions at an accelerated pace.

  • Thought

    mistermix: Some great comments.

    No doubt that Sony Ericcson, for instance, only releases on GSM.

    Your question regarding VZW and RIM is an interesting one. I certainly hope that VZW is not de-emphasizing BB’s due to the per subscriber fee. To me, that would not be a smart move, because VZW really caters to the enterprise segment. Plus, I believe that VZW only pays the fee to RIM if the client uses BIS…and not BES.

    Either way, I believe that for the good of the profits of both VZW and RIM, that RIM needs to release its CDMA versions at an accelerated pace.