Apple: Inside the cult

iPhone clobbering BlackBerry Storm, keeping AT&T afloat

The numbers are out on Verizon's first quarter of selling the touch-screen BlackBerry Storm, heralded as an iPhone killer, and they're good, but not great. After a $100 million ad campaign, Verizon sold 500,000 of the gadgets, compared to 1.9 million iPhones sold during the same time period. There have been plenty of complaints about tech bugs and the like in the Storm's rollout; RIM execs dismiss those and normal for the introduction of a new gadget, and of course we all remember that the iPhone 3G had its own problems upon its release (though it nevertheless sold 2.4 million units in the first three months it was on sale).

Meanwhile, AT&T saw plunging profits this past quarter -- not necessarily because of the iPhone, directly, although the company is only now really beginning to see the beginnings of the cash cow that Apple's phone can be as it is finally done subsidizing the purchases of the early adopters. No, the biggest problem for AT&T is that people are fleeing its oldest business, wired telephones. Wireline sales dropped 3.3 percent, and I'm not sure if that figure only includes a drop in people setting up new phone service, or also encompasses those who have jettisoned a previously existing landline. I bring the point up because for many people, the impetus for finally dropping that landline comes when they buy a smartphone with a radically more expensive data plan; while pushing smartphones with its wireless arm is thus obviously necessary for AT&T to survive, it may result in a certain cannibalization of former landline customers. (For the record, I ditched my landline when my wife and I got iPhones this past fall ... though fortunately for AT&T, my provider had been Verizon.)

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