Others angling for Apple/AT&T's smartphone riches

Big profits spark big competition for device sales, third-party applications

Anyone wondering why there have been so many smartphones in the news lately need only look at the quarterly profits reported this week by AT&T and Apple.

In its earnings report for the third quarter, AT&T reposted revenues of $31.3 billion, up by more than $1 billion from the third quarter of 2007, and a net income of $3.23 billion, up from the $3.06 billion the carrier reported in 2007. Apple posted revenues of $7.9 million, up from $6.2 billion in 2007, and a net income of $1.1 billion, up from $904 million in Q3 2007.

The common thread running through both companies' good fortunes is the iPhone, which for the first time sold more units than Research in Motion's BlackBerry device over a three-month span. In total, Apple sold 6.9 million iPhones in the third quarter of 2008, compared with 6.1 million BlackBerries sold over the same period. Apple CEO Steve Jobs says that iPhone sales accounted for 39% of the company's total revenues in the third quarter, and that the company had also sold roughly 200 million iPhone applications from its online AppStore in its three-plus months of existence. AT&T, meanwhile, says the iPhone 3G helped the company pick up nearly 1 million new customers in the third quarter, thus helping drive wireless net income up to $2.3 billion, an increase of more than 20% from 2007.

With the iPhone driving profit growth at both AT&T and Apple, many telcos and tech companies have been working overtime to develop popular smartphones of their own. The biggest new smartphone to officially hit the market this week was T-Mobile's G1, the first commercially available device to run on Google's Android open source mobile platform. The device, which was developed by HTC, has generated buzz in recent weeks because of its Linux-based open source mobile platform that Google first debuted last November. Google has long said that the goal of the platform would be to spur innovation within the mobile development community and also to give users the ability to switch carriers without switching their mobile devices.

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Anyone wondering why there have been so many smartphones in the news lately need only look at the quarterly profits reported this week by AT&T and Apple.

In its earnings report for the third quarter, AT&T reposted revenues of $31.3 billion, up by more than $1 billion from the third quarter of 2007, and a net income of $3.23 billion, up from the $3.06 billion the carrier reported in 2007. Apple posted revenues of $7.9 million, up from $6.2 billion in 2007, and a net income of $1.1 billion, up from $904 million in Q3 2007.

The common thread running through both companies' good fortunes is the iPhone, which for the first time sold more units than Research in Motion's BlackBerry device over a three-month span. In total, Apple sold 6.9 million iPhones in the third quarter of 2008, compared with 6.1 million BlackBerries sold over the same period. Apple CEO Steve Jobs says that iPhone sales accounted for 39% of the company's total revenues in the third quarter, and that the company had also sold roughly 200 million iPhone applications from its online AppStore in its three-plus months of existence. AT&T, meanwhile, says the iPhone 3G helped the company pick up nearly 1 million new customers in the third quarter, thus helping drive wireless net income up to $2.3 billion, an increase of more than 20% from 2007.

With the iPhone driving profit growth at both AT&T and Apple, many telcos and tech companies have been working overtime to develop popular smartphones of their own. The biggest new smartphone to officially hit the market this week was T-Mobile's G1, the first commercially available device to run on Google's Android open source mobile platform. The device, which was developed by HTC, has generated buzz in recent weeks because of its Linux-based open source mobile platform that Google first debuted last November. Google has long said that the goal of the platform would be to spur innovation within the mobile development community and also to give users the ability to switch carriers without switching their mobile devices.

In addition to having the first Android-powered device go on sale this week, Google also released Android's source code so third-party developers can experiment with and improve upon the mobile platform. As Andy Rubin, Google's senior director of mobile platforms, put it, "An open-sourced mobile platform, that's constantly being improved upon by the community and is available for everyone to use, speeds innovation."

Not to be outdone in the open source mobile platform arena, Nokia began aggressively courting developers this week by talking about its plans open up its Symbian mobile platform to unlicensed third-party development in order to keep pace with Android in attracting software developers. Although the company stands to lose an estimated $300 million annually in licensing revenues by opening up its platform, Symbian CEO Nigel Clifford says it had no choice if it wanted to stay competitive with other mobile platforms.

"Up until now maybe developers have been little bit put off by licensing arrangements, by terms and conditions and that is one of the principal changes with the Symbian Foundation," he says.