Richard Martin Blog: Do Subscriber Numbers Really Matter?

The latest round of figures on subscriber/purchaser growth and losses indicates, once again, that such numbers are at best imperfect gauges for company success.

Verizon Wireless said that in the most recent quarter it added a net 997,000 new customers, down from previous levels of subscriber additions. Boosted by still-climbing iPhone sales, meanwhile, rival AT&T added a whopping 2.6 million new subscribers – more than 150 percent above Verizon’s total.

A closer look, though, reveals that that gap is narrower than it appears. AT&T’s churn rate is actually higher than Verizon’s, at 1.32 percent compared to 1.07 percent. What’s more, a much larger number new AT&T “subscribers" are actually prepaid users, which offer much lower average-revenue than contract, or post-paid customers.

“Verizon Wireless remains the largest carrier in the U.S.," noted VentureBeat, “with 93.2 million customers at the end of the quarter, compared to AT&T’s 92.8 million users." That difference in itself – about 400,000 customers out of a total of 93 million – amounts to a rounding error. Taking these differences into account, AT&T and Verizon are essentially tied – and Verizon will soon be offering the iPhone, which accounts for the bulk of AT&T’s tenuous lead in new subscriber rates.

Similarly, Steve Jobs’ crowing that Apple has surpassed BlackBerry-maker Research in Motion in the burgeoning smartphone market – shipping 14.5 million units compared to RIM’s 12.3 million, according to Strategy Analytics – masks underlying realities. RIM’s share of the smartphone market fell below Apple’s for the first time, 16.1 percent (BlackBerry) to 18.3 percent (iPhone). But the overall market grew by 78 percent, meaning that both companies continue to see healthy growth. At any rate, both of the North American vendors remain far behind World No. 1 Nokia, which despite slipping dominance and management turmoil controls a 34.4 percent market share.

There is no doubt subscriber growth is good, and faster growth is better than slower growth. Like political junkies riveted to the latest polls, investors and pundits need numbers to keep score with, and to give them something to write about. But in the rapidly shifting mobile and wireless space, quarterly subscriber numbers are evanescent and, often, illusory. Don’t base your bets – or your business strategy – on them.