AT&T Beats Street, iPhone Numbers Cast Shadow on Apple

AT&T’s strong subscriber growth in its wireless business propelled its earnings past expectations, the company said, but the results were overshadowed by data showing early sign-ups for iPhone service fell short of forecasts.

AT&T, the exclusive carrier of the iPhone in the U.S., said it activated 146,000 subscriptions for the Apple device in the first two days following its June 29 launch.

That news hurt shares of Apple, which is due to report earnings — and provide additional insight into how well the iPhone sold — on Wednesday. Apple shares were down as much as 5 percent in early trading Tuesday.

Activation Numbers

The activation numbers don’t necessarily reflect how well the iPhone sold. Some users may not have immediately signed up for a calling plan for the phone, while other early buyers may have tried to resell their devices. Given the long, hype-fueled run-up to the iPhone launch, however, the activation numbers were seen as weaker than expected.

Still, for AT&T, the wireless business remains the main driver of growth and profitability. The company’s net profit rose 61 percent to US$2.9 billion, or 47 cents a share, in the second quarter compared with $1.8 billion, or 46 cents a share, a year earlier. The per-share profit beat Wall Street consensus estimates by 3 cents.

Revenue soared, due in part to the roll-up of Cingular Wireless and BellSouth into the new AT&T, with sales coming in at $29.5 billion compared with $15.8 billion a year ago. Adjusted to take all three entities into account, revenue rose about 2 percent, in line with forecasts.

iPhone Impact

AT&T also issued an upbeat forecast as it expects wireless subscriber growth to continue. Overall, AT&T Wireless — the company re-branded the unit from its Cingular name during the quarter — added 1.5 million subscribers in the quarter, bringing its total to 63.7 million.

iPhone subscriptions and new handset models, including the BlackBerry Curve, also helped reduce the churn rate — the pace at which customers leave a carrier — to 1.6 percent from 1.7 percent a year ago. Forty percent of the iPhone subscriptions were from consumers who were not previously AT&T customers, the company said.

Wireless is “a major growth engine” for the carrier, said AT&T CEO Randall Stephenson.

“Our launch with Apple of the breakthrough iPhone has quickly redefined customer expectations for their wireless experience, initial response was unprecedented, and sales in July continue to be strong,” he added. “We have good momentum heading into the second half of the year and our assets position us well for the long term,” Stephenson noted.

“The company continues to head in the right direction,” telecom analyst Jeff Kagan told the E-Commerce Times. AT&T is still redefining itself, however, trying to determine if it is a wireless company that also provides at-home services or a wireline company with a wireless unit, he added.

At the same time “the competition between AT&T and other wireless and wireline providers remains intense and will only get hotter over the next few years,” Kagan said. “This is definitely a much bigger and different company than when it was the smallest Baby Bell in the mid-1980s.”

Drawing Attention

The iPhone data drew the most attention. American Technology Research analyst Shaw Wu expected 250,000 iPhone to sell in the first two days of availability, he said in a research note on Monday. Meanwhile, Lehman Brothers analyst Harry E. Blount predicted 250,000 to 300,000 units sold during that time period; Pacific Crest’s Andy Hargreaves said as many as 400,000 iPhones could have been sold on June 29 and 30.

How well the iPhone sells over the long run will prove more important to both Apple and AT&T, Kagan said, and early expectations may have been impossible to meet. Still, how well the device sells early on may determine how eager Apple is to roll out lower-priced models — a tactic that worked well with the iPod — or help AT&T decide to offer discounts on calling and data plans for the iPhone.

“The iPhone was inflated to a bigger-than-life image by incredible media coverage before it went on sale,” Kagan added. “The bottom line is the stores sold out quickly. The first few weeks and months of sales will be to people who have been waiting for six months since the announcement. The iPhone still looks like a success story for AT&T and for Apple. The only question is the magnitude, and we won’t have an answer for a while.”

Video Too

Apart from the iPhone, AT&T is being closely watched for how well it can absorb its many acquisitions — including the $86 billion takeover of BellSouth that gave it full control of the wireless unit — and whether it can fend off competition from cable companies and Internet-based startups to preserve its base of high-speed Internet customers.

AT&T had 13.3 million consumer and business high-speed Internet connections in the quarter, up 20 percent from a year earlier, with 35 percent of its consumer lines having broadband service, up from 27.8 percent a year ago.

The company also said its Internet-based video service, called “U-verse,” showed strong growth in the quarter, ending with 51,000 video subscribers, up from 13,000 at the end of the first quarter.

That project has seen millions of capital investment in recent years and is part of AT&T’s efforts to offer a broader bundle of services to customers. AT&T needs to make more gains in at-home video delivery in order to effectively fend off competition from cable companies, who are vying to switch home calling users to their VoIP (Voice over Internet Protocol) offerings, UBS analyst John Hodulik told the E-Commerce Times.

“The network investment has been made and the job at AT&T now is to get more customers to sign up for that service,” said Hodulik, adding that by doing so, AT&T will boost per-customer revenue and increase long-term loyalty among subscribers.

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Accent Altering Voice Tech Aims To Replace Frustration With Communication

frustrated customer calling customer service

Having trouble understanding that person at the end of the support line you’ve called to get some customer service? A Silicon Valley company wants to make those kinds of problems a thing of the past.

The company, Sanas, makes software that uses artificial intelligence to remove the accents in the speech of non-native, or even native, English speakers and output a more standard version of the language. “The program does phonetic-based speech synthesis in real-time,” one of the firm’s founders, Sharath Keshava Narayana, told TechNewsWorld.

In addition, the voice characteristics remain the same even after the accent is removed. The voice output by the software sounds the same as the voice input, only the accent has been removed so, for example, the sex of the speaker is preserved.

“What we’re doing is allowing agents to maintain their identity, maintain their accents, without the need to change it,” said Sanas CEO Maxim Serebryakov.

“The call center market is enormous. It’s 4% of India’s GDP, 14% of the Philippine’s GDP,” he told TechNewsWorld. “We’re not talking about a few thousand people getting discriminated against on a daily basis because of their cultural identity. We’re talking about millions and millions of people that get treated differently because of the way they sound.”

“The concept is sound. If they can make it work, it’s a big deal,” observed Jack E. Gold, founder and principal analyst at J.Gold Associates, an IT advisory company in Northborough, Mass.

“It can make companies more efficient and more effective and more responsive to consumers,” he told TechNewsWorld.

Talking Local

Gold explained that locals tend to better understand local dialects and associate with them better. “Even talking to someone with a heavy Southern accent sometimes gives me pause,” said the Massachusetts resident. “It affects the effectiveness of the call center if you can be much more like me.”

“Many call center workers are based overseas and customers could easily have trouble understanding what they’re saying in the case of strong accents,” John Harmon, a senior analyst with Coresight Research, a global advisory and research firm specializing in retail and technology, told TechNewsWorld.

“But the same could be true even for regional U.S. accents,” he added.

However, Taylor Goucher, COO of Connext Global Solutions, an outsourcing company in Honolulu, discounted accents as a source of customer frustration.

“It is well known that companies outsource call center support to different countries and rural parts of the United States,” he told TechNewsWorld. “The larger issue is the right selection of employees for the position and the training and processes that are in place to make them successful.”

Customer Perceptions

Harmon noted that consumers can have a negative reaction when they encounter a support person with a foreign accent at the other end of a support line. “A caller could feel that a company is not taking customer support seriously because it’s finding a cheaper solution by outsourcing service to an overseas call center,” he said.

“Also,” he added, “some customers might feel that someone overseas might be less able to help them.”

Goucher cited a study taken by Zendesk in 2011 that showed customer satisfaction dropping from 79% to 58% when a call center was moved outside the United States. “Everyone that I know has likely had a poor customer experience at some point in their lives with an agent that they couldn’t understand,” he observed.

He noted that the biggest problem with bad customer experience is the lack of support systems, training, and management oversight in the call center.

“Frequently we see companies move call centers offshore just to have the phone answered.” he said. “In customer service, answering the phone isn’t the most important part, it’s what happens after.”

“Agents, accent or no accent, will be able to provide winning customer experiences if they are the right person for the role, have the right training, and have the right tools to solve customer problems,” he added. “Saying the accent is the problem is an easy out.”

Bias Against Accents

When a customer support person doesn’t have the tools to solve a problem, it can be a huge frustration to a customer, Gold observed. “If I call somebody, I want my problem solved, and I don’t want to go through 88 steps to get there,” he said. “It’s frustrating to me because I just spent a whole bunch of money with your company.”

“Anything that can be done to get over that hump faster has multiple benefits,” he continued. “From the consumer perspective, there’s the benefit of not pissing me off. In addition, if I can get through faster, it means the service person can spend less time with me and can handle more calls. And if I can hone in on the problem better, I won’t have to call again about it.”

Regardless of whether a customer support person has the tools they need to provide top-notch service, accents can influence a caller’s response to the person at the other end of a phone line.

“A customer could become upset at having to decode a foreign accent,” Harmon said. “There is also the stereotype that some U.S. accents sound uneducated, and a customer could feel like that the service provider is getting by with cheaper support.”

“In some cases, I think the biggest pre-existing bias is that if the agent has an accent, they aren’t going to be able to solve my problem,” Goucher added.

Choice for Voice

Serebryakov noted that one of the goals of Sanas is to provide people with choice when it comes to their voice. “When we post photos on Instagram, we can use filters to represent ourselves however we want to,” he explained. “But you don’t have a similar medium for voice. Our mission at Sanas is to provide that kind of choice.”

Although Sanas has initially targeted call centers for its technology, there are other areas that hold potential for it.

“One of the biggest uses we see for the technology is in enterprise communication,” Narayana said. “We got a call from Samsung saying they’ve got 70,000 engineers in Korea who interact with engineers in the U.S., and they don’t talk at team meetings because they’re scared how they’ll be interpreted. That’s the next use case we want to solve.”

The technology also has potential in gaming, health care, telemedicine, and education, he added.

Sanas on June 22 announced a $32 million Series A, boasting the largest Series A round in history for a speech technology company.

John P. Mello Jr. has been an ECT News Network reporter since 2003. His areas of focus include cybersecurity, IT issues, privacy, e-commerce, social media, artificial intelligence, big data and consumer electronics. He has written and edited for numerous publications, including the Boston Business Journal, the Boston Phoenix, Megapixel.Net and Government Security News. Email John.

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OSS NEWS

Coding Vulnerabilities, Linux Growth, FOSS Friction Cap Summer Highlights

As IT workers continue their daunting job of protecting network users from bad guys, a few new tools might help stem the tide of vulnerabilities that continue to link open source and proprietary software.

Canonical and Microsoft reached a new agreement to make their two cloud platforms play nicer together. Meanwhile, Microsoft apologized to open-source software devs. But no apology was rendered for BitLocker locking out Linux users.

Let’s get caught up on the latest open-source software industry news.

New Open-Source Tool Helps Devs Spot Exploits

Vulnerability software platform firm Rezilion on August 12 announced the availability of its new open-source tool MI-X from the GitHub repository. The CLI tool helps researchers and developers quickly know if their containers and hosts are impacted by a specific vulnerability to shorten the attack window and create an effective remediation plan.

“Cybersecurity vendors, software providers, and CISA are issuing daily vulnerability disclosures alerting the industry to the fact that all software is built with mistakes that must be addressed, often immediately,” said Yotam Perkal, director of vulnerability research at Rezilion.

“With this influx of information, the launch of MI-X offers users a repository of information to validate exploitability of specific vulnerabilities, creating more focus and efficiency around patching efforts,” he added.

“As an active participant in the vulnerability research community, this is an impactful milestone for developers and researchers to collaborate and build together,” Perkal noted.

Current tools fail to factor in exploitability as organizations grapple with a litany of critical and zero-day vulnerabilities, and scramble to understand if they are affected by that vulnerability. It is an ongoing race to figure out the answer before a threat actor does.

To make this determination, organizations need to identify the vulnerability in their environment and ascertain if that vulnerability is truly exploitable to have a mitigation and remediation plan in place.

Current vulnerability scanners take too long to scan, do not factor in exploitability, and often miss it altogether. That is what happened with the Log4j vulnerability. The lack of tools gives threat actors a lot of time to exploit a flaw and do major damage, according to Rezilion.

The introduction of MI-X is the first of a series of initiatives Rezilion plans to foster a community around detecting, prioritizing, and remediating software vulnerabilities.

Linux Thrives, Along With Growing Security Woes

Recent data monitoring of more than 63 million computing devices across 65,000 organizations shows the Linux OS is alive and well within businesses.

New research from IT asset management software firm Lansweeper shows that even though Linux lacks the more widespread popularity of Windows and macOS, plenty of corporate devices run Linux operating systems.

Scanning data from more than 300,000 Linux devices across some 26,000 organizations, Lansweeper also uncovered the popularity of each Linux operating system depending on the total amount of IT assets managed by each organization.

The company released its finding August 4, noting that around 32.8 million people use Linux globally, with about 90% of all cloud infrastructure and almost all the world’s supercomputers being dedicated users.

Lansweeper’s research revealed CentOS is the most widely used (25.6%) followed by Ubuntu (20.8%) and Red Hat (15%). The company did not break out the percentages for users of the numerous other Linux OS distributions in use today.

Chart shows Linux devices by company size


Lansweeper suggested that businesses demonstrate a disconnect between using Linux for its enhanced security and proactively putting security processes in place.

Two recent Linux vulnerabilities this year — Dirty Pipe in March and Nimbuspwn in April — plus Lansweeper’s new data, show that when it comes to protecting what is under their own roof, businesses are going in blind.

“It’s our belief that most of the devices running Linux are business-critical servers, which are the desired target for cybercriminals, and logic shows that the larger the company grows, the more Linux devices there are that must be protected,” said Roel Decneut, chief strategy officer at Lansweeper.

“With so many versions and ways to install Linux, IT teams are having to grapple with the complexity of tracking and managing the devices as well as trying to keep them protected from cyberattacks,” he explained.

Since its launch in 2004, Lansweeper has been developing a software platform that scans and inventories all types of IT devices, installed software, and active users on a network. This allows organizations to centrally manage their IT.

BitLocker, Linux Dual Booting Not Perfect Together

Microsoft Windows users who want to install a Linux distribution to dual boot on the same computer are now between a technological rock and a Microsoft hard place. They can thank an increased use of Windows BitLocker software for the worsening Linux dual-booting dilemma.

Developers of Linux distros are fighting more challenges in supporting Microsoft’s full-disk encryption on Windows 10 and Windows 11 installations. Fedora/Red Hat engineers noted that the problem is worsened by Microsoft sealing the full-disk encryption key is sealed using the Trusted Platform Module (TPM) hardware.

Fedora’s Anaconda installer along with other Linux distribution installers cannot resize BitLocker volumes. The workaround is first resizing BitLocker volumes within Windows to create enough free space for the Linux volume on the hard drive. That useful detail is not included in what are often flimsy installation instructions for dual-booting Linux.

A related problem complicates the process. The BitLocker encryption key imposes another fatal restriction.

In order to unseal, the key must match the boot chain measurement in the TPM’s Platform Configuration Register (PCR). Using the default settings for GRUB in the boot chain for dual boot setups produces the wrong measurement values.

Users trying to dual boot then get dropped to a BitLocker recovery screen when trying to boot Windows 10/11, according to discussions of the problem on the Fedora mailing list.

Microsoft, Canonical: A Case of Opposites Attract

Canonical and Microsoft have tightened the business knot connecting them with the common goal of better securing the software supply chain.

The two software companies on August 16 announced that native .NET is now available for Ubuntu 22.04 hosts and containers. This collaboration between .NET and Ubuntu provides enterprise-grade support.

The support lets .NET developers install the ASP.NET and .NET SDK runtimes from Ubuntu 22.04 LTS with a single “apt install” command.

See full details here and watch this brief video for the update:

Microsoft Reverses Open-Source App Sales Ban

In what might well be the latest case of Microsoft opening its marketing mouth to insert its stumbling foot, the company recently upset software developers by implementing a ban on the sale of open-source software in its app store. Microsoft has since reversed that decision.

Microsoft had announced new terms for its app store to take effect July 16. The new terms stated that all pricing cannot attempt to profit from open source or other software that is otherwise generally available at no cost. Many software developers and re-distributors of free- and open-source software (FOSS) sell installable versions of their products on the Microsoft Store.

Redmond maintained its new restrictions would solve the problem of “misleading listings.” Microsoft claimed FOSS licenses permit anyone to post a version of a FOSS program written by others.

However, developers pushed back noting the problem is easily solved the same way regular stores solve it — through trademark names. Consumers can tell genuine sources of software products from third-party re-packagers with trademark rules that already exist.

Microsoft has since acquiesced by removing references to open-source pricing restrictions in its store policies. The company clarified that the previous policy was intended to “help protect customers from misleading product listings.”

More information is available in the Microsoft Store Policies document.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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