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The trouble with Apple's success
People wait outside an Apple store all night prior to the mainland release of iPhone 4S on January 12, 2012 in Beijing, China. As the company grows, it also faces challenges like having a strong enough network for all its users.
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Adriene Hill: Apple had a blockbuster holiday season. It made $13 billion in profits -- a record. And did it, in part, selling iPhones -- sales more than doubled.
For more we have Marketplace's Jennifer Collins with us now. Good morning Jennifer.
Jennifer Collins: Good morning.
Hill: So Apple sold 37 million iPhones in the last three months of 2011. Why so many? How so many?
Collins: Well this is the first time the iPhone's been available through AT&T, Verizon and now Sprint. So more carriers -- but also more phones. And for all the talk of those voice control features on the new iPhone 4S, It may actually be an earlier and cheaper iPhone that's boosting Apple's numbers.
Or that's what Brian Blair thinks. He's a tech analyst with Wedge Partners.
Brian Blair: So the 3GS right now is free with contract. So that I think has made up a very large percentage of the overall quarterly units.
And Blair says U.S. consumers are going to keep buying phones.
Hill: So more phones -- can our cellular networks keep up with that?
Collins: Well, I talked to Fran Caulfield with Insight Research about this. He says we've all experience the trouble they're having keeping up.
Fran Caulfield: Slow response time from a website or a jumbled video. I guess in the worst case it could result in a dropped call.
But there are some solutions. Caulfield says the carriers have been trying to buy up spectrum -- that's what drove the AT&T Tmobile merger that failed. And now, they're try to pass along those costs. This week, AT&T raised rates on three of its data plans about $5 a month. And many folks I talked to expect Verizon to follow suit.
Hill: Marketplace's Jennifer Collins, thanks.
Collins: Thank you.
The problem with all these smartphones is what users are being encouraged to do with them. Rather than storing music and data, they are being encouraged to stream entertainment. They are doing exactly that, so much that the bulk of Internet use is now for entertainment, something it is woefully unprepared for.
