The problem for Apple investors is that the booming market the company created with the iPhone seven years ago – and then boosted with the iPad three years later -- is now producing more growth for the wireless phone giant than it is for Apple itself.
AT&T reported Tuesday its strongest growth in long-term wireless subscribers in five years, "with smartphones and tablets leading the way," as AT&T Chief Financial Officer John Stephens told analysts and investors on a conference call to discuss first-quarter results.
Just as important, a surging number of AT&T customers are switching to so-called usage-based pricing – paying based on how much wireless data they download from the Web -- rather than paying for the devices up front with the help of subsidies.
While the transition is putting a short-term hit on AT&T's balance sheet (as it has to write down the full price of such device sales immediately), the popularity of those plans also helped generate the company's strongest cash flow from operations in seven years.
"The move away from device subsidies accelerated in Q1," Stephens said, as the number of new and existing customers choosing so-called mobile share data plans tripled from a year earlier.
The Dallas-based company said that drove wireless revenue up 7% from a year earlier to $18 billion, also the strongest growth in years.
That year-over-year growth rate is now higher, in fact, than what Wall Street is expecting from Apple both for its most-recent quarter and for the company's full fiscal year.
Apple, which will report fiscal second-quarter results after the close of markets Wednesday, is expected to post flat sales for the period of $45.3 billion.
For the year ending in September, analysts expect Apple sales to rise 5.2%, to $180 billion.
That's down from 9.2% growth a year earlier, as iPhones and iPads face increasing price p! ressure from Android-powered devices made by Samsung Electronics and others.
Apple's growth is slowing even as "the smartphone (has become) the remote control of our lives," as Stephens said late Tuesday.
That sounds like the vision Jobs pitched to AT&T in late 2006 and early 2007, when he convinced the company to become the first U.S. wireless operator to sell and support the original iPhone.
Jobs also convinced AT&T (and later Verizon and others) to contribute massive subsidies to offset the high cost of the device, so more wireless consumers could afford such an advanced product.
Without those subsidies, which were as high as $400, the first iPhone would have been a niche device in terms of market share: awesome in power but out of the reach of the majority of phone buyers.
The only way for wireless carriers to make money from such an arrangement was if consumers started using their devices a lot more and agreed to pay for them based on a usage model -- rather than signing up for subsidized, unlimited data plans.
The handheld market Jobs foresaw is now here: a category of high-priced devices that consumers use for ever-more minutes every day, to download ever-greater amounts of text, photo and video files from the Internet.
Half of AT&T mobile shared accounts are now on plans of 10-gigabytes-per-month or higher, Stephens said Tuesday.
"The transition of our customer base can clearly be seen this quarter," he said, adding that the shift away from subsidized data plans to shared data plans "will have a positive long-term impact" on AT&T's business.
Whether the shift will produce the same benefits for Apple in the future remains to be seen.
John Shinal has covered tech and financial markets for 15 years at Bloomberg, BusinessWeek, the San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others. Follow him on Twitter: @johnshinal.