Special Report

American Companies with the Most Customers

Last week, Apple (NASDAQ: AAPL) announced that it sold 35.1 million iPhones worldwide in the latest quarter. The figure is large, but not extraordinary. Some consumer products and consumer electronics companies sell their products to a considerably larger number of customers — in the U.S. alone. 24/7 Wall St. examined the corporations operating in the largest U.S. consumer-based industries to find the largest companies based on customer count.

Read The American Companies With the Most Customers

The customer bases of many of these companies are in the tens of millions. Each company operates in an industry that provides a product or a service to an extremely wide spectrum of American consumers. The leader in each sector reached its position through innovation, longevity or some combination of the two.

Each of the industries on this list serves a very large base of customers. For example, there are thousands of retailers, serving pretty much the entire population, but only Costco is the leader in membership with over 65 million members. Founded in 1983, Costco (NASDAQ: COST) is a relatively new company. It became a success largely because it charges customers a membership fee for access to its stores and in exchange offers extremely low prices that are never marked up more than 15% above the price Costco pays.

Some industries are huge, but only have a small number of competitors. While there are only a handful of national wireless carriers, there are over 330 million wireless subscriptions in the U.S. — more than the population itself. But there are only four competitors of any size — AT&T (NYSE: T), Verizon Wireless, Sprint-Nextel (NYSE: S) and T-Mobile. Each company has to battle for a share of a market that is no longer growing. The weapons the companies use to gain market share are products, customer service and price. AT&T is the leader. Its share of the market is based to some extent on history. It is a descendant from the original AT&T phone monopoly. But without strong products and intelligent pricing there is no assurance it can stay ahead of number two competitor Verizon Wireless.

24/7 Wall St. examined 10 of America’s largest consumer industries and the customer counts for the biggest two or three companies in each sector. We then reviewed the history of each industry in an attempt to find how the top company in each reached its leadership position. To rank the companies, 24/7 Wall St. took each leader and compared it in size to the leaders in the other industries chosen. We used company and industry data to confirm customer counts. Each company in this ranking is the largest company in its industry, based on customer count.

These are the American Companies with the Most Customers.

10. The Wall Street Journal
> Customers: 2.1 million
> Industry: newspapers
> Parent company: News Corp. (NASDAQ: NWS)
> Major competitors: USA Today, New York Times

There are only three major national newspapers: Wall Street Journal, New York Times, and USA Today. The country’s other papers, for the most part, are local. The Wall Street Journal leads the pack, with a daily circulation of approximately 2.1 million for the six months ending September 30, 2011, according to the Audit Bureau of Circulations. The second most popular paper, USA Today, has a circulation of nearly 1.8 million. The newspaper industry as a whole has taken a huge hit since the rise of online journalism. The Wall Street Journal, however, has been one of the few online publications that has been successful in transferring its business to the Internet.

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9. Charles Schwab
> Customers: 8.6 million
> Industry: discount brokerage
> Parent company: Charles Schwab Corporation (NYSE: SCHW)
> Major competitors: E*Trade (NASDAQ: ETFC), TD Ameritrade (NASDAQ: AMTD)

As is the case with many industries that have transitioned to the Internet, investing has become increasingly accessible as a result. Discount brokerages did not exist before the 1970s. The Internet allowed discount brokerages to charge investors even less. Charles Schwab has drawn the most customers through this model, and it has 8.6 million active brokerage accounts as of the first quarter of 2012. Because market growth is relatively flat for the discount brokerage market, price, product and service are most important for companies trying to gain market share. Schwab does well on all fronts, including offering a flat $8.95 commission per online trade.

8. AT&T
> Customers: 37.9 million
> Industry: landline telephones
> Parent company: AT&T Corp.
> Major competitors: Verizon (NYSE: VZ)

It was not until 1977 that the first cellular network was built in the United States, and mobile phones did not become widely used until the 1990s. Before that, there was nothing but landlines. The landline market is led by AT&T, which currently provides about 37.9 million connections. Verizon, which has the second-largest market share, provides 23.7 million connections. The landline telephone business is now shrinking due to the rise of cable VoIP and wireless handsets. More than three out of every 10 American households now only have wireless telephones.

Also Read: America’s Most (and Least) Peaceful States

7. Nintendo Wii
> Customers: 39.4 million
> Industry: video game consoles
> Parent company: Nintendo
> Major competitors: Microsoft (NASDAQ: MSFT), Sony (NYSE: SNE)

Since its launch, the Wii has sold more units than either of the two competing next-gen systems, Microsoft’s Xbox 360 and Sony’s PS3, according to research firm NPD. Although sales for Nintendo’s popular device have recently declined, it has still sold 39.4 million devices in the U.S. since its launch, compared to the 360’s 33.8 million. The PS3 is a distant third, at 21 million. Initially labeled as a failure, the Wii caught on as a device accessible to non-hardcore video gamers. Families saw it as a product their kids could enjoy, and extra hardware like the Wii fit has helped with the console’s longevity.

6. Comcast
> Customers: 49.8 million
> Industry: cable
> Parent company: Comcast (NASDAQ: CMCSA)
> Major competitors: Time Warner (NYSE: TWX), Cablevision (NYSE: CVC)

For such a massive national industry, the cable industry is arguably the most localized in the country. Most of the country’s cable companies have carved out niches, making them the largest provider, or only provider, in a particular region. In New York City, Time Warner has a basic monopoly on coverage. However, nationwide, Comcast has the most customers, with 49.8 million customers as of the end of 2011. Time Warner has slightly more than half of that, at 12.4 million subscribers. Comcast has attempted to move into vertical integration, most notably with the purchase of NBC studios early in 2011.

5. Costco
> Customers: 65.7 million
> Industry: membership retail
> Parent company: Costco
> Major competitors: BJ’s, Sam’s Club

The business model of membership-based big-box retailers does not lend itself to having a large customer base. Costco and major competitors BJ’s and Sam’s Club charge between $50 and $100 each year in membership fees that grant customers access to their wholesale prices. This means that, while the companies necessarily will have fewer customers than other types of big-box retailers, they will make up for it in the margins with customer fees. Costco is by far the largest membership retailer, with 65.7 million cardholders as of February 12, 2012, compared to Sam’s Club’s 47 million.

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4. AT&T
> Customers: 103.9 million
> Industry: wireless telephones
> Parent company: AT&T Corp.
> Major competitors: Verizon, Sprint

According to CTIA-The Wireless Association, there are 331.6 million wireless subscriber connections in the United States as of December 2011. This is more than the population of the country. Naturally, domestic growth has slowed dramatically, shifting the focus of businesses to gaining market share. Wireless companies now attempt to deliver products, prices and service that are superior to their competitors’. AT&T is currently the largest wireless provider, with 103.9 million subscribers. Verizon follows, with 93.0 million subscribers. AT&T would be even larger if the Justice Department had not prevented it from purchasing T-Mobile last year because of antitrust issues.

3. Delta
> Customers: 111.1 million
> Industry: airline
> Parent company: Delta Air Lines (NYSE: DAL)
> Major competitors: Southwest (NYSE: LUV), American

Few industries have been as troubled as the big airlines in the U.S. At some point in their history, more or less every major carrier has gone through bankruptcy at least once. Delta’s merger with Northwest Airlines in 2008 made it the largest carrier in the world. As of 2010, the company reported 110.9 million annual enplaned passengers. The next largest company, Southwest, had 106 million passengers. The merger between Continental and United, approved at the end of last year, may cause Delta to lose its number one spot in the coming months.

Also Read: America’s Nine Most Damaged Brands

2. iTunes
> Customers: 225 million
> Industry: e-commerce
> Parent company: Apple Inc.
> Major competitors: Amazon.com (NASDAQ: AMZN), eBay (NASDAQ: EBAY), PayPal

There are at least 225 million registered Apple iTunes accounts worldwide. These are accounts that are tied to a credit card. After reaching the 200 million mark in March 2011, the now-late Steve Jobs stated that “Amazon doesn’t publish their numbers. But it’s very likely that this is the most accounts with cards anywhere on the Internet.” Apple’s iTunes Store, which originally sold only media content, has benefited greatly from the addition of the Apple App Store. On March 5, 2012, Apple announced that customers downloaded 25 billion apps.

1. Visa
> Customers: 302 million
> Industry: credit cards
> Parent company: Visa Inc. (NYSE: V)
> Major competitors: MasterCard (NYSE: MA), Discover (NYSE: DFS)

Visa, MasterCard and American Express (NYSE: AXP) have been in the business longer than most of the other smaller competitors. This has allowed the three companies to remain dominant for most of the last several decades. As of 2010, Visa had nearly half of the nation’s market share, at 49.6%. The next-largest competitor, MasterCard, had a 33.4% share. While American Express, which had just an 8% share, must rely on its own marketing to distribute membership, Visa can use banks as issuers, making it much easier to gain the kind of market share it has.

Charles B. Stockdale & Douglas A. McIntyre

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