Apple’s iPhone: Calling Europe or Europe Calling? (Abridged)

Case Solution

Jordan Mitchell, Sandra Sieber, Josep Valor Sabatier

Short version of the IES621 enclosure. Apple needs little introduction. Following the launch of the successful iPod in 2001, Apple has been on an aggressive growth path (revenue increased at a compound annual growth rate (CAGR) of 31% and net revenue increased by a CAGR of 128%). In 2007, Apple announced that it would change another mobile phone industry with the iPhone. The iPhone was hailed as an instant hit in the US, selling a million units in a record 74 days (it took the iPod two years to hit the million mark). Aside from the high sales and positive tech reviews, many were surprised by the revenue-sharing model that Apple had negotiated with wireless service providers who traditionally hadn’t handed over any of their subscription revenue to mobile phone makers. The case is set on November 9, 2007, the morning the iPhone is launched with Telefonicas O2 in the UK. Students must determine whether the agreement will be beneficial to Telefónica O2 and the long-term impact on the fabric of the industry.

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