Product Overview

This case describes the introduction of the Apple iPhone, including subsequent price reductions and market share goals. The case includes publicly available data on iPhone production costs, channel margins, and marketing costs. It concludes with the July 2008 introduction of the second generation 3G iPhone.

Learning Objectives

The case provides students with a current example that helps them review basic pricing concepts of costs, margins, customer lifetime value, and price elasticity. It also reinforces concepts of segmentation (business versus personal usage) and diffusion of innovation (cf. Rogers, Moore).