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Valuation of innovation: The case of iPhone

  • Korkeamäki, Timo

    ()

    (Hanken School of Economics and Bank of Finland)

  • Takalo, Tuomas

    ()

    (Bank of Finland Research)

We study the value of innovation in a case study of one of the most visible innovative products in recent years, Apple’s iPhone. The value effects of news announcements, patent publications, and trademarks relating to iPhone are taken into account. Our estimate of the lower bound on the value of iPhone is fairly high, 30 billion U.S. (event-day) dollars or 10% to 13% of the firm’s market cap (at the end of 2009). We find that patentable technology explains about 25% of the total value, which derives from market reactions to publication of patent applications rather than grants. We also observe a weak negative reaction among Apple’s rivals to news about iPhone. Apple appears to capture most of the value within the iPhone supply chain.

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File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1224.pdf
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Paper provided by Bank of Finland in its series Research Discussion Papers with number 24/2012.

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Length: 40 pages
Date of creation: 17 Jul 2012
Date of revision:
Handle: RePEc:hhs:bofrdp:2012_024
Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.suomenpankki.fi/en/

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