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Valuation of innovation: The case of iPhone

  • Korkeamäki, Timo
  • Takalo, Tuomas

We estimate the private value of Apple’s iPhone by observing abnormal stock market reactions to news announcements and patent publications related to the innovation. Our estimate of the lower bound on the market valuation of iPhone is fairly high, at minimum 30 billion U.S. (event day) dollars. We find that patentable technology explains about 25% of that total value. We also find a weak negative reaction among Apple’s rivals to the news about iPhone but no significant reaction to the publication of patent documents concerning iPhone can be observed. The evidence suggests that the value of iPhone primarily stems from Apple’s management and marketing abilities and efforts rather than from underlying "hard" technologies and intellectual property.

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File URL: https://mpra.ub.uni-muenchen.de/28042/1/MPRA_paper_28042.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 28042.

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Date of creation: 28 Dec 2010
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Handle: RePEc:pra:mprapa:28042
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  7. Ali-Yrkkö, Jyrki & Rouvinen, Petri & Seppälä, Timo & Ylä-Anttila, Pekka, 2011. "Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone," Discussion Papers 1240, The Research Institute of the Finnish Economy.
  8. Klaus Kultti & Tuomas Takalo & Juuso Toikka, 2006. "Simultaneous Model of Innovation, Secrecy, and Patent Policy," American Economic Review, American Economic Association, vol. 96(2), pages 82-86, May.
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