How would you assess Apple’s initial Strategy of iphone and why do they change it so

quickly?

● Exclusive partnership with AT&T in the beginning

● Initially 2G and 2.5G, but after offered 3G so created problem
● Initially expensive no subsidy after AT&T, subscription revenue.
● Keypad were not synced and difficult for office people to use them
● Cannot work with any other carrier
● Was based on revenue sharing model with AT&T
● Apple was bearing a loss of close to $ 1- billion due to service sharing model as deals
were slow in coming

Why changed?
● With iPhone 3G, they changed their strategy with AT&T and asked them to pay a fixed
price for each iPhone being sold
● In order to expand in new markets and increase sales, they revised their agreement with
AT&T and it helped them in opening up new retail channels and their operation cost also
decreased
● By moving away from revenue sharing model, they were able to sign deals with different
carriers
● 1 million(out of 3.7 million) iPhones were sold in an unauthorized market, so they
expanded it in 22 markets to expand international distribution
● Allowed 3rd party apps
● Initially pricing was high, the new deal enabled apple to reduce consumer pricing
● lower consumer pricing and wider international distribution helped fuel promising early
sales for the iPhone 3G. Over the first weekend of its availability, worldwide shipments of
the device totaled 1 million units.