Taking stock of the iPhone market

Inter-dependency is not a new concept for Apple products but the iPhone shows a level of inter-dependency with distribution and production the likes of which has never been seen.

The iPhone is a severely constrained product. We’re used to thinking that it’s production constrained—and it is, but it’s also distribution constrained. It has a business model that is almost completely dependent on operator subsidy. Few end users pay the $650 average price that Apple obtains and that price point has held for a remarkably long time. This price point is largely invisible to the user.

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