This is a presentation that we gave in a business school class called \"Strategy in Action.\" The class was taught by Andy Grove, the ex-CEO of Intel. Unbeknownst to us, Andy invited Steve Jobs to attend the presentation - and he came. It was a memorable class.

1. Apple disrupts the mobile telecommunication industry Doron Alter, Gabriel Silva, Gabriel Tavridis, Ed Baker, Dan Murillo 06/06/09

4. Apple disrupted the Music industry…can they do it in Mobile? Mobile Industry Music Industry Device Companies Record Labels Competes Disrupts Device Companies Service Providers Competes Disrupts? 06/06/09

6. Overview of the U.S. mobile telecommunication industry 2007E # of U.S. users: 150 Million 2007E # of U.S. users: 63 Million Challenge for OEM’s is to extract value from the service providers Consumer Mobile Structure PIE (Pre-Apple) Enterprise Mobile Structure PIE (Pre-Apple) 06/06/09

7. Service providers dominated the U.S. mobile industry by exploiting geographic monopolies 06/06/09 Infrastructure Historical Geographic Monopolies Control Over OEM’s

8. Service providers managed U.S. customers tastes and built a walled garden Customer Preferences Europe U.S. Phones as fashion accessories Phones as necessities Annual Contracts Pre-Paid Plans Phone subsidies & locking phones illegal Phone subsidies & locking phones standard Phone number portability since 1998 Phone number portability since 2003 SIM Card Based No SIM Cards (Verizon, Sprint) Business Model Differences Europe U.S. High Switching Costs Low Switching Costs

9. How can an OEM win over the service providers? Annual Contracts Phone subsidies & locking phones standard Phone number portability since 2003 No SIM Cards (Verizon, Sprint) Switching Costs Customer Preferences Phones as necessities Phones as fashion accessories

11. Apple Rubber Band Model Competence Strategic Action Corporate Strategy Basis of C/A

12. Apple has created immediate switching costs 06/06/09

13. Apple has used its power to extract significant value from at&t $18/month $0/month * Piper Jaffray estimate Online Platform Buy music, apps, etc., from Apple Extra Revenue 06/06/09

14. Apple has also used its power to own the customer experience 06/06/09

15. If Nokia had come up with an “iPhone”... 06/06/09 … could they disrupt? … probably not!

16. As a result, Apple has increased its share of the PIE Mobile Industry PIE Share (Apple) Can Apple maintain this position indefinitely? Mobile Industry PIE Share (Nokia, etc.) 06/06/09

21. Nokia Strategic Analysis and Response Competence Strategic Action Corporate Strategy Basis of C/A

22. Opportunities and Challenges

25. Google/Medio will respond by … 06/06/09 Advertising Agencies $ Ads Consumers Service Providers $

28. Is Apple repeating the mistakes of the PC era? 06/06/09 User Experience Hard Easy Problem Space Small Large When should a firm provide an integrated hardware/software product? Integrated Not-Integrated 1984 1991 2007 ?

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30. What factors Apple enabled to disrupt the industry? Powerful Brand Innovative Customer Loyalty No Prior Rules Bind Apple to the Service Providers 06/06/09