Valuation of innovation: The case of iPhone

Timo Korkeamäki and Tuomas Takalo

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: innovation; R&D; patent; iPhone; valuation (search for similar items in EconPapers)
JEL-codes: G14 O32 O34 (search for similar items in EconPapers)
Date: 2010-12-28
New Economics Papers: this item is included in nep-cfn, nep-ino, nep-ipr, nep-pr~ and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:28042

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