{"content":{"sharePage":{"page":0,"digests":[{"id":"44189228","dateCreated":"1318526685","smartDate":"Oct 13, 2011","userCreated":{"username":"RWentink","url":"https:\/\/www.wikispaces.com\/user\/view\/RWentink","imageUrl":"https:\/\/ssl.wikicdn.com\/i\/user_none_lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/44189228"},"dateDigested":1532762542,"startDate":null,"sharedType":"discussion","title":"Economies of Scale and Apple","description":"I'm looking forward to your future postings on this topic. I wanted to share my opinion, for what it's worth, on the subject of economies of scale and consumer choice, using the iPhone as an example.<br \/>\n<br \/>\nI've been involved in a project to build a new phone, and can attest to the fact that economies of scale drive the pricing of the inputs. Even the price of a button on the phone drops significantly in a large lot size.<br \/>\n<br \/>\nIf you think back to when the iPhone first came out, many said that we already had cell phones, and why would we need another? The iPhone was significantly more expensive than many other models on the market. Its unique value was the improved user experience combined with what Katz and Shapiro call the &quot;indirect network externality&quot;, or in the case of the iPhone, the large development community and number of available apps. The iPhone's design and use of apps changed the way we think about and use cell phones, and &quot;smart phones&quot; are the overwhelming choice of consumers today.<br \/>\n<br \/>\nApple certainly had money to invest in the iPhone's development. And they could commit to a large number of phones for their initial lot. But certainly not more than Nokia, who was the cell phone market leader at that point outside the U.S.<br \/>\n<br \/>\nAt the time, Nokia's economies of scale didn't prevent Apple from entering the market with a differentiated product. Even at its more expensive price, the iPhone presumably benefited consumers, given the number purchased. <br \/>\n<br \/>\nIt seems to me that economies of scale can keep a firm competitive with an established product, such as Nokia's cell phones at the point when the iPhone first entered the market. If established products were the only available choices in the market, I'd agree economies of scale might harm consumer choice. But innovative products still manage to get out in the market and change the playing field--and in the computer hardware and software industry, they often come from tiny startups, who are the least likely to enjoy economies of scale.","replyPages":[{"page":0,"digests":[{"id":"44202022","body":"<!-- ws:start:WikiTextUrlRule:2:http:\/\/www.bloomberg.com\/news\/2011-10-13\/apple-s-iphone-sells-out-at-all-three-u-s-carriers-ahead-of-store-debut.html --><a class=\"wiki_link_ext\" href=\"http:\/\/www.bloomberg.com\/news\/2011-10-13\/apple-s-iphone-sells-out-at-all-three-u-s-carriers-ahead-of-store-debut.html\" rel=\"nofollow\">http:\/\/www.bloomberg.com\/news\/2011-10-13\/apple-s-iphone-sells-out-at-all-three-u-s-carriers-ahead-of-store-debut.html<\/a><!-- ws:end:WikiTextUrlRule:2 --><br \/>\n<br \/>\nThe newest version of the Apple smartphone has, for the first time, been made available simultaneously at all three of the largest U.S. carriers.  The new iPhone was sold out even before the phones because available (thanks to pre-sales).  The strategy was launched to help boost appeal amid a weak economy. Apple is hoping that positive reviews and signs of robust demand for the device should help boost revenue for the wireless carriers in the years ahead.","dateCreated":"1318537326","smartDate":"Oct 13, 2011","userCreated":{"username":"MJWagner74","url":"https:\/\/www.wikispaces.com\/user\/view\/MJWagner74","imageUrl":"https:\/\/ssl.wikicdn.com\/i\/user_none_lg.jpg"}}],"more":0}]}],"more":false},"comments":[]},"http":{"code":200,"status":"OK"},"redirectUrl":null,"javascript":null,"notices":{"warning":[],"error":[],"info":[],"success":[]}}