Valuation of Innovation: The Case of Iphone

44 Pages Posted: 18 Jul 2012

See all articles by Timo P. Korkeamaki

Timo P. Korkeamaki

Hanken School of Economics - Department of Finance and Statistics

Tuomas Takalo

Bank of Finland

Multiple version iconThere are 2 versions of this paper

Date Written: July 17, 2012

Abstract

We study the value of innovation in a case study of one of the most visible innovative products in recent years, Apple’s iPhone. The value effects of news announcements, patent publications, and trademarks relating to iPhone are taken into account. Our estimate of the lower bound on the value of iPhone is fairly high, 30 billion U.S. (event-day) dollars or 10% to 13% of the firm’s market cap (at the end of 2009). We find that patentable technology explains about 25% of the total value, which derives from market reactions to publication of patent applications rather than grants. We also observe a weak negative reaction among Apple’s rivals to news about iPhone. Apple appears to capture most of the value within the iPhone supply chain.

Keywords: innovation management, intellectual property rights, valuation, event studies

JEL Classification: G14, O32, O34

Suggested Citation

Korkeamaki, Timo and Takalo, Tuomas, Valuation of Innovation: The Case of Iphone (July 17, 2012). Bank of Finland Research Discussion Paper No. 24/2012, Available at SSRN: https://ssrn.com/abstract=2111162 or http://dx.doi.org/10.2139/ssrn.2111162

Timo Korkeamaki (Contact Author)

Hanken School of Economics - Department of Finance and Statistics ( email )

FI-00101 Helsinki
Finland

Tuomas Takalo

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

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