This case describes the introduction of the Apple iPhone, including subsequent price reductions and market share goals. The case includes publicly available data on iPhone production costs, channel margins, and marketing costs. It concludes with the July 2008 introduction of the second-generation 3G iPhone. Excerpt UVA-M-0851 Jul. 5, 2013 THE APPLE IPHONE (ABRIDGED) So we're going to enter a very competitive market, lot of players, we think we're going to have the best product in the world, and we're going to go for it and see if we can get 1% market share, 10 million units in 2008, and go from there. —Steve Jobs Computers were too expensive for individual ownership until the 1970s, when microprocessors began to be mass-produced, making it feasible for enthusiasts to purchase kits and assemble minicomputers at home. In 1976, college dropouts Steve Jobs and Steve Wozniak founded Apple Computer to preassemble minicomputers for customers. As the mass market for preassembled personal computers began to grow, Tandy Corporation and others introduced competing products. The minicomputer market grew quickly enough that, by the early 1980s, it had attracted the attention of IBM, whose first PC, or personal computer, was targeted toward business users who were familiar with IBM and skeptical of upstarts. The company quickly dominated the market. . . .