On This Day In Finance: June 29 - Apple iPhone

By Peter Cherewyk | June 29, 2009 AAA
On This Day In Finance: June 29 - Apple iPhone

On this day in 2007, the Apple iPhone officially went on sale to the public. The phone was sold for $499 and had a hard drive size of four gigabytes for the smaller model, and $599 for the larger eight gigabytes model. Lineups that rounded blocks and campers taking up city sidewalks outside of retail stores were a common sight on launch day. Now, two years later, the upgraded eight gigabyte version of the iPhone costs $99.

This is a perfect example of two flaws in the consumer price index (CPI). The CPI allows us to gauge the cost of living and inflation from one year to the next. New products, such as smart phones, increase consumer welfare, which puts a upward bias on the CPI known as new product bias. Also, the huge increase in quality over two years, as is seen in most new technologies, skews the numbers and is known as the quality change bias. (Learn more in Economic Indicators: Consumer Price Index (CPI).)

Apple's (Nasdaq:AAPL) stock is up about 60% since the announcement of the iPhone back on January 9, 2007. Keep in mind, this is after the largest market crash since the Great Depression. Sales for the newest version of the iPhone (3G) exceeded one million units in the first three days after its launch, so it still looks like Apple is providing what consumers want. Some estimates even have the total iPhones sold to date at well over 20 million.

IN PICTURES:
Eight Ways To Survive A Market Downturn

comments powered by Disqus
Related Articles
  1. Foreclosure Opens Doors For Real Estate ...
    Home & Auto

    Foreclosure Opens Doors For Real Estate ...

  2. Cashing In On The Venture Capital Cycle
    Fundamental Analysis

    Cashing In On The Venture Capital Cycle

  3. 12 Things You Need To Know About Financial ...
    Investing Basics

    12 Things You Need To Know About Financial ...

  4. Valuing Firms Using Present Value Of ...
    Fundamental Analysis

    Valuing Firms Using Present Value Of ...

  5. Accounting Rules Could Roil The Markets
    Bonds & Fixed Income

    Accounting Rules Could Roil The Markets

Trading Center