Why the iPhone Won't Last Forever and What the Government Should Do to Promote its Successor

INTRODUCTION ................................................................................... 314 I. A BRIEF ECONOMIC HISTORY OF DISRUPTIVE REVOLUTIONS IN THE HANDSET MARKET ........................... 317 A. Innovative Handsets From the Last Two Decades .................. 317 B. Market Dynamics: Share Changes Among Handset Makers Around the Introduction of the Iconic Device .......................... 326 1. Smartphone Segment .................................................... 326 2. Other Segments of the Handset Market ...................... 329 II. WHAT MAKES THE IPHONE SPECIAL YET NOT A MUSTHAVE INPUT FOR WIRELESS CARRIERS? ................................ 331 A. Identifying the Key Attributes of the iPhone ........................... 333 B. Are Those Attributes Currently Offered By Rival Smartphones—And if Not, Will They Soon Be Replicated or Superseded? ........................................................................... 333 C. Even the Best Device Makers, Including Apple, Stumble at Times ................................................................................... 336 III. THE ROLE OF EXCLUSIVE AGREEMENTS IN PROMOTING INNOVATION IN THE HANDSET MARKET IN THE UNITED STATES ....................................................................................... 337 A. Procompetitive Motivations for Exclusive Handset Contracts .............................................................................. 339 1. Risk Sharing .................................................................. 340 2. Marketing Support ........................................................ 341 3. Quality Assurance and Reputation ............................... 342 B. Why the Critics of Handset Exclusivity Are Wrong ................. 342 IV. OTHER DISRUPTIVE TECHNOLOGIES ON THE HORIZON .... 344