Managerial Economics 13th Edition by James McGuigan,Charles Moyer,Frederick Harris

Exercise 1

Web-Based Satellite Phones Displace Motorola's Mobile Phone 21
Motorola's Iridium, a go-anywhere mobile phone system that transmitted and received signals beamed down from 66 satellites, was called "the eighth wonder of the world" by Motorola CEO Chris Galvin. However, at $1,500 for a handset the size of a brick, consumers balked. Few business travelers concluded they needed the security and reliability offered in remote corners of the globe such as Kathmandu or Lagos. As a result, Motorola's 25 percent historical market share in mobile phones declined steadily to 13 percent in 2001, and Motorola stock fell 16 percent from 1997 to 2001, during a period when the S P 500 was up 76 percent. For the business customer, RIM's Blackberry was satellite communication-based, much smaller and lighter, almost as secure, and much more mobile. For the mass market, Nokia began designing web-enabled phones that could connect to local area networks and eventually the Internet. Apple iPhones and Samsung Android phones then ushered in a new era of smart phones.
Characterize the product space for mobile phones when Iridium began.