Disruptive innovation: Apple threatened by skinnied-down challenger.

TakeAway: A disruptive innovator in the French Telecom industry is growing market share and inadvertently challenging Apple’s IPhone business model.

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Excerpt from Forbes: “Apple’s Business Model Vulnerability, Exposed by a French Upstart”

Free Mobile is up-ending Apple’s prospects in France. Analysts are blaming the firm for driving down iPhone sales by 10% in the past quarter alone.

Free is offering unlimited domestic calls and texts, free calls to many international countries, 3 GB of data, and no contract commitment — all for $25 a month. In exchange, subscribers give up benefits associated with traditional mobile carriers. Free barely advertises, does not invest in proprietary applications; and doesn’t subsidize handsets at all.

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Free has won nearly 3 million subscribers in its first three months, and the incumbents are facing intense price pressure.

This is a major problem for Apple. People who have to pay the full price for a handset flock to the less expensive, and technically quite solid, Android and Windows offerings.

The iPhone has always been expensive, reliant upon big subsidies from carriers trying to stand out from their competitors.

Edited by ARK

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