I’ve had it in my mind for a couple of years now to write about Apple and its impact on the world in terms of creating wealth. With the death of the brilliant Steve Jobs, it seems an apropos to do it now.
One of the things that has fascinated me about Jobs and the amazing company that he built was how much wealth they created for others around the world. His story is, of course, almost entirely unique but it still shows us the capacity for individuals and collectives (i.e., companies) to create wealth where none existed before. The invention of the iPhone is, perhaps, the most illustrative example.
The iPhone is said to be roughly 75% U.S. sourced (although it is assembled in China.)
[R]oughly $500 retail price of an iPhone, only about $180 is accounted for by the manufacturing and assembly processes done in China. The other $320 results from the design, software development, marketing, shipping, and selling done in the United States. So, of the total value added, nearly twice as much is done in America as in China. Moreover, the low cost of manufacturing in China provides low prices for U.S. consumers who are thus able to buy more phones and thereby create more U.S. based jobs.
This remarkable device has created immense wealth for Apple, of course, but it goes far beyond that in terms of wealth created. Look for a case for an iPhone and you’ll discover entire companies set up around that industry. Accessories like chargers, camera adapters and a whole host of other interesting and useful dongles are widespread.
And then there are the apps.
You cannot talk about iPhones without talking about apps. There are over a half-billion iPhone & iPad apps in the iTunes store. By January of 2011, Apple had sold over 10 billion apps. The mobile app industry, which Apple has roughly 90% of, was over $5 billion in 2010 and is expected to top $15 billion this year. By 2014, by one estimate, mobile app sales may reach $185 billion.
In addition the wealth created by the apps themselves, there is a ripple effect of revenue generated companies utilizing apps. In addition revenue generated by dvertisers who pay to have their ads run on many apps, many companies benefit from increased sales due to use of specialized apps. For example, Domino’s Pizza had $1 million ins sales from their iPhone app in less than one month after its release. It saw orders increase to $1 million per week just three months after its release. The ease with which transaction can take place using an iPhone app is clearly having an impact on sales for some companies.
The genius of Steve Jobs and the company he created is a gift to all of us. The many products sold by Apple not only enrich our technology-using lives, they are adding wealth, and JOBS! to our economy, both here in the USA and abroad. You don’t hear Apple whining about excessive government regulation or taxation getting in the way of their success. They operate in the system as it is now and are doing very well, thank you very much. And, the better they do, the better all of us do.