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Running head: THE IPHONE
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The iPhone and the U.S. as its Biggest Beneficiary
Xinyu Zhou
Professor Bertaina
THE IPHONE
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The iPhone and the U.S. as its Biggest Beneficiary
Introduction
Previous literature on technology use and acceptance had emphasized on functional
factors as the determinants of decisions regarding adoption and the use of technologies. This
position assumes that customer’s desire to use a particular technology is based functional
needs. However, the introduction of the mobile communication technology of the iPhone by
Apple Inc. suggests that consumers adopt and use new innovative not just for functional
purposes but for the experience as well (Arruda-Filho, Cabusas & Dholakia, 2010). Apple’s
iPhone is a revolutionary mobile device that offers integrated products and services. It is a
handheld computer-cum-phone with many functionalities. It opened up new possibilities to
combine functional tasks and social appearance that helped the company generate billions of
dollars in sales. Apple, as a result, became one of the biggest companies in United States
history. With so much money generated by the iPhone, there has been a significant interest as
to where all the money goes and who benefits from it. This essay argues that even though the
most of the components of the product are manufactured and assembled in China, the United
States economy benefits the most from the value created by the Apple iPhone.
A Brief History of the iPhone
The iPhone is arguably the world’s most iconic device. It is not a very old device,
ironically. The first iPhone was introduced in 2007 by the late Steve Jobs of Apple at the
MacWorld Convention. Jobs had, in 2003, requested Apple’s engineers to look into the use of
touchscreen devices and the tablet computer, which would later become the iPad. The iPhone
is similar to the Newton MessagePad, an almost all-screen mobile device manufactured by
Apple in the 1990s. In 2003, Jobs had voiced his belief that traditional computers and tablet
PCs were not the best choices for Apple to manufacture. Instead, he believed that mobile
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phones were going to become very important tools for accessing information anywhere, and
that cell phones needed to have very good synchronization software.
Jobs and Apple focused on the iTunes synchronization software and the iPod. They
collaborated with Motorola and released the ROKE E1, which was the cell phone to use the
software. However, Jobs was not excited with this device as he felt it prevented Apple from
making the phone it wanted to make. Regardless, the experience gave Jobs a new product
concept they would name iPhone which was made up of a multimedia (iTunes) plus
smartphone. Jobs unveiled the product in 2007 stating that Apple had been developing the
technology for almost three years, and it represented the leading technology for its time. The
gadget could be controlled by touch rather than physical buttons. Jobs told the convention
that the iPhone would “reinvent the phone” (Grossman, 2007). And it has, in the decade that
has passed since its launch, Apple has introduced several new models that have changed the
world in the financial, technical, and cultural aspects.
How the U.S. Benefits from the iPhone
Introduction
The iconic brand of the iPhone could be as uniquely American as a bottle of coke,
apple pie, or hamburgers. But a closer look at how the product is made, and its supply chain,
would make one wonder whether it is in fact as uniquely American as any of these things. We
are all aware of the fact that even though this smartphone is made in America, it has products
that are made elsewhere. It may contain components that may come from Samsung, LG, or
Sharp. This is how the economics of the smartphone is: it is based on the principle that an
enemy is a friend for your sake. Apple makes a lot of money as it is one of the biggest public
companies in the United Sates and the world. Apple was ranked the fourth biggest U.S.
companies in 2016 by Forbes Magazine, and it made $233 billion in sales in 2016 alone
(Schaefer, 2016). In this regard, Apple Inc. makes a lot of money from its iPhone device.
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This part analyzes the distribution of the wealth from the global supply chains of the iPhone
and finds that even though the most of the components of the product are manufactured and
assembled in China, the United States benefits the most from the technology.
Design and Development
The iPhone is essentially an American product because its design and engineering
were as result of the skill and genius of technology designers and developers at Apple’s
headquarters in Cupertino, California. The device’s brain – the A6 chip – is made by a
semiconductor company in the United States, probably by an Intel or IBM plant or even a
Samsung subsidiary in Austin, Texas. Moreover, the software that is used in the device, i.e.
the IOS operating system is designed in the United States. The company built a $500 million
data center in North Carolina. This shows that the core design aspects of the iPhone are
designed in the United States.
Other parts of the phone’s design are also done in America. The radio frequency
aspect is provided by a company known as Triquint that is based in Ohio. The audio chip is
manufactured by a company based in Texas called Cirrus Logic. Furthermore, the controller
chips are designed and manufactured by the Californian firm PMC-Sierra and Broadcom
Corp. Moreover, the glass is manufactured and developed by a Corning factored in Kentucky,
even though a large part of the process has been given to the company’s factories in Taiwan
and Japan. Clearly, the more specialized elements and design of the smartphone are
American.
Marketing, Applications, and Customer Service
Aside from the technical specifications, the iPhone also gives other important
economies that it creates to firms in the United States. The marketing part, which is a large
part of the process, is handled by the firm TBWA which operates in New York and Los
Angeles. The applications and games used in the iPhone are also provided by American
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software companies. These applications bring a large share of the profits associated with the
device, and they go to Apple and other American companies. Additionally, Apple retains a
U.S. customer call center in Indiana which coordinates the customer assistance issues.
Share of the Profits
The United States economy takes the largest share of the profits derived from the
sales of the iPhone. An article called “Capturing Value in Global Networks:
Apple’s iPad and iPhone” by Kraemer, Linden & Dedrick sought to analyze the distribution
of money and value from the Apple’s iPhone. The authors found that Apple and the U.S.
economy continue to capture the biggest share of the technology. The article states that “the
primary benefits go to the U.S. economy as Apple continues to keep most of its product
design, software development, product management, marketing and other high-wage
functions in the U.S” (Kraemer, Linden & Dedrick, 2011). In this regard, the authors contend
that Apple has control of its supply chain which gives it the power to control its suppliers. In
fact, the distribution of the profits from the iPhone indicates that 58.5 percent goes to Apple
and 2.4 percent of the profits go to other companies in the United States. The U.S economy,
in this regard, is the largest beneficiary of the iPhone technology.
The Role of China
Despite the iPhone being assembled in China, the Chinese economy gains little from
the innovation. According to the MIT Technology Review, there has been a lot of calls by
Americans to get Apple to relocate the manufacturing of its products back to the U.S. so as to
create jobs for Americans. Presidential candidate Donald Trump had suggested last summer
that he will “get Apple to start making their computers and their iPhones on our land, not in
China” (Kakaes, 2016). This issue had, therefore, been a political argument both in the US
and the UK because the idea is that both countries would become wealthier if they were to do
more manufacturing. However, this may not be the case.
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Despite the phone being assembled in China, the value of the labor provided by
Chinese workers is very little. The Kraemer et al. article stated that the labor accounts for
only 2 percent of the machine, while the US economy makes 60 percent. According to
Worstall (2011), the reason for this situation is that “basic manufacturing, electronics
assembly type manufacturing, simply isn’t a high-value occupation anymore.” The wages
paid for any particular work depend on the value that work adds. Electronics assembly seems
to add little value, so there may not be high wages for those that are doing the tasks as it is
not a high-value job.
Negative Impact of the iPhone
Fear of Separation
Despite the fanfare and excitement surrounding the iPhone, it has some significant
negative effects such as the fear of separation. What happens when we are not able to answer
our ringing phones because we are unable to? According to a study by Clayton et al., being
without your iPhone may cause negative psychological and physical results. The study
examined the behavior of iPhone users who were asked to complete word puzzles. It found
that when the iPhone users were not able to answer their ringing devices, they experienced
increased blood pressure and heart rate, anxiety, unpleasantness, and decreased cognition.
The findings of this study indicate that iPhone separation or the inability to respond to one’s
ringing phone causes negative physical and psychological effects.
Bad Posture and Mood
The iPhone, like all other smartphones, are ruining our posture. It is normal to notice
many people hunched over the iPhones in public places, indicating that technology has
changed out lives in so many ways, including how we hold ourselves. According to an article
in The New York Times, “When we bend our necks forward 60 degrees, as we do to use our
phones, the effective stress on our neck increases to 60 pounds — the weight of about five
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gallons of paint” (Lahan, 2015). Our posture can affect our psychological health. When we
are scared or sad or depressed, we have a hunched posture. Moreover, posture does not just
reveal our emotional state; it may also cause them. People who slouch, for instance, have
lower self-esteem and greater fear. They are more likely to say negative things. Sitting
upright, though it may seem a simple behavior, can help us build resistance to stress. It is
ironical that people spend so many hours busy on their phones to increase their productivity,
but spending even some short periods of time with these gadgets reduces our sharpness and
our productivity.
Impact on Social Interactions
The presence of iPhones and other mobile devices can have a negative quality on
face-to-face social interactions. A study in the journal Environment and Behavior sought to
investigate the relationship between the presence of iPhones during interactions and the
quality of those social interactions. Misra, Genevie, and Miao examined 100 pairs of persons
who had an existing relationship who were asked to discuss anything for ten minutes at a
coffee shop. The authors noted whether an iPhone was placed on the table or used during the
conversation. The study found that conversations with no phones involved were relatively
better than those who had phones present. According to Misra et al. (2016), those individuals
with no mobile phones reported a higher level of empathy for their partner, while those with
phones reported lower levels of empathy. This study shows that the mere presence of iPhones
and other smartphones can divide our attention between the immediate setting and the virtual
networks.
Conclusion
Apple’s iPhone is a revolutionary mobile device that offers integrated products and
services. It is a handheld computer-cum-phone with many functionalities. It opened up new
possibilities to combine functional tasks and social appearance that helped the company
THE IPHONE
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generate billions of dollars in sales. Apple, as a result, became one of the biggest company in
United States history. With so much money generated by the iPhone, there has been a
significant interest as to where all the money goes and who benefits from it. If one were to
look at how the product is made, and its supply chain, one wonders whether it is in fact as
uniquely American as the apple pie. The reason is that the device has components that are
designed and manufactured in countries such as the U.S., China, Japan, Taiwan, and Europe.
However, the biggest beneficiary of this technology is Apple and the U.S. economy as the
key parts of the supply chain, such as design, marketing, and application development, are all
done in the U.S. Even though the iPhone is assembled in China, the Chinese economy gains
little from the innovation. The iPhone, despite its benefits, has some negative impact on
people such as fear of separation, bad posture, and reduced quality of social interactions.
THE IPHONE
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References
Arruda-Filho, E. J., Cabusas, J. A., & Dholakia, N. (2010). Social behavior and brand
devotion among iPhone innovators. International Journal of Information
Management, 30(6), 475-480.
Clayton, R. B., Leshner, G., & Almond, A. (2015). The extended iSelf: The impact of iPhone
separation on cognition, emotion, and physiology. Journal of Computer‐Mediated
Communication, 20(2), 119-135.
Grossman, L. (2007, January 12). The Apple of your ear. Time. Retrieved from
http://content.time.com/time/magazine/article/0,9171,1576854,00.html
Kakaes, K. (2016, June 9). The all-American iPhone. MIT Technology Review p. 1. Retrieved
from https://www.technologyreview.com/s/601491/the-all-american-iphone/
Lahan, T. (2015, December 12). Your iPhone is ruining your posture — and your mood. The
New York Times, p. 1. Retrieved from
https://www.nytimes.com/2015/12/13/opinion/sunday/your-iphone-is-ruining-yourposture-and-your-mood.html
Misra, S., Cheng, L., Genevie, J., & Yuan, M. (2016). The iPhone effect: the quality of inperson social interactions in the presence of mobile devices. Environment and
Behavior, 48(2), 275-298.
Schaefer, S. (2016, May 25). The largest U.S. companies 2016: Berkshire, banks And Apple.
Forbes, p. 1. Retrieved from
https://www.forbes.com/sites/steveschaefer/2016/05/25/the-largest-u-s-companies2016-berkshire-banks-and-apple/#73741ae61958
Worstall, T. (2011, December 24). China makes almost nothing out of Apple’s iPads and
THE IPHONE
iPhones. Forbes, p. 1. Retrieved from
https://www.forbes.com/sites/timworstall/2011/12/24/china-makes-almost-nothingout-of-apples-ipads-and-i/#1413265b60b4
10
The iPhone and the U.S. as its Biggest Beneficiary – Outline
Thesis statement: Even though the most of the components of the product are manufactured and
assembled in China, the United States economy benefits the most from the value created by the
Apple iPhone.
I.
Introduction
II.
A Brief History of the iPhone
III.
How the U.S. Benefits from the iPhone
A. Introduction
B. Design and Development
C. Marketing
D. Applications
E. Customer Service
F. Share of the Profits
G. The Role of China
IV.
Negative Impact of the iPhone
A. Fear of Separation
B. Bad Posture and Mood
C. Impact on Social Interactions
V.
Conclusion
I wanted to make sure you will still be submitting a revised edition of essay one that balances your
voice with the voice of your sources more effectively and with proper citations. Remember, I’d
rather have more of your voice than that of the source. This is an argumentative writing class,
which means that part of your voice should be in the paper.
Here are professor’s advice. You can revise on that way.
…
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