Introduction
As portable devices that fulfill the functions of traditional phones while also supporting some tasks allocated to personal computers, smartphones have transformed into an indispensable part of US citizens’ lives. No longer regarded as luxurious items, these tech products have offered endless information processing opportunities to common consumers, giving rise to one of the country’s successful markets. The US smartphone market has grown significantly over the years, resulting in an important effect on the country’s economy.
Technological advancement is attributed to driving the growth of the smartphone market, including but not limited to larger screens, better photography capabilities, and longer battery life. Consumers’ expectations do not stop evolving, prompting tech giants to invest in innovation and futuristic features to differentiate themselves from the rest of the highly competitive market. The goal of this essay is to examine smartphone sales in the US and their economic impact. Mobile phone sales’ influences on the US economy include job creation in retail, repair services, manufacturing, and software design, increases in the economy’s overall outputs, modernization of retail, and prevention of hyperinflation.
Literature Review
Several researchers have studied the smartphone industry’s impact on the US economy. According to Statista, the total revenue generated from smartphone sales in the US in 2020 was $77.5 billion, and it is expected to reach $82.8 billion by 2023 (Fan & Yang, 2020). The increasing demand for smartphones has led to the creation of many job opportunities in the tech industry, such as software development, hardware manufacturing, and mobile app development (Fan & Yang, 2020). Furthermore, it has also contributed significantly to the growth of e-commerce, social media, and mobile advertising.
According to a 2020 analysis by Deloitte, the smartphone market has grown to be a significant part of the US economy. According to the study, the sector contributed an estimated $1.4 trillion, or 5.5%, of the nation’s gross domestic product (GDP) in 2019 (Mu & Zhang, 2021). The study also revealed that the sector supports over 4 million employees nationwide, with a total estimated economic value of $475 billion (Mu & Zhang, 2021). The industry’s influence on the economy is projected to grow even more as a result of ongoing technical development and customer demand. The rising adoption rates among consumers are proof that there is a rising need for cell phones.
The US smartphone industry’s activity adds to the popularization of e-commerce in the mobile phone trade, but to a lower degree than that of other global leaders. The US is widely recognized as one of the largest markets for smartphones in terms of size and rate of penetration. The latter is defined as the percentage of potential customers that have been acquired (Park et al., 2019).
As of 2017, almost 70% of the country’s population was represented by active smartphone users (Park et al., 2019). However, in terms of online marketplace utilization, the US is outperformed by India, the UK, and China, with online deals representing 45%, 39%, and 34% of their total smartphone sales, respectively (Purwanto & Sudargini, 2021). For the US market, digital marketplace use represents only 24% of total mobile phone sales (Purwanto & Sudargini, 2021). As e-commerce is generally more profitable than traditional retail businesses, it is possible that the US market for smartphones does not realize its full potential for the country’s economy at the moment.
The country’s smartphone market features large corporations with high sales, suggesting stable demand and active job creation in the US retail and device repair sectors. The US market for smartphones consists of at least 18 prominent smartphone manufacturers (Byrne, 2019; Fan & Yang, 2020). The market leaders’ average sales per month range from 0,33 to 1,99 mln units, with the U.S.-based Apple Corporation featuring the best result (Fan & Yang, 2020).
Particularly, in terms of total sales, Apple outperforms other foreign manufacturers present in the US market, including the Samsung conglomerate, by at least 160% (Fan & Yang, 2020). Handling such demand requires increases in retail staff, promoting the market’s contributions to new job openings for tech retail employees (Mu & Zhang, 2021). Furthermore, around 50 million smartphone users in the US accidentally break their devices’ screens every year, stimulating the cell phone repair market’s growth (Perzanowski, 2021). Thus, the country’s smartphone market can indirectly support employment.
The current situation with smartphone sales also contributes to preventing excessive inflation or severe drops in citizens’ purchasing power. In the US, the constant quality price index for smartphones saw a 15-20% decrease between 2010 and 2018, making the inflation rate similar to the situation with computers in the 1990s (Byrne, 2019). Moreover, the consumer price index for smartphones in the US faced a 7-point reduction between 2008 and 2018, featuring moderate deflation compared to other markets, such as the UK, New Zealand, and Finland (Byrne, 2019). Since 2018, the consumer price index for smartphones sold in the US has been falling by around 12% annually (Byrne, 2019). Relatively low inflation can have positive impacts on demand levels among the target population by removing barriers to product consumption.
Economic and Empirical Analysis
The demand and supply study of the smartphone market in the United States might reveal important market insights. The demand for smartphones is influenced by a variety of factors, including customer preferences, income, price, and availability. The demand for smartphones is directly impacted by income levels, with high-income groups often purchasing more expensive smartphones (Makov et al., 2018). Demand is greatly influenced by price, as people are less inclined to buy cell phones if they are too expensive (Makov et al., 2018). The availability of cell phones is also a significant determinant of demand, with customers generally favoring shopping at retailers who provide a broad selection of devices at reasonable pricing.
Despite being supposed to have a decent product lifetime, smartphones are not immune to mechanical damage. Thus, another hypothetical and unique factor that stimulates demand in this specific market refers to cell phones’ imperfect durability combined with many products’ relative affordability (Makov et al., 2018; Perzanowski, 2021). Millions of users in the US destroy the screens of their devices on a regular basis (Perzanowski, 2021). Long-term cell phone users’ inability to function as social units without smartphones causes them to choose between replacing the device and seeking repair services (Perzanowski, 2021). Thus, unplanned service and device purchases are not uncommon, adding to the already high demand for cell phones.
In a similar manner, cell phone supply is influenced by a variety of factors, including competition, production costs, and technical advancements. As consumer expectations evolve, technological advancements are crucial to the supply of telephones. This makes it possible for companies to match consumer demand by manufacturing more sophisticated phones.
Reliance on outdated production technology to offer consumers nothing more than basic smartphone functions does not create any stable motivation for purchasing. At the same time, smartphones’ ability to replace computers, professional cameras, or other devices at least partially enables meeting the clientele’s expectations (Varriale et al., 2022). The cost of production and access to raw materials, such as lithium, are significant factors that affect the supply of cell phones (Moreno-Brieva & Merino-Moreno, 2020).
The manufacturing cost of a product must be considered in the final selling price. A further factor affecting the availability of cell phones is the fierce competition that exists among technical firms (Khan, 2021). If businesses wish to compete in the market, they must constantly create and offer unique features that set their products apart from competitors.
Conclusion
On a final note, smartphone sales, which total billions of dollars and provide millions of jobs, have a tremendous impact on the US economy. Being just a small portion of the US IT device industry, the smartphone market has transformed into a significant part of its economy, accounting for one-twentieth of its GDP. On a national level, smartphone sales also have some implications for popularizing e-commerce, which is a highly profitable and resource-effective model of transaction management.
The demand for smartphones and repair services, including screen replacement, remains high, contributing to the creation of more jobs in IT device retail and repair centers in the country and stimulating its economy. In a similar manner, the rising demand for mobile phones supports employment in the technology industry by promoting software and hardware development jobs. Because of the continual advancements in technology, it is anticipated that demand for smartphones will skyrocket, further fostering industry growth. If technology businesses want to stay ahead of the competition, they must continue finding new ideas and producing items of excellent quality at affordable rates.
References
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