Do you own a PC, iPhone, car, airplane, shoes, or a tablet PC? How much of what you value in each of these products do you think was created by the “maker” of the product? How much of the value does the “maker” capture (appropriate)? What is the ﬁrm’s business model? How many countries contribute to the beneﬁts that you value in the product? Consider one of these products, the iPhone: each owner of an iPhone perceives value in the device when he or she navigates through the device by touching the screen, makes or receives phone calls, uses an app, surfs the Web, sends or receives e-mail, takes or views pictures, and so on. Apple conceived of and designed the iPhone but did not manufacture the product when it introduced it in 2007. The hundreds of components that went into the product came from numerous suppliers from the US, Europe and Asia, and were shipped to an Asian manufacturer who assembled and shipped them to the US for distribution. Many of the critical components, especially the microchips, were themselves systems that were designed and either manufactured by the suppliers, or manufactured by their subcontractors before being shipped to Apple’s own subcontractors for assembly. (Microchips, with their rapidly increasing functionality but dropping prices, are what have made innovations such as the iPhone possible.) Infenion AG, a German company, supplied the digital baseband, radio-frequency transceiver, and power-management devices.1 Samsung, a South Korean company, made the video processor chip, while Sharp and Sanyo, Japanese ﬁrms, supplied the LCD display. The touch-sensitive modules that were overlaid on to the phone’s LCD screen to make the
multi-touch control possible were designed by Balda AG, a German company and produced in its factories in China. Marvel Semiconductor of the US provided the WiFi chips. The camera lens was supplied by Largan Precision of Taiwan, while the camera module was supplied by three Taiwanese companies: Altus-Tech, Primax, and Lite-On. Delta Electronics supplied the battery charger. Various other ﬁrms supplied other components. Apple also supplied the operating system and other software that manage the device.