Opinion: Digging into Apple's U.S. job creation engine

A funny thing happened at Toy Fair this week. Not funny as in funny toys or funny games, but funny as in a sudden but fundamental shift in how we will play from now on.

Toy giants such as Hasbro and Mattel, middling companies trying to find profitable new niches and new companies all are creating a new type of product — apps (some Android, most Apple iOS) combined to interact with some sort of physical real-life objects to create a new virtual play experience.

For instance, Hasbro has its Lazer Tag blaster, into which you clip an iPhone or iPod to create a heads-up display. Mattel has Hot Wheels designed to roll over a course right on top of an iPad screen. WowWee's AppGear games include ZombieBurbz, little collectable figurines that are set on a table and "seen" in the virtual iPad game.

These new app-based toys relates to the on-going controversy about conditions in Apple's Chinese factories, including the pending iPad 3. As part of the conversation, many critics are asking why, with Apple's enormous profits, isn't the company bringing these manufacturing jobs back to the U.S.

What's not being discussed is all the perhaps millions of jobs Apple already has produced for the U.S. economy.

Considering its influence and value, Apple itself doesn't directly employ a huge number of people compared to other big companies.

According to its SEC filing last September, Apple employees 60,400 people full-time and 2,900 full-time equivalent temporary workers or contractors. Microsoft, by comparison, employs more than 92,000 and IBM more than 425,000.

But Apple's vast job-generating machine operates outside its Cupertino walls.

It's An App-Happy World

There are more than half a million iOS apps. Someone is developing them.
I know I'll get a howl from Apple-haters/Android lovers, but without iPhone proving the concept of today's smartphone, there is no Android ecosystem and, by extension, no app universe for any device.

Last week, TechNet, a "bipartisan political network of CEOs and seniors [sic] executives that promotes the growth of technology-led innovation," released a report entitled "Where the Jobs Are: The App Economy," which notes:

…the App Economy now is responsible for roughly 466,000 jobs in the United States, up from zero in 2007 when the iPhone was introduced…

Well, actually, there were a limited number of smartphone apps pre-iPhone, mostly from Verizon and the carrier's still current Brew programming environment.

According to the market research firm Research2Guidance, as reported last October in the Fiscal Times:

In 2008, the same year Apple launched its iPhone App Store, the mobile app market brought in $349 million in revenue. By the end of 2011, it will be an estimated $7.68 billion…

This employment-rich Apple-created app economy is more than just jobs — it'smade many entrepreneurs rich, who then usually become employers themselves.

Toy Story

What had been missing from this virtual app universe is retail, which is where these app-enhanced toys come in.

While retailers don't get a piece of the action from apps, they will now get to sell new app-enhanced hardware. This is a brand new economic ecosystem creating jobs at the toy companies and at brick-and-mortar stores who will hire buyers, inventory and sales people to stock and sell these app-enhanced toys.

Nukotoys is perhaps the poster child for this new Apple-generated toy economy. Nukotoys is a new company led by former high-level executives from Silicon Valley and the toy, gaming and trading card businesses, who have created a rich conductive touch-card iPad ecosystem.

You buy packs of Pokémon-like trading cards. Touch the information-packed card to the iPad/iPhone/iPad screen running the appropriate app (the first two are "Animal Planet Wildlife," comprised of a 60-card set, and "Monsterology," based on one of the popular Ology book series, which is a 100-card series) and that card character comes alive — and can be manipulated via touch — on screen.

In the "Animal Planet" game, you can populate an entire savannah, have lions hunt gazelles as a game while learning about how nature works. It's sophisticated, immersive, compelling, cool — and completely new.

"As today's three-year-olds tap around iPads with ease, Apple is powering a revolution in the $21 billion toy industry," confirms Rodger Raderman, co-CEO of Nukotoys. "Because of Apple's innovation, we have nearly 100 people actively working on making our vision a reality."

And that's just one company on the cusp of a new product ecosystem and U.S. job-creation niche that did not exist without Apple.

Would You Like a Case with That?

Who gets credit for what jobs are created in the app ecosystem, both Apple's and Android's, can be debated (and I'm sure it will be in the comments that follow).

What can't be argued is the enormous Apple accessory cottage industry. At last month's Consumer Electronics Show, there were 300-plus booths dedicated to Apple accessories, a tenth of all the booths on the Las Vegas show floor.

These 300 exhibitors represent a fraction of the estimated $2-3 billion Made for Apple accessories generated last year, which could rise as high as $5 billion in a couple of years — around a tenth of all mobile phone accessories sales.

Someone is designing and selling these headphones, cases, screen protectors and other doo-dads that don't exist without Apple selling millions of relatively inexpensive iPhones, iPads and iPods.

Just because Apple is this energetic U.S. job generator doesn't mean it gets a pass on conditions in the Chinese factories it contracts with (along with every other electronics maker who make their electronics in China). Nor does it mean it wouldn't be great if Apple somehow found a way to bring some manufacturing jobs back to the U.S.

But what kind of jobs would we rather have Apple create for Americans — stultifying factory jobs or entrepreneurial opportunities for people who hope to become rich and create more jobs?

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