Since its origins as a pioneer in the personal computer industry, Apple Inc. has become the world leader in that and other segments, with a market capitalisation of US$600 billion and more than 100,000 employees worldwide. The company’s share price has risen by more than 20,000% since it first went public in 1980. Its value and continued steady success has consistently put it in the ranks of the most-prized corporations worldwide among investors.1)Retrieved 30 March 2016 http://www.marketwatch.com/story/apples-share-price-has-risen-23639-from-its-first-trading-day-2015-02-10

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AAPL. Chart | History | Apple IPO | Management | Future

AAPL. Chart


History: Pioneering The Personal Computer Revolution

The company was formed in the mid-1970s by partners Steve Wozniak, Steve Jobs and Ronald Wayne in Cupertino, Calif. in the region near San Francisco now known as Silicon Valley. Wayne stayed with the company for only a short time.

The idea for the company emerged after Wozniak attended the first meeting of a computer enthusiast group called Homebrew Computer Club in the garage of Gordon French in Menlo Park, Calif. on March 5, 1975. Computer hobbyists at the meeting discussed the Altair 8800 compact computer built by Micro Instrumentation and Telemetry Systems (MITS) with an Intel 8080 micro-processor.2)Retrieved 30 March 2016 http://www.foundersatwork.com/steve-wozniak.html

Wozniak, who worked as an engineer at Hewlett-Packard’s scientific calculator division, went to the meeting at the invitation of a friend. He intended on showing off a communications terminal he built to access phone networks using a keyboard, a circuit board and video display.3)Retrieved 30 March 2016 http://www.computerhistory.org/atchm/steve-jobs/

At the meeting, after examining the design of the Altair 8800, Wozniak had a stroke of inspiration on the possible use of microprocessors in his own version of a home computer. His basic innovation was to add the microprocessor to a terminal that used a keyboard input and a video output, so the machine would be compact and user friendly. Most conventional computers at that time were very large, room-sized machines that were difficult to use and were mostly only available to government agencies, large businesses and university research centers.

Although a number of smaller personal computers such as the Altair 8800 were developed in the early 1970s, up until that point they were lacking in the ability to conveniently enter and display data. They relied on components like toggle switches and external teletype machines for input and output.

Wozniak later said that he had been seeking to make a computer as normal and human to use as a typewriter or calculator.4)Retrieved 30 March 2016 http://www.cnet.com/news/steve-wozniak-on-homebrew-computer-club/

Over the course of 1975, Wozniak worked on his invention and presented it to his fellow computer enthusiasts at the Homebrew Computer club. To carry out the project, he included an MOS 6502 microprocessor that was capable of handling 4K bytes of memory so that the machine could run programming languages common at the time, such as Basic and Fortran. Wozniak said he chose the 6502 microprocessor because of its low cost, which at the time was around US$25. Other similar microprocessors at the time, produced by companies like Intel and Motorola, sold for as much as US$300 or more.5)Retrieved 30 March 2016 http://www.atariarchives.org/deli/homebrew_and_how_the_apple.php/

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For an investment of about US$1,000, Wozniak was able to develop a functional model of what would become the Apple 1. It was essentially a circuit board with several chips, including a microprocessor, which could be connected to a keyboard and a television set or other video monitor.

Wozniak was eventually joined by his high school friend Steve Jobs, who had worked at Atari Inc., to collaborate on the project. Jobs was interested in founding a company with Wozniak’s computer project, and he was able get agreement with a local computer store, the Byte Shop, for an order of 100 machines to sell at a retail price of US$666.66. The sales price included a markup on each machine of about 30% over a manufacturing cost of US$500 each.

To finance initial production, Jobs sold his VW mini-van, and Wozniak sold a high-end Hewlett-Packard HP-65 programmable calculator that he owned. Additionally they were able to obtain a 30-day credit offer from a local parts supplier. By July 1976, Wozniak and Jobs launched the Apple I computer for sale. They sold nearly 200 of the machines in the first year of production.6)Retrieved 30 March 2016 http://www.computerhistory.org/atchm/steve-jobs/

In later interviews, Jobs said he came up with the name “Apple” because he had visited an apple farm7)Retrieved 30 March 2016 http://www.reed.edu/reed_magazine/december2011/articles/features/jobs/jobs2.html and thought the name Apple symbolized “simplicity and refined sophistication” that would provide appeal for the type of product they were aiming for. Jobs also said he appreciated the fact that the name Apple came ahead of his former employer Atari in alphabetical listings in the phone book.

Initially, Wozniak and Jobs tried to sell the idea of a compact Apple computer to Wozniak’s employers at Hewlett-Packard and to executives at Commodore International. Neither company chose to invest in it.

After the success of the initial machine among local computer enthusiasts, Wozniak began working on a second-generation project, the Apple II, which would include a built-in keyboard and capacity for color graphics. Jobs and Wozniak obtained US$250,000 in financing from investor Mike Markkula with a plan to produce 1,000 units of the machine. With Markkula’s investment, the company was able to incorporate as Apple Computer Inc. in January 1977.8)Retrieved 30 March 2016 http://www.foundersatwork.com/steve-wozniak.html

The company launched its Apple II product at the West Coast Computer Faire in April 1977. The machine was subsequently offered at retailers for a list price of US$1,298. Wozniak later developed a floppy-disk drive for the system similar to disks that have been developed by IBM in the early 1970s.9)Retrieved 30 March 2016 http://www.foundersatwork.com/steve-wozniak.html

Mike Markkula persuaded Mike Scott to come from National Semiconductor to work as Apple’s first CEO from 1977 until 1981. Between 1981 and 1983, Mike Markkula held the position.

Sales revenues in 1977 were US$770,000, and within the first two years of operations the company sold more than 50,000 thousand units of the Apple II. The company sold more than 6 million units of the machine by the time it was discontinued in 1993.10)Retrieved 30 March 2016 http://pctimeline.info/apple/

IPO Apple Computer Inc.

The company went public in 1980, raising US$100 million in an IPO at a price of US$22 per share (US$0.39 split adjusted price). Sales in that year were US$117 million, and the company’s market capitalisation totaled US$1.6 billion.11)Retrieved 30 March 2016 https://www.zoho.com/general/blog/apples-revenue-history.html

After the company went public, Jobs became chairman of Apple in March 1981. Wozniak, who suffered injuries following a plane accident in February 1981, chose to leave Apple in 1983 amid a declining interest in participating in management of the company. And that same year, Jobs hired John Sculley, from PepsiCo, to become the company’s CEO.

With the development of the Macintosh system, Apple developed its own operating system called Mac OS, which was released in January 1984.

At this time, Jobs chose to head up a new division in the company that produced the Macintosh computer, which unlike Apple’s previous models had a fully integrated user interface. The model helped popularise Apple products with design and artistic communities. Further, agreements made by Jobs with publishing software producers Adobe systems helped popularise Apple equipment for use in a budding “desktop publishing” industry.12)Retrieved 30 March 2016 http://www.designtalkboard.com/design-articles/desktoppublishing.php

Headwinds, Competition And Management Changes

After some disagreements with Sculley over budgets for the Macintosh division, Jobs left Apple in 1985 to form NeXT Software. That company helped develop the NeXTCube, which was an important pioneering product in the internet server segment. Jobs also bought the Pixar computer animation company from film director George Lucas. Apple’s share price, which was trading at around US$8, fell to around US$2 following Jobs’ exit.13)Retrieved 30 March 2016 http://fortune.com/2012/10/05/apple-from-1980-to-2012/

As it was focused on personal computers, Apple obtained an edge in the segment on long-established business machine company IBM. However, IBM held a strong footing in the computer industry through traditional sales connection within the business sector and its use of systems popularised by software entrepreneur Bill Gates and his company Microsoft.14)Retrieved 30 March 2016 http://www.cnet.com/news/how-ibms-5150-pc-shaped-the-computer-industry/

With competition from Microsoft on IBM equipment and similar licensed platforms in the early 1990s, Apple began to lose some market share in the personal computer segment that it had helped pioneer.15)Retrieved 30 March 2016 http://www.businessinsider.com/how-apple-really-lost-its-lead-in-the-80s-2012-12

Sculley turned down an offer from Gates to license Microsoft’s popular Office software for Apple’s equipment. As a result, Apple found itself seeking a new operating system in the face of competition from multitasking capabilities of Microsoft’s “Windows 95.”16)Retrieved 30 March 2016 http://lowendmac.com/2005/apples-copland-project/

The Return of Jobs: A New Drive for Innovation

In 1993, Apple’s board of directors forced John Sculley to resign. He was replaced by Michael Spindler, who had worked in the company’s European operations. Yet, in 1995, Spindler was replaced by Gil Amelio, who had worked at National Semiconductor. With Apple in need of a new operating system, Amelio supported a move to purchase Jobs’ software company for US$429 million. And in 1997, Jobs was invited back to Apple to lead the company as its CEO.

Once again the head of the company, Jobs negotiated an agreement with Microsoft to license its office products for use on Apple equipment. In his second stint at the company, he was particularly focused on use of Apple products for internet applications. From that time, he led the company to introduce new products in different categories, including the iMac, MacBook Pro, iBook laptop computers, iPod digital music players, and iTunes media player software.

Among the products that gained the most attention following Jobs’ return to the company was the iPhone, launched in June 2007 after much anticipation in the media. The phone, which came pre-installed with the iOS mobile operating system and popular user applications, quickly became the standard for a new category of devices known as “smart phones.” The company has sold more than half a billion units of the iPhone since its introduction.

The iPad tablet, which launched in January 2010, has been quite popular as well. Although Microsoft tried pushing tablets in previous years, Apple’s iPad gained immediate success for its iOS mobile operating system, touch screen operation and a series of apps that came preinstalled on the device. Since its launch, the company has sold more than 250 million of the devices.

Steve Jobs led the company until August 2011, when he resigned during a battle with pancreatic cancer. He died October 5, 2011 at age 56.

In an interview shortly after Jobs’ death, industry colleague and sometimes-rival Bill Gates attributed the success of Apple to Jobs’ appreciation for innovative product design and user-friendliness.

Jobs was replaced by his hand-picked successor, the company’s chief operating officer Tim Cook, who previously worked at Compaq as vice president of corporate materials.17)Retrieved 30 March 2016 http://www.forbes.com/sites/jaysomaney/2015/08/16/how-much-is-steve-jobs-missed-at-apple/#3b2920084c6a

Looking Ahead

Following Jobs’ passing, there has been much debate about what the future holds for Apple. Some question whether the company will continue to be viewed as a leader in innovation or whether it will fall victim to a more traditional business life cycle to which some of its competitors succumbed over time.

Innovation could continue to be important, as analysts expect Apple will face increasing competition from other platforms such as Android. Further, the company has faced challenges outside the normal sphere of its operation. This occurred following a controversy and lawsuits over smartphone encryption that is thought to impede government investigation into terrorist and other criminal activities.18)Retrieved 30 March 2016 http://www.theguardian.com/technology/2016/feb/19/apple-fbi-privacy-encryption-fight-san-bernardino-shooting-syed-farook-iphone

Analysts have credited Cook for maintaining the company’s stability and strength since Jobs’ passing. And in that time, the company has launched new versions of existing products in addition to new products that were under development while Jobs was at the company, such as the iWatch.

In a mission statement released in 2015, Tim Cook said that the company:

  • is “constantly focusing on innovating,”
  • believes “in the simple not the complex,”
  • needs “to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution”
  • and believes “in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.”19)Retrieved 30 March 2016 http://www.forbes.com/sites/patrickhull/2012/12/19/be-visionary-think-big/#550f7b3222f7

Looking forward, analysts have reviewed patents obtained by Apple to divine the direction that the company will try to take. Among some of the projects that appear on the horizon is the Apple Car, a vehicle technology maintained in secrecy under the name of Project Titan. The car is expected to be electric and may or may not be self-driving. It is foreseen being launched around 2020.20)Retrieved 30 March 2016 http://www.techtimes.com/articles/123597/20160112/apple-s-project-titan-everything-we-know-so-far-about-apple-s-highly-rumored-electric-car-project.htm

Another project under expansion is “mixed reality,” which involves the hybridisation of physical objects with virtual reality.21)Retrieved 30 March 2016 http://www.thewrap.com/apple-mixed-reality-will-replace-the-iphone-analyst-says/ Additionally, the company seeks to expand its Apple payment system, dubbed Apple Pay, which is a mobile payment and digital wallet service that allows users to make payments with their smartphones, tablets and other mobile devices.

Attracting loyal customers with the rollout of new technologies may be helpful to holding on to revenue streams brought by these services. Some analysts have sounded alarm bells about the company’s recent “growth stall,” and there have been predictions that its revenues could start to decline for the first time in more than a decade. Cook, however, has said that despite the concerns of a softening in global consumer technology market, the company will be able to maintain its market share in lucrative markets such as smartphones.22)Retrieved 30 March 2016 http://www.telegraph.co.uk/technology/2016/01/26/apple-predicts-first-revenue-decline-in-13-years/

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References   [ + ]

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5. Retrieved 30 March 2016 http://www.atariarchives.org/deli/homebrew_and_how_the_apple.php/
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10. Retrieved 30 March 2016 http://pctimeline.info/apple/
11. Retrieved 30 March 2016 https://www.zoho.com/general/blog/apples-revenue-history.html
12. Retrieved 30 March 2016 http://www.designtalkboard.com/design-articles/desktoppublishing.php
13. Retrieved 30 March 2016 http://fortune.com/2012/10/05/apple-from-1980-to-2012/
14. Retrieved 30 March 2016 http://www.cnet.com/news/how-ibms-5150-pc-shaped-the-computer-industry/
15. Retrieved 30 March 2016 http://www.businessinsider.com/how-apple-really-lost-its-lead-in-the-80s-2012-12
16. Retrieved 30 March 2016 http://lowendmac.com/2005/apples-copland-project/
17. Retrieved 30 March 2016 http://www.forbes.com/sites/jaysomaney/2015/08/16/how-much-is-steve-jobs-missed-at-apple/#3b2920084c6a
18. Retrieved 30 March 2016 http://www.theguardian.com/technology/2016/feb/19/apple-fbi-privacy-encryption-fight-san-bernardino-shooting-syed-farook-iphone
19. Retrieved 30 March 2016 http://www.forbes.com/sites/patrickhull/2012/12/19/be-visionary-think-big/#550f7b3222f7
20. Retrieved 30 March 2016 http://www.techtimes.com/articles/123597/20160112/apple-s-project-titan-everything-we-know-so-far-about-apple-s-highly-rumored-electric-car-project.htm
21. Retrieved 30 March 2016 http://www.thewrap.com/apple-mixed-reality-will-replace-the-iphone-analyst-says/
22. Retrieved 30 March 2016 http://www.telegraph.co.uk/technology/2016/01/26/apple-predicts-first-revenue-decline-in-13-years/