Apple Inc. is an American multinational technology company that specializes in consumer electronics, computer software, and online services. Apple is the world's largest technology company by revenue (totaling $274.5 billion in 2020) and, since January 2021, the world's most valuable company. As of 2021, Apple is the world's fourth-largest PC vendor by unit sales,[9] and fourth-largest smartphone manufacturer.[10][11] It is one of the Big Five American information technology companies, along with Amazon, Google, Microsoft, and Facebook.[12][13][14]
Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in 1976 to develop and sell Wozniak's Apple I personal computer. It was incorporated by Jobs and Wozniak as Apple Computer, Inc. in 1977, and sales of its computers, including the Apple II, grew quickly. They went public in 1980 to instant financial success. Over the next few years, Apple shipped new computers featuring innovative graphical user interfaces, such as the original Macintosh, announced with the critically acclaimed advert "1984". However, the high price of its products and limited application library caused problems, as did power struggles between executives. In 1985, Wozniak departed Apple amicably,[15] while Jobs resigned to found NeXT, taking some Apple co-workers with him.[16]
As the market for personal computers expanded and evolved through the 1990s, Apple lost considerable market share to the lower-priced duopoly of Microsoft Windows on Intel PC clones. The board recruited CEO Gil Amelio, who prepared the struggling company for eventual success with extensive reforms, product focus and layoffs in his 500 day tenure. In 1997, Gil bought NeXT, to resolve Apple's unsuccessful OS strategy and bring back Steve Jobs, who replaced Amelio as CEO later that year. Apple returned to profitability under the revitalizing "Think different" campaign, launching the iMac and iPod, opening a retail chain of Apple Stores in 2001, and acquiring numerous companies to broaden their software portfolio. In 2007, the company launched the iPhone to critical acclaim and financial success. In 2011, Jobs resigned as CEO due to health complications, and died two months later. He was succeeded by Tim Cook.
In August 2018, Apple became the first publicly traded U.S. company to be valued at over $1 trillion[17][18] and the first valued over $2 trillion two years later.[19][20] It has a high level of brand loyalty and is ranked as the world's most valuable brand; as of January 2021, there are 1.65 billion Apple products in use worldwide.[21] However, the company receives significant criticism regarding the labor practices of its contractors, its environmental practices, and business ethics, including anti-competitive behavior, and materials sourcing.
History
1976–1984: Founding and incorporation
Apple Computer Company was founded on April 1, 1976, by Steve Jobs, Steve Wozniak, and Ronald Wayne as a business partnership.[22][25] The company's first product is the Apple I, a computer designed and hand-built entirely by Wozniak.[26][27] To finance its creation, Jobs sold his only motorized means of transportation, a VW Microbus, for a few hundred dollars, and Wozniak sold his HP-65 calculator for US$500 (equivalent to $2,274 in 2020).[28] Wozniak debuted the first prototype at the Homebrew Computer Club in July 1976.[29][30] The Apple I was sold as a motherboard with CPU, RAM, and basic textual-video chips—a base kit concept which would not yet be marketed as a complete personal computer.[31] It went on sale soon after debut for US$666.66 (equivalent to $3,032 in 2020).[32][33][34][35][36]:180 Wozniak later said he was unaware of the coincidental mark of the beast in the number 666, and that he came up with the price because he liked "repeating digits".[37]
Apple Computer, Inc. was incorporated on January 3, 1977,[38][39] without Wayne, who had left and sold his share of the company back to Jobs and Wozniak for $800 only twelve days after having co-founded Apple.[40][41] Multimillionaire Mike Markkula provided essential business expertise and funding of US$250,000 (equivalent to $1,067,683 in 2020) to Jobs and Wozniak during the incorporation of Apple.[42][43] During the first five years of operations, revenues grew exponentially, doubling about every four months. Between September 1977 and September 1980, yearly sales grew from $775,000 to $118 million, an average annual growth rate of 533%.[44][45]
The Apple II, also invented by Wozniak, was introduced on April 16, 1977, at the first West Coast Computer Faire.[46] It differs from its major rivals, the TRS-80 and Commodore PET, because of its character cell-based color graphics and open architecture. While early Apple II models use ordinary cassette tapes as storage devices, they were superseded by the introduction of a 51⁄4-inch floppy disk drive and interface called the Disk II in 1978.[47][48] The Apple II was chosen to be the desktop platform for the first "killer application" of the business world: VisiCalc, a spreadsheet program released in 1979.[47] VisiCalc created a business market for the Apple II and gave home users an additional reason to buy an Apple II: compatibility with the office.[47] Before VisiCalc, Apple had been a distant third place competitor to Commodore and Tandy.[49][50]
By the end of the 1970s, Apple had a staff of computer designers and a production line. The company introduced the Apple III in May 1980 in an attempt to compete with IBM in the business and corporate computing market.[51] Jobs and several Apple employees, including human–computer interface expert Jef Raskin, visited Xerox PARC in December 1979 to see a demonstration of the Xerox Alto. Xerox granted Apple engineers three days of access to the PARC facilities in return for the option to buy 100,000[52] shares (5.6 million split-adjusted shares as of March 30, 2019)[39] of Apple at the pre-IPO price of $10 a share.[53]
Jobs was immediately convinced that all future computers would use a graphical user interface (GUI), and development of a GUI began for the Apple Lisa.[54][55] In 1982, however, he was pushed from the Lisa team due to infighting. Jobs then took over Wozniak's and Raskin's low-cost-computer project, the Macintosh, and redefined it as a graphical system cheaper and faster than Lisa.[56] In 1983, Lisa became the first personal computer sold to the public with a GUI, but was a commercial failure due to its high price and limited software titles, so in 1985 it would be repurposed as the high end Macintosh and discontinued in its second year.[57]
On December 12, 1980, Apple (ticker symbol "AAPL") went public selling 4.6 million shares at $22 per share ($.39 per share when adjusting for stock splits as of March 30, 2019),[39] generating over $100 million, which was more capital than any IPO since Ford Motor Company in 1956.[58] By the end of the day, 300 millionaires were created, from a stock price of $29 per share[59] and a market cap of $1.778 billion.[58][59]
1984–1991: Success with Macintosh
In 1984, Apple launched the Macintosh, the first personal computer to be sold without a programming language.[60] Its debut was signified by "1984", a $1.5 million television advertisement directed by Ridley Scott that aired during the third quarter of Super Bowl XVIII on January 22, 1984.[61] This is now hailed as a watershed event for Apple's success[62] and was called a "masterpiece" by CNN[63] and one of the greatest TV advertisements of all time by TV Guide.[64][65]
Macintosh sales were initially good, but began to taper off dramatically after the first three months due to its high price, slow speed, and limited range of available software.[66][67][68][69]:195 In early 1985, this sales slump triggered a power struggle between Steve Jobs and CEO John Sculley, who had been hired two years earlier by Jobs[70][71] using the famous line, "Do you want to sell sugar water for the rest of your life or come with me and change the world?"[72] Sculley decided to remove Jobs as the general manager of the Macintosh division, and gained unanimous support from the Apple board of directors.[73][70]
The board of directors instructed Sculley to contain Jobs and his ability to launch expensive forays into untested products. Rather than submit to Sculley's direction, Jobs attempted to oust him from his leadership role at Apple.[74] Informed by Jean-Louis Gassée, Sculley found out that Jobs had been attempting to organize a coup and called an emergency executive meeting at which Apple's executive staff sided with Sculley and stripped Jobs of all operational duties.[74] Jobs resigned from Apple in September 1985 and took a number of Apple employees with him to found NeXT Inc.[75] Wozniak had also quit his active employment at Apple earlier in 1985 to pursue other ventures, expressing his frustration with Apple's treatment of the Apple II division and stating that the company had "been going in the wrong direction for the last five years".[16][15][76] Despite Wozniak's grievances, he left the company amicably and both Jobs and Wozniak remained Apple shareholders.[77] Wozniak continues to represent the company at events or in interviews,[15] receiving a stipend estimated to be $120,000 per year for this role.[36]
The outlook on Macintosh improved with the introduction of the LaserWriter, the first reasonably priced PostScript laser printer, and PageMaker, an early desktop publishing application released in July 1985.[78] It has been suggested that the combination of Macintosh, LaserWriter, and PageMaker was responsible for the creation of the desktop publishing market.[79]
After the departures of Jobs and Wozniak, the Macintosh product line underwent a steady change of focus to higher price points, the so-called "high-right policy" named for the position on a chart of price vs. profits. Jobs had argued the company should produce products aimed at the consumer market and aimed for a $1,000 price for the Macintosh, which they were unable to meet. Newer models selling at higher price points offered higher profit margin, and appeared to have no effect on total sales as power users snapped up every increase in power. Although some worried about pricing themselves out of the market, the high-right policy was in full force by the mid-1980s, notably due to Jean-Louis Gassée's mantra of "fifty-five or die", referring to the 55% profit margins of the Macintosh II.[80]:79–80 Selling Macintosh at such high profit margins was only possible because of its dominant position in the desktop publishing market.[81]
This policy began to backfire in the last years of the decade as new desktop publishing programs appeared on PC clones that offered some or much of the same functionality of the Macintosh but at far lower price points. The company lost its monopoly in this market and had already estranged many of its original consumer customer base who could no longer afford their high-priced products. The Christmas season of 1989 is the first in the company's history to have declining sales, which led to a 20% drop in Apple's stock price.[80]:117–129 During this period, the relationship between Sculley and Gassée deteriorated, leading Sculley to effectively demote Gassée in January 1990 by appointing Michael Spindler as the chief operating officer.[82] Gassée left the company later that year.[83] In October 1990, Apple introduced three lower-cost models, the Macintosh Classic, Macintosh LC, and Macintosh IIsi,[84] all of which saw significant sales due to pent-up demand.
In 1991, Apple introduced the PowerBook, replacing the "luggable" Macintosh Portable with a design that set the current shape for almost all modern laptops. The same year, Apple introduced System 7, a major upgrade to the operating system which added color to the interface and introduced new networking capabilities. It remained the architectural basis for the Classic Mac OS. The success of the PowerBook and other products brought increasing revenue.[85] For some time, Apple was doing incredibly well, introducing fresh new products and generating increasing profits in the process. The magazine MacAddict named the period between 1989 and 1991 as the "first golden age" of the Macintosh.[86]
Apple believed the Apple II series was too expensive to produce and took away sales from the low-end Macintosh.[87] In October 1990, Apple released the Macintosh LC, and began efforts to promote that computer by advising developer technical support staff to recommend developing applications for Macintosh rather than Apple II, and authorizing salespersons to direct consumers towards Macintosh and away from Apple II.[88] The Apple IIe was discontinued in 1993.[89]
1991–1997: Decline and restructuring
The success of Apple's lower-cost consumer models, especially the LC, also led to the cannibalization of their higher-priced machines. To address this, management introduced several new brands, selling largely identical machines at different price points aimed at different markets. These were the high-end Quadra, the mid-range Centris line, and the consumer-marketed Performa series. This led to significant market confusion, as customers did not understand the difference between models.[91]
Apple also experimented with a number of other unsuccessful consumer targeted products during the 1990s, including digital cameras, portable CD audio players, speakers, video consoles, the eWorld online service, and TV appliances. Enormous resources were also invested in the problem-plagued Newton division based on John Sculley's unrealistic market forecasts.[92]
Throughout this period, Microsoft continued to gain market share with Windows by focusing on delivering software to inexpensive personal computers, while Apple was delivering a richly engineered but expensive experience.[93] Apple relied on high profit margins and never developed a clear response; instead, they sued Microsoft for using a GUI similar to the Apple Lisa in Apple Computer, Inc. v. Microsoft Corp.[94] The lawsuit dragged on for years before it was finally dismissed. At this time, a series of major product flops and missed deadlines sullied Apple's reputation, and Sculley was replaced as CEO by Michael Spindler.[95]
By the late 1980s, Apple was developing alternative platforms to System 6, such as A/UX and Pink. The System 6 platform itself was outdated because it was not originally built for multitasking. By the 1990s, Apple was facing competition from OS/2 and UNIX vendors such as Sun Microsystems. System 6 and 7 would need to be replaced by a new platform or reworked to run on modern hardware.[96]
In 1994, Apple, IBM, and Motorola formed the AIM alliance with the goal of creating a new computing platform (the PowerPC Reference Platform; PReP), which would use IBM and Motorola hardware coupled with Apple software. The AIM alliance hoped that PReP's performance and Apple's software would leave the PC far behind and thus counter Microsoft's monopoly. The same year, Apple introduced the Power Macintosh, the first of many Apple computers to use Motorola's PowerPC processor.[97]
In 1996, Spindler was replaced by Gil Amelio as CEO. Hired for his reputation as a corporate rehabilitator, Amelio made deep changes, including extensive layoffs and cost-cutting.[98] After numerous failed attempts to modernize Mac OS, first with the Pink project from 1988 and later with Copland from 1994, Apple in 1997 purchased NeXT for its NeXTSTEP operating system and to bring Steve Jobs back.[99] Apple was only weeks away from bankruptcy when Jobs returned.[100]
1997–2007: Return to profitability
The NeXT acquisition was finalized on February 9, 1997,[101] bringing Jobs back to Apple as an advisor. On July 9, 1997, Amelio was ousted by the board of directors after overseeing a three-year record-low stock price and crippling financial losses. Jobs acted as the interim CEO and began restructuring the company's product line; it was during this period that he identified the design talent of Jonathan Ive, and the pair worked collaboratively to rebuild Apple's status.[102]
At the August 1997 Macworld Expo in Boston, Jobs announced that Apple would join Microsoft to release new versions of Microsoft Office for the Macintosh, and that Microsoft had made a $150 million investment in non-voting Apple stock.[103] On November 10, 1997, Apple introduced the Apple Store website, which was tied to a new build-to-order manufacturing strategy.[104][105]
On August 15, 1998, Apple introduced a new all-in-one computer reminiscent of the Macintosh 128K: the iMac. The iMac design team was led by Ive, who would later design the iPod and the iPhone.[106][107] The iMac featured modern technology and a unique design, and sold almost 800,000 units in its first five months.[108]
Around 1998 Apple completed numerous acquisitions to create a portfolio of digital production software for both professionals and consumers. Of these, one notable transaction was Apple's acquisition of Macromedia's Key Grip software project, signaling an expansion into the digital video editing market. The sale was an outcome of Macromedia's decision to solely focus on web development software. The product, still unfinished at the time of the sale, was renamed "Final Cut Pro" when it was launched on the retail market in April 1999.[109][110] The development of Key Grip also led to Apple's release of the consumer video-editing product iMovie in October 1999.[111] Next, Apple successfully acquired the German company Astarte, which had developed DVD authoring technology, as well as Astarte's corresponding products and engineering team in April 2000. Astarte's digital tool DVDirector was subsequently transformed into the professional-oriented DVD Studio Pro software product. Apple then employed the same technology to create iDVD for the consumer market.[111] In July 2001, Apple acquired Spruce Technologies, a PC DVD authoring platform, to incorporate their technology into Apple's expanding portfolio of digital video projects.[112][113]
SoundJam MP, released by Casady & Greene in 1998, was renamed "iTunes" when Apple purchased it in 2000. The primary developers of the MP3 player and music library software moved to Apple as part of the acquisition, and simplified SoundJam's user interface, added the ability to burn CDs, and removed its recording feature and skin support.[114] SoundJam was Apple's second choice for the core of Apple's music software project, originally code-named iMusic,[115][116] behind Panic's Audion.[117] Apple was not able to set up a meeting with Panic in time to be fully considered as the latter was in the middle of similar negotiations with AOL.[117]
In 2002, Apple purchased Nothing Real for their advanced digital compositing application Shake,[118] as well as Emagic for the music productivity application Logic. The purchase of Emagic made Apple the first computer manufacturer to own a music software company. The acquisition was followed by the development of Apple's consumer-level GarageBand application.[119] The release of iPhoto in the same year completed the iLife suite.[120]
Mac OS X, based on NeXT's NeXTSTEP, OPENSTEP, and BSD Unix, was released on March 24, 2001, after several years of development. Aimed at consumers and professionals alike, Mac OS X aimed to combine the stability, reliability, and security of Unix with the ease of use afforded by an overhauled user interface. To aid users in migrating from Mac OS 9, the new operating system allowed the use of OS 9 applications within Mac OS X via the Classic Environment.[121]
On May 19, 2001, Apple opened its first official eponymous retail stores in Virginia and California.[122] On October 23 of the same year, Apple debuted the iPod portable digital audio player. The product, which was first sold on November 10, 2001, was phenomenally successful with over 100 million units sold within six years.[123][124] In 2003, Apple's iTunes Store was introduced. The service offered online music downloads for $0.99 a song and integration with the iPod. The iTunes Store quickly became the market leader in online music services, with over five billion downloads by June 19, 2008.[125][126] Two years later, the iTunes Store was the world's largest music retailer.[127][128
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