By becoming the first publicly traded U.S. company to be valued at $1 trillion, as measured by market capitalization, Apple made history on August 2, 2018. In August 2020, the company broke new records as the first U.S. to achieve a market cap of $2 trillion. As of early October 2020, Apple (AAPL) has hovered just below that level.
Apple has been one of the world’s most valuable firms since 2010. For many years after that, it stayed at or near the top. It’s easy for Apple to make popular products with generous margins because the company is so highly valued. However, errors, overthrown CEOs, and much more will be found by a curious reader who digs a little deeper. We’ll look at the story behind the success of Apple in this article.
Steve Jobs and Steve Wozniak co-founded Apple in 1977, introducing first the Apple I and then the Apple II.
Apple went public in 1980, but Jobs eventually left—only to triumphantly return several years later.
Apple’s success lies in a strategic vision that transcended simple desktop computing to include mobile devices and wearables.
Both performance and design are key drivers of the Apple brand and its ongoing success.
From Apple I to Steve Jobs 2.0
Apple’s achievement requires a look back at its origins and history. A brief overview of Apple’s innovative product chronology can be found from the first Apple computer (the Apple I, which was just a motherboard that had no monitor or keyboard), up to the latest iWatch.
Founded by Steve Jobs and Steve Wozniak, Apple started out with the Apple I in the kit computer business. This initial production run is now popular as a collectible. It will be remembered, however, that in 1977, that same year Apple was officially incorporated, it helped the company get enough capital to build the Apple II. The two main computers were built by Wozniak and the marketing side was handled.
Although the hardware remained largely the same, Apple II drove sales to the company until the mid-1980s. Apple has tried updates such as Apple III and Apple Lisa, but commercial updates have failed to catch up. Though Apple II was still on the market, Apple was in trouble as a company at the start of the ’80s.
A leap forward for Apple was the 1984 release of the Macintosh. However, IBM had attracted attention in the interim years between the Apple II and the Macintosh. Disappointing Macintosh’s revenue and internal control struggles led Apple’s board to dismiss jobs in favor of John Sculley (some sources say that Jobs decided to quit).
Jobs worked on NeXT Inc. after leaving Apple. Apple began to develop its product lines under Sculley.
In those years, Apple enjoyed strong growth. Until 1993, Sculley served as CEO of Apple. It has produced new products, including laser printers, portable Macintosh, PowerBooks, Newton, and more. Apple products have continued to sell at a premium, so the margins for Apple have been generous and have led to strong financial results. In the same period, however, cheaper Windows computers served a much larger mid-market, while Windows also benefited from strong Intel processors. Apple seemed to stall in comparison.
Two CEOs, Michael Spindler and Gil Amelio were unable to tackle the unstoppable spread of Microsoft systems. The new operating system of Microsoft, Windows, became the industry standard, and the Macintosh of Apple showed signs of age. In addition to Apple founder Steve Jobs, Amelio has eventually decided to address some of these issues through the purchase of NeXT Inc. NeXT Inc.
The Second Chance CEO
Apple has either been a reflection of or a reaction to Steve Jobs from the Macintosh onwards. Apple tried to build a machine on the Macintosh that made computing simple and enjoyable. In general, Jobs was out to create a user experience that would persuade everyone to purchase a Mac.
Jobs believed that a truly revolutionary product could not depend on the needs and want of customers. He thought that until they were actually using it, clients couldn’t understand the value of a product. Sadly, in 1985, Jobs was ahead of his time, exactly 12 years ahead of his time.
The hardware had caught up to his vision for all things digital when Jobs overthrew Amelio and took Apple’s reins once more in 1997. With a strong marketing campaign featuring the ‘Think Different’ slogan, he launched the iMac. Although jobs are often credited with spending money and time on marketing, excellent marketing and branding have always been the key to the growth of Apple. The real difference was the beauty and design between the iMac and all the products before it.
Like every other PC on the market, it was not a tower and monitor set-up. The iMac seemed nearly like a fast photographed rider’s helmet, a colorful blur from the screen. The iMac was the most aesthetically pleasing equipment on the market in 1998. It was a computer that nobody knew they wanted until they had seen it. It was elegant and it was user-friendly, thanks to the OS upgrade.
The iMac was just the beginning, with Apple releasing a series of hits reflecting a new focus on elegance and user experience. The iBook, iPod, iPhone, MacBook Air, and iPad are all included. The iPod became the killer for MP3 players and the iPhone essentially started and subsequently dominated the market for smartphones. Somehow the iPad persuaded millions of people to consume content with a new screen.
All of these appliances were seen as quality – and certainly design – better than competing products. Work on the design was relentless and Apple’s whole culture was indoctrinated into the art of design.
In his second term, Apple’s second point was the ease of use. These new control forms became part of the simplicity which makes Apple appealing after just a few minutes of using the wheel on an I Pad or tapping Icons on an iPad. Next to the fans, the company has had from the beginning, each product release from Apple is anticipated by the public and the media.
In particular, all these products have moved Apple to a new business model to create close hardware, software, and content ecosystem. Apple did not create iTunes, as many other manufacturers had done, as a simple program for users to transmit MP3s to iPods. The company instead attacked the concept of an album, breaking it into songs that were individually sold at a fraction of the price of the entire album.
The software was used for the same process. Apple’s mobile devices can use stripped-down apps to do many popular computer functions – available, of course, in Apple’s App Store.
Apple has built a stadium and laid down rules to play as the first big mover in many of these markets. Apple gets a cut when you pay on Apple devices for books, movies, apps, or music. Naturally, this business does not generate as much income as the sale of iPhones or iPads with much more generous characteristics.
That said, the content you purchase from Apple causes many people to purchase Apple when their I devices get old again. Thus, in the short and long term, the content portion of the ecosystem pays off for Apple. Once you are moving to Apple because of design or simplicity, your content will remain integrated.
The Post-Jobs Era
Pancreatic cancer killed Steve Jobs in 2011. As CEO, Steve Jobs handed the reins of the company over to Tim Cook shortly before his death. Nonetheless, most measures succeeded in the post-Job era at Apple. In both market share and stock prices, Apple remained a dominant technology company.
Some analysts consider that Apple has become iterative, rather than transformational, in its technology releases without jobs. The Apple Watch was the most important release of the post-Jobs era. Apple TV devices were also created and the Apple TV+ video on request service was launched for the company.
Apple relies heavily on the iPhone production cycle to drive its financial success in the absence of a new and groundbreaking product. Critics say that Apple has lost its innovative edge and moves on its brand for sales without Steve Jobs at its helm in recent years.
Some of the top products with the most integrated ecosystem have still been made by the company. However, the gap was not as pronounced any more between Apple and competitors such as Samsung and Google. Indeed, companies such as Samsung are increasingly prepared to lead in certain categories with regard to product innovation.
Apple in the 20s
The market capitalization of Apple reached new levels in 2020, with the company enjoying several successes and setting new future goals. Wearable technology revenues, like the Apple Watch, have set new records. Service revenues from Apple also increased in the coronavirus pandemic with contactless payment options like Apple Pay becoming more popular.
Two major changes to the Mac were also announced by Apple by 2020. First, Apple transforms the Mac from its own custom-designed chips from Intel processors. The new processors of Apple are based on those used for iPhones and iPads to increase their energy efficiency. The new chips offer Apple’s laptops more battery life and processing power than PCs.
Second, Apple changes the macOS to allow developers to create iOS and iPadOS applications on the Mac with no changes. This increases the number of Mac apps dramatically and makes them more competitive with computers.
The Bottom Line
You are quite likely to read this article on an Apple device or with an Apple device near you. Perhaps you do it on a MacBook air while you listen to an iPod touch and look at the latest Apple Watch for your iPhone warnings. That is because its devices are beautiful to look at and a pleasure to use, as well as behind Apple’s success. That is why the company has such a strong brand and a high stock assessment.
Marketing aids and never hurts the media and the fan frenzy. However, Apple’s success is driven by the quality of the products. Add to it the iEcosystem that makes staying at Apple much easier than trying something new, and you’ve got a company called a business moat by Warren Buffett. It’s no surprise that Apple was heavily invested by Buffett.