How was apple formed

How Did Apple Get So Big?

The Story Behind Apple’s Success

On August 2, 2018, Apple made history by becoming the first publicly traded U.S. company to be valued at $1 trillion, as measured by market capitalization.   In August of 2020, the company broke records again by becoming the first U.S. company to reach a $2 trillion market cap.   Apple (AAPL) hovered just below that level as of early October 2020.

Since 2010, Apple has been one of the most valuable companies in the world.   It stayed at or near the top for many years after that.   The reason Apple is so highly valued is simple on the surface: the company makes popular products with generous margins. However, a curious reader who digs a little deeper will find mistakes, overthrown CEOs, and much more. In this article, we’ll look at the story behind Apple’s success.

Key Takeaways

• 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

Understanding why Apple became so successful requires looking back at its origins and history. From the first Apple computer (the Apple I, which was just a motherboard without a monitor or keyboard) to the latest iWatch, here is a brief overview of the chronology of Apple’s innovative products.

Apple, founded by Steve Jobs and Steve Wozniak, started out in the business of kit computers with the Apple I.   This initial production run is popular as a collectible now. However, it will mainly be remembered for helping the company get enough capital to build the Apple II in 1977—the same year Apple officially incorporated.   Wozniak primarily built both these computers, and Jobs handled the marketing side. 

The Apple II drove the company’s revenue until the mid-1980s, despite the hardware remaining largely the same. Apple attempted updates like the Apple III and the Apple Lisa, but these failed to catch on commercially. Although the Apple II was still selling, Apple as a company was in trouble when the 1980s began.

The 1984 release of the Macintosh was a leap forward for Apple. However, in the intervening years between the Apple II and the Macintosh, IBM had caught up. Disappointing revenues from the Macintosh and internal struggles for control led to Apple’s board dismissing Jobs in favor of John Sculley (some sources say Jobs decided to leave). 

In any case, Jobs worked on NeXT Inc. after leaving Apple. Under Sculley, Apple started growing its product lines.

Sculley served as Apple’s CEO until 1993.   During those years, Apple enjoyed strong growth. It created new products, including laser printers, Macintosh Portable, PowerBooks, the Newton, and much more. Apple products continued to sell at a premium, so the margins were generous for Apple and led to strong financial results. During the same period, however, cheaper computers running Windows were serving a far larger middle market, while Windows also benefited from powerful Intel processors. By comparison, Apple seemed to be stalling.

Two CEOs, Michael Spindler and Gil Amelio, failed to turn the tide against the relentless spread of systems running Microsoft operating systems.   Microsoft’s new operating system, Windows, was becoming the industry standard, and the Apple Macintosh was showing signs of age. Amelio eventually set about addressing some of these issues by buying NeXT Inc.—the company run by none other than Apple founder Steve Jobs.

The Second Chance CEO

From the Macintosh onward, Apple has either been a reflection of or a reaction to Steve Jobs. In the Macintosh, Apple was trying to create a machine that made computing simple and enjoyable. In particular, Jobs was out to create a user experience that would convince everyone to buy a Mac.

Jobs believed a truly revolutionary product couldn’t depend on customers’ needs and wants. He thought customers could not understand the value of a product until they were actually using it. Unfortunately, Jobs was ahead of his time in 1985—precisely 12 years ahead of his time.

When Jobs overthrew Amelio and took Apple’s reins once more in 1997, the hardware had caught up to his vision for all things digital. He launched the iMac with a strong marketing campaign featuring the «Think Different» slogan. Although Jobs is often given credit for spending the money and time on marketing, excellent marketing and branding have always been key to Apple’s growth. The real difference between the iMac and all the products preceding it was the beauty and design.

It was not a tower and monitor setup like every other PC on the market. The iMac almost looked like a racer’s helmet photographed at speed, a colorful blur sweeping back from the screen. In 1998, the iMac was the most aesthetically pleasing machine on the market. It was the computer no one knew they wanted until they saw it. It was elegant and, thanks to the OS upgrade, it was user-friendly.

The iEcosystem

The iMac was just the start as Apple released a string of hit products that reflected the new focus on elegance and user experience. These included the iBook, the iPod, the iPhone, the MacBook Air, and the iPad. The iPod became the category killer in MP3 players, and the iPhone essentially launched and then dominated the smartphone market. The iPad then somehow convinced millions of people that they needed yet another screen to consume content.

All these devices were perceived as being better in quality—and certainly in design—than competing products. Jobs was relentless on design and indoctrinated the entire culture of Apple into the art of design.

The other point he brought Apple back to in his second tenure is the ease of use. After a few minutes of using the wheel on an iPod or tapping icons on an iPad, these new forms of control became part of the simplicity that makes Apple appealing. Now every product update from Apple is anticipated by the media and the general public, in addition to the fans that the company had from the start.

More importantly, all of these products moved Apple into a new business model of creating a tight ecosystem of hardware, software, and content. Apple didn’t create iTunes to be a simple program for users to transfer MP3s onto iPods, as was the case with many other manufacturers’ offerings. Instead, the company attacked the concept of an album by breaking them into songs that would be sold individually at a fraction of the whole album’s price.

The same process took place with software. Many popular computer functions could be done on Apple’s mobile devices using stripped-down apps—available, of course, on Apple’s App Store.

Being the first big mover into many of these markets, Apple built the stadium and set the rules for the game. When you pay for books, movies, apps, or music on an Apple device, Apple gets a cut. Of course, this business doesn’t generate as much revenue as selling an iPhone or an iPad, where the markup is much more generous.

That said, it is the content you buy through Apple that locks many people into buying Apple again when their i-devices get old. So the content part of the ecosystem pays off for Apple in the short-term and the long-term. Once you migrate to Apple because of the design or the simplicity, it is the integration with your content that keeps you there.

The Post-Jobs Era

Steve Jobs died in 2011 of pancreatic cancer.   Serving as CEO until shortly before his death, Steve Jobs turned the reins of the company over to Tim Cook.   The post-Jobs era at Apple has nonetheless been a success by most measures. Apple continued to be the dominant tech company in both market share and stock price.

Some analysts feel that without Jobs as the creative force, Apple has become solely iterative in its tech releases rather than transformative. The major release of the post-Jobs era has been the Apple Watch. The firm also created Apple TV devices and launched the Apple TV+ streaming video-on-demand service to go with it.

In the absence of a groundbreaking new product, Apple is heavily reliant on the iPhone’s production cycle to power its financial success. Critics say that without Steve Jobs at the helm, Apple has lost its innovative edge in recent years and is riding on its brand to drive sales.

The company still produced some of the best products with the most integrated ecosystem. However, the gap between Apple and competitors like Samsung and Google was no longer as pronounced as it once was. Indeed, companies like Samsung were increasingly poised to take the lead when it comes to product innovation in some categories.

Apple in the 20s

Apple’s market capitalization reached new highs in 2020, as the company enjoyed some successes and set new goals for the future. The company’s revenue from wearable technology, such as the Apple Watch, set new records. Apple’s revenue from services also rose to record highs during the 2020 crisis, as contactless payment options like Apple Pay became more popular.

Apple also announced two major changes to the Mac in 2020. First, Apple is transitioning the Mac away from Intel processors to its own custom-designed chips. Apple’s new processors are based on the ones used in iPhones and iPads, making them more energy-efficient. The new chips have the potential to give Apple’s laptops longer battery life and more processing power than PCs.

Secondly, Apple is changing the macOS so that developers can make iOS and iPadOS apps run on the Mac without modifications. That will dramatically expand the number of apps available on the Mac and make it more competitive with PCs.

The Bottom Line

There is a fairly good chance that you are reading this article either on an Apple device or with one near you. Maybe you are doing it on a MacBook Air while listening to an iPod touch and occasionally glancing at the newest Apple Watch for alerts from your iPhone. The reason behind that—and behind Apple’s success—is that its devices are beautiful to look at and a pleasure to use. That’s why the company has such a powerful brand and lofty stock valuation.

The marketing helps, and the media and fan frenzy never hurt. However, it is the quality of the products that drive Apple’s success. Add to this the iEcosystem that makes it much easier to stay with Apple than try something new, and you have a company with what Warren Buffett called an economic moat. It should not be surprising that Buffett invested heavily in Apple.

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Five big things that have made Apple

By Sarah Porter
BBC News, Singapore

It’s been called the most successful company in history.

And it’s just become the world’s first public company to be worth $1 trillion (ВЈ767bn).

So how’s it done it?

Here’s a quick look at five of the biggest things that have helped make Apple the gigantic success story it is today.

1. Steve Jobs — a brand unto himself

As the co-founder of one of the world’s most successful companies, his is one of the most recognised names in the world of tech.

He put Apple at the forefront of the personal computing revolution, and was behind a suite of revolutionary, highly desirable products — from the iPod to the iPad.

But he was also recognised as one of the modern world’s first auteur chief executives — and became a brand unto himself.

From the time he founded the company with Steve Wozniak in 1976 in Silicon Valley, California, Apple was seen as a firm that was set to achieve great things.

Apple shares were in such high demand that by the time it opted for a flotation in 1980, it became the biggest stock market launch since Ford in 1956.

In 1985, Mr Jobs was famously ousted from the firm he founded after a falling out with chief executive John Scully.

But by 1997, after Apple had been operating at a loss for 12 years, Mr Jobs was asked to return.

He quickly set about scrapping various projects and introduced Think Different — a campaign designed to promote Apple and its products, and revive employee morale. The firm quickly returned to profitability.

Apple just wouldn’t be Apple without his name behind it.

2. The iPhone — a revolution

Launched in 2007, the impact the iPhone has had on modern mobile communication is unmatched, and unquestionable.

Almost 1.4 million iPhones were sold in the first year they were on the market. Competitors such as Nokia and Blackberry, which had dominated the mobile phone market, were quickly knocked out.

While Apple recently dropped to third place in the battle of the world’s biggest smartphone makers, behind South Korea’s Samsung and China’s Huawei, its iPhones are still clocking strong demand worldwide.

Apple sold 41.3 million of them in the three months to June this year — and about 216 million worldwide last year.

Moreover, Apple’s bottom line is still largely determined by their sales. In the most recent quarter, 56% of Apple’s revenue came from iPhone sales.

But perhaps more importantly for Apple’s future — the iPhone is a gateway to the company’s booming services offerings.

3. Apple services — and brand loyalty

Think iTunes or Apple Music, the App Store, iCloud and Apple Pay.

These are just some of the things that make up Apple’s services business — and they’re regarded as the firm’s most important and fastest-growing drivers of revenue.

In the three months to June this year, Apple’s services saw revenue growth of 31%.

And while the iPhone might be a gateway to Apple’s offerings, things like Apple Music and the App Store, in turn, help drive brand loyalty.

If a consumer truly loves using their iPhone to buy music and movies, Apple’s hope is that they’ll move on to purchase an iPad, a Macbook, an Apple TV or watch.

«That’s the financial genius that sits inside that brand — getting consumers to keep buying the hardware,» says Paul Nelson, managing director of BrandMatters.

«Strong brands have clients who are simply disinterested in alternatives — and that’s where Apple’s strength lies. The fact that you just become a loyalist.»

4. China — and growth

Without China, the world’s biggest smartphone market, Apple’s success would look quite different.

Mainland China generates about a quarter of Apple’s profits.

In addition, most of Apple’s iPhones are manufactured in Shenzhen in southern China

And while the company suffered a rough patch between March 2016 and July last year — when its Greater China revenues saw double-digit falls — the tech giant has now reversed those fortunes.

Since September 2017, Apple has seen double-digit year-on-year revenue growth across the Greater China region.

How? Well, the iPhone has remained a symbol of wealth and prestige among China’s growing middle-income, big city dwellers.

So despite the stiff competition from cheaper home-made brands, Apple’s more lucrative iPhones, iPads and Macs have helped repair its regional revenue numbers.

5. The Apple brand today

The Forbes list, which measures the value of a company’s brand by looking at its financial numbers, has ranked Apple as the most valuable brand for the last eight years in a row. This year, it was valued at $182.8bn.

Now Forbes may only analyse companies with a presence in the US, but compare Apple’s brand value to that of Coca-Cola’s — a one-time world leader in terms of brand recognition — this year valued at just $57.3bn.

For those of us born before the turn of the millennium, it’s probably difficult to imagine a world without Coca-Cola signs somewhere along our local shopping streets.

But for the generations that follow, the instantly recognisable eaten apple seems set (so far) to be one of the brands of the 21st Century.

«The thing that Apple has been able to do, that Coca-Cola hasn’t been able to, is to remain relevant and contemporary,» says BrandMatters’ Paul Nelson.

«They have kept the human at the centre of their ecosystem, and at the centre of everything they do. Their whole brand is about humanising technology.

«The reason you get to a trillion dollars is that you create in your business model built-in barriers for customers to move elsewhere. And Apple is just that — it’s a complete ecosystem.»

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