9. Apple Inc.

Revenues 2017/18: $ 37.190 billion (€ 31.490 billion)

Overview

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Apple is a leading supplier of computer hardware and software. Since 2000, the company from Cupertino, California has revolutionized entire entertainment industries, first with the iPod, then with the iPhone, the iPad, and the launch of the iTunes store. Today, the management is aware that the times of rapid growth with hardware are coming to an end. Now the company wants to benefit more from the approximately 1.4 billion users of Apple devices that are already in circulation. A subscription offer with series and films from its own production called Apple TV+ started on November 1, 2019.

For the classification of Apple in our databaser ranking, only the sales of the "Services" division were taken as a basis; the sales include digital content stores and streaming services, AppleCare, licensing and other services. Since the first quarter of 2019, Apple has been calculating the amortization of Maps, Siri and free iCloud services as "Services" net sales. The "Services" division's revenues have been recalculated for 2018 and 2017 to be consistent with the 2019 presentation.

General Information

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Head office:
One Apple Park Way
Cupertino, CA 95014
Telephone: 001 408 996 1010
Website: investor.apple.com  

Branches of trade: subscription and streaming services (music, film), license sales
Legal form: corporation
Financial Year: 01.10. – 30.09.
Founding Year: 1976

Basic Economic Data

2017/182016/172015/162014/152013/142012/13
Revenue (US$ m)265,595229,234215,639233,175182,795170,910

Net profit (US$ m)

59,53148,35145,68753,39439,51037,037
Share price (US$, year end)137.20142.70111.1699.3393.4958.82
Employees132,000123,000116,000100,00092,60080,300



Revenue "Services" (US$ m) after new classification
2018/192017/182016/17
Revenue Apple (US$ m)260,174265,595229,234

"Services"

46,29139,74832,700

Executives and Directors

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Management:

  • Timothy D. Cook, Chief Executive Officer
  • Angela Ahrendts, Senior Vice President, Retail and Online Stores
  • Eddy Cue, Senior Vice President Internet Software and Services
  • Joanthan Ive, Chief Design Officer
  • Luca Maestri, Senior Vice President and Chief Financial Officer
  • Craig Federighi, Senior Vice President, Software Engineering
  • Dan Riccio, Senior Vice President, Hardware Engineering
  • Philip W. Schiller, Senior Vice President, Worldwide Marketing
  • Bruce Sewell, Senior Vice President and General Counsel
  • Jeff Williams, Senior Vice President Operations
  • Johny Srouji, Senior Vice President, Hardware Technologies


Board of Directors:

  • Arthur D. Levinson, Chairman of the Board, Genentech
  • James A. Bell, The Boeing Company
  • Tim Cook, CEO Apple
  • Susan L. Wagner, BlackRock
  • Al Gore
  • Andrea Jung, Grameen America
  • Ronald D. Sugar, Northrop Grumman Corporation
  • Robert A. Iger, President & CEO The Walt Disney Company

History

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In the early 1970s Steve Jobs and Stephen "Woz" Wozniak met for the first time in his garage. Jobs had heard about the "Cream Soda" computer that Wozniak had built on his own. During the school holidays, both worked at Hewlett-Packard, where they got to know each other better. Their first joint project was the construction of "Blue Boxes", with which one could make free long distance calls, since the devices simulated the corresponding tones of the telephone company. This was the first demonstration of the division of labour that made the Jobs/Wozniak team so successful: With his technical know-how, Wozniak was responsible for manufacturing the devices, while Jobs organized the material and managed sales. The two young entrepreneurs earned 90 dollars for every blue box sold.

Jobs and Wozniak were part of the first generation of the "Homebrew Computer Club" in 1975. There, hobby computer engineers who were enthusiastic about technology could present their projects to like-minded people and exchange their know-how. There Stephen Wozniak presented a home-made computer that was equipped with a keyboard and could be connected to a television set. Jobs was enthusiastic about the prototype and convinced Wozniak to set up his own company to manufacture the computer in series.

Apple Computer was founded in 1976 in the bedroom of Jobs' parents' house near San Francisco. Jobs later claimed to have chosen the name "Apple", among other reasons, to appear in the phone book before Atari. Besides Jobs and Wozniak, Ronald Wayne was one of the founding members. The graphic designer was a friend of Steve Jobs, whom he had met at their joint employer Atari. Jobs provided Wayne, who also designed the first Apple logo, with ten percent of the company's shares, so that in case of an emergency, he and Wayne could exercise a veto right over Wozniak, who, like Jobs, held 45 percent.

The first product was the wooden computer developed by Wozniak, which was christened "Apple I". The successor model Apple II sold about 50,000 copies between 1977 and 1980. While the number of Apple employees in 1977 was still around 50, by 1979 it had grown to more than 1,000. Steve Jobs' parents' house had long since become too small, so the workforce moved to the new company headquarters in Cupertino, California, at the end of 1977. In 1980, Apple ventured to go public, becoming the first Silicon Valley start-up company whose securities were traded on Wall Street. Steve Jobs and many employees became multimillionaires overnight.

At the beginning of the 1980s, the competitive situation on the computer market was quite different from that in the mid-1970s. In the meantime, companies such as Commodore, Atari and IBM offered similar and sometimes more powerful computers. A special challenge for Apple was that IBM introduced the "IBM PC" in 1981, while the third generation of Apple computers had flown. The IBM PC was designed as a pure business PC, had a user-friendly operating system with the DOS produced by Microsoft and thus fulfilled all the requirements for use in large companies and administrative authorities. As a first reaction Apple placed a full-page ad in a daily newspaper, which arrogantly commented on IBM's entry into the personal computer market with the headline "Welcome IBM, seriously".

At that time Apple could not offer a comparable product. The Apple II continued to sell well, but only among technology-enthusiastic home users. In order to keep up with IBM, a worthy successor to the Apple II was to be introduced to the market in 1982 (after the flop of the Apple III). Then came Apple Lisa (named either after the abbreviation for "Local Integrated Software Architecture" or after Steve Jobs' daughter). Lisa was intended to give users a new kind of computer experience. The most important component was to be a mouse-based, graphical operating system, such as only the computer manufacturer PARC had previously integrated into its "Xerox Alto" model. To gain the technical expertise to implement such a "Graphical User Interface" (GUI), Steve Jobs asked Xerox for information and offered PARC managers options on Apple shares. Several programmers also switched completely from PARC to Apple to support the Lisa development team.

Apple's then CEO Michael Scott was skeptical about Steve Jobs' involvement in the Lisa project. Jobs was already responsible for the failed Apple III model, which had cost the company several million dollars. Scott was not prepared to give Jobs all the freedom he needed to develop a new computer a second time. He pulled him out of the Lisa department and made him a spokesperson. But after a brief intermezzo as head of the PR department, Jobs became interested in an Apple project that had previously led a shadowy existence with only four responsible programmers. Since 1979, the small team under the leadership of Jef Raskin had been working on the computer named after Raskin's favourite apple variety "McIntosh", which was to have high-quality graphics capabilities and still be affordable for everyone at a price of 500 dollars. Annoyed at being banned from the Lisa project, Steve Jobs seized the leadership of the Macintosh team, which he ironically had wanted to dissolve several times in the years before. Jef Raskin, the real father of the Macintosh, was transferred by Jobs to another department and left Apple a short time later. The name "Bicycle", which the project was then to be given, did not catch on.

The working atmosphere at Apple suffered from the competition, also triggered by jobs, between the Lisa team and the Macintosh engineers (who allegedly copied parts of Lisa). The Apple II department, which still produced the company's most profitable product, also felt disadvantaged. When Steve Jobs also brought Stephen Wozniak into the Macintosh department, the Apple II team lost its most important employee. The negative mood also had personnel consequences. CEO Scott had to leave. He had not succeeded in maintaining the company peace. In 1981, at the insistence of Steve Jobs, John Sculley was hired as the new CEO. Sculley, who came from the beverage giant PepsiCo, had developed Pepsi into a beverage brand in the 1970s that could compete with the market leader Coca-Cola. In this context, Steve Jobs' question that convinced Sculley to join Apple became legendary: "Do you want to sell sugar water for the rest of your life or do you want a chance to change the world?

After the Lisa computer became a flop, CEO Sculley had no choice but to rely on the Macintosh team around Steve Jobs. The two got along well at first, and for the press and staff they were a "dynamic duo". They shared a passion for unusual advertising campaigns and commissioned the Chiat/Day agency to market the 1984 launch of the Macintosh. The agency hired director Ridley Scott to shoot a commercial that aired only once during the halftime break of the Super Bowl and played in a future inspired by Orwell's "1984", in which a woman destroys the screen of "Big Brother" with a hammer. At the end the famous slogan was inserted: "On January 24th, Apple Computer will introduce Macintosh. And you'll see why 1984 won't be like '1984'"

Initially, the Macintosh sold very well, but remained well below expectations. Apple's management and board of directors held Jobs responsible for this. He had strained the nerves of decision-makers, the supervisory board and employees to such an extent that he had become an undesirable person within the company he himself had founded ten years earlier.

After Jobs' expulsion, Apple was on the rise. The main reason for this was the development of the technically improved Macintosh II, which sold twelve and a half million units by 1993. The Sculley era was also marked by one of the biggest copyright disputes in American economic history, in which Microsoft and Apple accused each other of having stolen the other's idea for graphical operating systems. In the mid-1990s, after Sculley and three other CEOs had tried in vain to put Apple back on the road to success, Steve Jobs came back. Apple was in desperate need of a new operating system and Jobs had just developed one. NeXT was taken over by Apple and Jobs became CEO again.

A first success was the iMac, which sold well also thanks to the "Think Different" advertising campaign. But in 2001, the entire computer industry was in a crisis, at a time when the market for Internet-capable home computers was saturated. For Apple, flops like the Power Mac G4 Cube exacerbated the crisis. Some computer manufacturers were already talking about the end of the PC. Jobs, however, countered the pessimists that the home computer would have to perform other tasks in the future. The magic word that characterized Jobs in numerous presentations was "digital lifestyle". Apple computers should be compatible and interact with consumer electronics in the future. For this purpose Apple developed the video software iMovie and the program iTunes, with which MP3s could be categorized and burned on a computer.

The most important product that Apple brought out as part of its digital lifestyle offensive was the iPod in 2001. With its five gigabyte hard disk, the music player had more storage space than any MP3 device before. The design developed by Jonathan Ive, which combined white plastic and chrome, made the iPod an object of prestige. A clever advertising campaign created a hype that had probably only been seen with the introduction of the Sony Walkman in the late 1970s. From 2001 to 2008 Apple sold more than 170 million iPods. An important part of the iPod phenomenon is the iTunes Store, the virtual music store where you can legally download music titles for a fee. Apple became a pioneer in online music distribution. 

Jobs then thought about a device that would combine the functions of an iPod with those of a BlackBerry and a mobile phone. He was able to draw on experience gained with the Newton PDA since the late 1980s. In 2004, Apple set up a thousand-strong working group for the highly confidential "Project Purple". Over a period of 30 months and for an estimated development cost of 150 million dollars, the iPhone was developed. With the "i" as a symbol for: "internet, individual, instruct, inform, inspire". Then, on January 9, 2007, the Macworld trade show at the Moscone Center (San Francisco). The company name was changed from Apple Computer, Inc. to Apple Inc. and Steve Jobs began his speech with: "Every once in a while, a revolutionary product comes along that changes everything." In a Facebook commentary someone writes: "The people who were there didn't know that this was an historic moment." The iPhone came on the market and quickly became the biggest success in the company's history. Between 2005 and 2015, sales increased sixteen-fold, with 2.2 billion iPhones sold by November 2018.

Until today, Apple was unable to come up with a similar "game changer", a similarly revolutionary, disruptive product (with the iPhone and other smartphones, for example, the entire advertising industry had to reorient itself away from traditional advertising platforms such as television and towards advertising on the Internet. Google and Facebook were the big winners). The iPad, the tablet computer with a touch-sensitive screen, from 2010 and the Apple Watch from 2015 and their respective further developments were certainly successful (with 18 million Apple Watches sold in 2017, Apple sold more watches than the entire Swiss watch industry). But there wasn’t another all-out success like the iPhone.

Already in October 2003 Steve Jobs had been diagnosed with a rare form of pancreatic cancer. On 05.10.2011 he died from the consequences of the disease in his family circle in Palo Alto, California.

Management

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After Steve Jobs had died in October 2011, the division of roles was clear. Jobs was Apple. He was the visionary, the iGod. Tim Cook, 50 years old at the time, CEO since August 2011, previously responsible for day-to-day business as COO, was confronted with a lot of scepticism. Shortly after Jobs' death, the "Huffington Post" wrote: "Why Apple is doomed.” Cook, son of an Alabama shipyard worker, studied mechanical engineering (industrial engineering), completed a Master of Business Administration and worked for IBM and at Intelligent Electronics. Steve Jobs himself brought him to Apple in 1998. Could the demure Cook, the one with the quieter management style and definitely not a "technology prophet", inherit the charismatic Steve Jobs?

Ten years later Cook is undisputedly in his post. A look at Apple shares speaks for itself. While the price was still at 56.65 dollars in mid-2013, by the end of January 2020 it had risen to almost 318 dollars. In mid-2019, 1.4 billion people owned an Apple device and 900 million an iPhone - most of them sold in the Cook era. In August 2018 Apple was the first company in the world to achieve a market value of one trillion dollars. "All criticism must be countered by the fact that Apple's success story simply continues," says Colin Crawford of "Macworld". The most important thing in a giant corporation is not necessarily the products, but the supply chain, sales, finance and marketing. A business that Tim Cook masters.

Business Units

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In Apple's Annual Report 2018 (from 1 October 2017 to 28 September 2018), i.e. the annual report relevant to the 2018 version of media.db, the following is noted under Business: Apple develops, produces and markets smartphones, PCs, tablets, wearables and accessories and sells related services. For the classification of Apple in our ranking, only the sales of the "Services" division are taken into account: Sales of digital content stores, streaming services, AppleCare, licensing and other services. Precisely these are the sales of the various App Stores, revenues from subscription services such as Apple Music (since June 30, 2015, video and music streaming in over 100 countries, with 60 million subscribers in June 2019) and from the iCloud business. 

Current Developments

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Apple is fundamentally changing. The time of the sales successes with the iPhone is over (even if there were record Christmas sales in 2019). Apple boss Tim Cook in November 2019: "In ten years, nobody will buy cars or iPhones anymore." The American tech expert Tien Tzuo proclaims "the end of ownership" and the subscription age, the "subscription economy". Apple, for example, has long since ceased to be a product company. The company's strategy is no longer based solely on the sale of iPhones, whose sales are declining anyway, but on services.

See the existing subscription services Apple Music, Apple News+ (newspaper flat rate), Apple Arcade (video games) and the video streamer Apple TV+, which was launched on 1.11.2019 with great effort. And at least in the USA you can even order iPhones by subscription instead of buying them. So much for the transformation to a subscription economy. According to Bloomberg, Apple plans to offer a bundle of its streaming services in 2020.

Apple, Macs and iPhones etc. are still considered different, more elegant, more aesthetic, more sustainable, simply better, cool and more expensive. Still, even, as you can read in the Swiss Handelszeitung, when Apple is the second most sought-after gift brand for rich Chinese women – after Bulgari, before Chanel. Keynotes at Apple events were at the time of Steve Jobs and are still today like sermons to cheering disciples. The news about the rise of Tim Cook "to become the most influential US manager" (SZ of 10.10.2019) fits to this. The news about Cook's direct line to President Trump (although he supported Hillary Clinton in 2016), about his close ties to the Trump family and how he saves many billions in taxes as a "highly successful lobbyist" for his company. It is also fitting that although he is sometimes described as a "spineless opportunist", there have been no waves of protest or calls for boycotts from the left. It's all about Apple. And about Macbooks, which, as you can't fail to notice, appear at least once on at least one table in every Hollywood movie and every Netflix series.

Further Reading

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  • Erdmann, Charlotte (2011): One more thing: Apples Erfolgsgeschichte vom Apple I bis zum iPad. Addison-Wesley, München.
  • Isaacson, Walter (2011): Steve Jobs: Die autorisierte Biografie des Apple-Gründers. C. Bertelsmann Verlag.
  • Moritz, Michael (2011): Apple: Die Geburt eines Kults. Börsenmedien.
  • Kahney, Leander (2008): Inside Steve’s Brain, Portfolio, New York.
  • Young, Jeffrey S./Simon, William L. (2006): iCon Steve Jobs: The Greatest Second Act in the History of Business, Wiley, New Jersey.
  • Wozniak, Steve/Smith, Gina (2007): iWoz: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It, W.W. Norton, New York.

Content

Institute of Media and Communications Policy

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Germany's Federal Agency for Civic Education,

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the city of Cologne, Germany,