Apple Computer, Inc. (NASDAQ: AAPL, LSE: ACP) is an American computer technology corporation with worldwide annual sales in its fiscal year 2005 (ending 24 September 2005) of US$ 13.9 billion [3] and 14,800 employees in several countries. Headquartered in Cupertino, California, Apple develops, sells, and supports a series of personal computers, portable media players, computer software, and computer hardware accessories. The company's most well known products include the Macintosh line of personal computers, the Mac OS X operating system, the iPod portable music player, and the iTunes media player. Apple operates retail stores in the United States, Canada, Japan, and the United Kingdom. The stores carry most of Apple's products as well as many third-party products and offer on-site support and repair for Apple hardware and software.
For a variety of reasons, ranging from its philosophy of comprehensive aesthetic design to its countercultural, even indie roots as a company that differentiates itself from the rest of the industry by “think(ing) different,” Apple has cultivated a customer base unusually devoted to the company and its brand. This so-called Cult of Mac is as cherished by longtime Apple customers as it is inexplicable to outsiders.
Apple has been a major player in the evolution of personal computing since its founding in 1976. The Apple II microcomputer, introduced in 1977, was a hit with home users. In 1983, Apple introduced the Lisa, the first commercial personal computer to employ a graphical user interface, which was influenced in part by the Xerox Alto. In 1984, the Macintosh (commonly called the "Mac") was introduced, furthering the concepts of a user-friendly graphical user interface, and also introducing the mouse for the first time in a personal computer. Apple's success with the Macintosh became a major influence in the development of graphical interfaces elsewhere, with major computer operating systems such as Microsoft Windows, the Commodore Amiga, Atari ST, all appearing on the market within two years of the introduction of the Macintosh. In 1991, Apple introduced the PowerBook line of portable computers, establishing the modern ergonomic form and design that has since become ubiquitous in the portable market. The 1990s also saw Apple's market share fall as competition from Microsoft Windows and the comparatively inexpensive IBM PC compatible computers that would eventually dominate the market. In the 2000s, Apple expanded their focus on software to include professional and prosumer video, music, and photo production solutions, with a view to promoting their computers as a "digital hub". It also introduced the iPod, the most popular digital music player in the world as of August 2006.[4]
Apple was founded on April 1, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne[5] (and later incorporated January 3, 1977[6] without Wayne, who sold his share of the company back to Jobs and Wozniak) to sell the Apple I personal computer kit at US$666.66. They were hand-built in the garage of Jobs' parents[7], and the Apple I was first shown to the public at the Homebrew Computer Club.[8] The Apple I was delivered in June, and was paid for on delivery. Eventually 200 Apple I computers were built. The Apple I was a motherboard (with CPU, RAM, and basic textual-video chips), not a complete personal computer as it is known today.[9]
Jobs approached a local computer store, The Byte Shop, who ordered fifty units and paid $500 for each unit after much persuasion from Jobs. Jobs then ordered components from Cramer Electronics, a national electronic parts distributor. Using a variety of methods, including borrowing space from friends and family and selling various items including a Volkswagen Type 2 bus, Jobs managed to secure the parts needed while Wozniak and Ronald Wayne assembled the Apple I.[citation needed]
The Apple II was introduced on April 16, 1977 at the first West Coast Computer Faire. Despite a price higher than competitors, it quickly pulled away from its two main rivals, the TRS-80 and Commodore PET, to become the market leader (and the symbol of the personal computing phenomenon) in the late 70s due to its color graphics, high build quality, and open architecture. While early models used ordinary cassette tapes as storage devices, this was quickly superceded by the introduction of a 5 1/4 inch floppy disk drive and interface, the Disk II.
Another key to success for Apple was software. The Apple II was chosen by programmers Daniel Bricklin and Bob Frankston to be the desktop platform for the first "killer app" of the business world—the VisiCalc spreadsheet program. VisiCalc created a business market for the Apple II, and the corporate market attracted many more software and hardware developers to the machine, as well as giving home users an additional reason to buy one—compatibility with the office. (See the timeline for dates of Apple II family model releases—the 1977 Apple II and its younger siblings the II+, IIe, IIc, and IIGS.)[citation needed]
More than two million Apple IIs were shipped at a price of US$970 for the 4KB model.[citation needed]
By the end of the 1970s, Jobs and his partners had a staff of computer designers and a production line. The Apple II was succeeded by the Apple III in May 1980 as the company struggled to compete against IBM and Microsoft in the lucrative business and corporate computing market. The designers of the Apple III were forced to comply with Jobs' request to omit the cooling fan, and this ultimately resulted in thousands of recalled units due to overheating.[citation needed] An updated version was introduced in 1983, but it was also a failure due to bad press and wary buyers. Nevertheless, the principals of the company persevered with further innovations and marketing.
In the early 1980s, IBM and Microsoft continued to gain market share at Apple's expense in the personal computer industry. Using a fundamentally different business model, IBM marketed an open hardware standard created with the IBM PC, which was bundled with Microsoft's MS-DOS (MicroSoft-Disk Operating System).
Based on the marketing and technical savvy of Steve Jobs and Steve Wozniak, and the business expertise of Mike Markkula, Apple dominated the personal computer industry from 1977 to 1983.
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1981 to 1989: Lisa and Macintosh
The protagonist of Apple's 1984 ad, set in a dystopian future modeled after the Orwell novel Nineteen Eighty-Four.
Jobs and several other Apple employees including Jef Raskin visited Xerox PARC in December 1979 to see the Alto computer. Xerox granted Apple engineers three days of access to the PARC facilities in return for selling them US$1 million in pre-IPO Apple stock (approximately US$18 million net).
Jobs was immediately convinced that all future computers would use a GUI, and decided to take over design of Apple's first project, the Apple Lisa, to produce such a machine. The Lisa was named after Jobs' daughter. He was eventually pushed from the group due to infighting, and instead took over Jef Raskin's low-cost computer project. Branding the new effort as the product that would "save Apple", an intense turf war broke out between the Lisa's "corporate shirts" and Jobs's Macintosh "pirates", both teams claiming they would ship first and be more successful. In 1983 the Lisa team won the race, and Apple introduced the first personal computer to be sold to the public with a GUI. However, the Lisa was a commercial failure as a result of its high price tag (9,995 USD) and limited software titles.
In 1984, drawing upon its experience with the Lisa, Apple next launched the Macintosh. Its debut was announced by a single national broadcast of the now famous US$1.5 million television commercial, "1984", based on George Orwell's novel Nineteen Eighty-Four. The commercial was directed by Ridley Scott and aired during Super Bowl XVIII on January 22, 1984. Jobs' intention with the ad was to equate Big Brother with the IBM PC, and a nameless female action hero portrayed by Anya Major with the Macintosh. While it initially sold well, follow-up sales were not particularly strong. The machine's fortunes changed with the introduction of the LaserWriter, the first laser printer to be offered at a reasonable price point, and PageMaker, an early desktop publishing (DTP) package. The Mac was particularly powerful in this market due to its advanced graphics capabilities, a side-effect of the GUI, and it can be said that the combination of these three products are responsible for the creation of the DTP market. As DTP became widespread, Apple's sales reached a series of new highs.
In anticipation of the Macintosh launch, Bill Gates, co-founder and chairman of Microsoft, was given several Macintosh prototypes in 1983 to develop software. While the company was indeed ready with its BASIC and the MultiPlan spreadsheet at the Macintosh's launch, in 1985 Microsoft launched Windows, its own GUI for IBM PCs using many of the elements of the Macintosh OS. By 1990, Windows 3.1 was a usable alternative to the Macintosh.
An internal power struggle developed between Jobs and new CEO John Sculley in 1985. Apple's board of directors sided with Sculley, and Jobs was removed from his managerial duties. Jobs later resigned from Apple and founded NeXT Inc., a computer company that built machines with futuristic designs and ran the UNIX-derived NeXTStep operating system. Although powerful, NeXT computers never caught on with buyers, due in part to their high purchase price.
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1989 to 1991: The Golden Age
The Macintosh Portable was Apple's first "portable" Macintosh computer, released in 1989.
Having learned several painful lessons after introducing the bulky Macintosh Portable in 1989, Apple turned to industrial designers and adopted a product strategy based in three portable devices. One portable was built by Sony, which had a strong reputation for designing small, durable and functional electronics devices. Sony took the specs of the Mac Portable, put in a smaller two-hour battery, a much smaller (physically) twenty megabyte hard drive and a smaller nine-inch passive matrix screen.
Called the PowerBook 100, this landmark product was introduced in 1991 and established the modern form and ergonomic layout of the laptop computer. This solidified Apple's reputation as a quality manufacturer, both of desktop and now portable machines.[citation needed] The same year, Apple introduced a massive upgrade to the Mac OS, in the form of System 7. Although resource-hungry (for the era), System 7 dramatically improved the Macintosh experience, adding color to the interface, simplifying common operations, and introducing a number of powerful new networking capabilities. System 7 would be the basis for the Mac OS until 2001.
The success of the PowerBook and several other Apple products during this period led to increasing revenue. The computer press listened to Apple press releases with rapt attention, and speculation was rife about what projects from Apple's famed Advanced Technology Group would next come to market. Apple merely had to mention a technology, Taligent for instance, for people to christen it the "new standard". For some time, it appeared that Apple could do no wrong, introducing new products that were the best on the market, and generating increasing profits in the process. The magazine MacAddict named the period between 1989 to 1991 the "first golden age" of the Macintosh.
The continuing development of Microsoft Windows eventually resulted in an interface that many people thought was close enough or even superior to the Macintosh in terms of ease of use and overall look and feel. Combined with low-cost hardware and an improving software suite, an increasing number of potential customers turned to the "Wintel" standard instead.
Apple, relying on high profit margins to maintain their massive R&D budget, never developed a clear response. Instead they decided that Windows was too close, and sued Microsoft for theft of intellectual property. The lawsuit dragged on for years before finally being thrown out of court. Worse, the lawsuit distracted management while a deep rot developed within the engineering ranks, which became increasingly unmanageable. At first there was little outward sign of the problem, but a series of major product flops and missed deadlines destroyed Apple's reputation of invincibility.
A QuickTake 200 digital camera, released in 1997. The QuickTake line of cameras was not successful for Apple.
At about the same time, Apple branched out into consumer electronics. One example of this product diversification was the Apple QuickTake digital camera, one of the first digital cameras ever brought to the consumer market. A more famous example was the Newton, coined a PDA by Sculley, that was introduced in 1993. Though it failed commercially, it defined and launched the new category of computing and was a forerunner and inspiration of devices such as Palm Pilot and PocketPC.
During the 1990s, Apple greatly expanded its computer lineup. It offered a multitude of models ("Quadra 840av", "Performa 6116"), but many felt Apple failed to adequately differentiate one model from another and the cost of supporting so many products adversely impacted profitability. Apple lost market share to Microsoft Windows, particularly Windows 95.
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1994 to 1997: Attempts at reinvention
Apple Computer, 1 Infinite Loop, Cupertino, CA.
By the mid-90s, Apple realized that it had to reinvent the Macintosh in order to stay competitive in the market. The needs of both computer users and computer programs were becoming, for a variety of technical reasons, harder for the existing hardware and operating system to address.
In 1994 Apple surprised its loyalists by allying with its long-time competitor IBM and CPU maker Motorola in the so-called AIM alliance. This was a bid to create a new computing platform (the PowerPC Reference Platform or PReP), which would use IBM and Motorola hardware coupled with Apple's software. The AIM alliance hoped that PReP's performance and Apple's software would leave the PC far behind, thus countering Microsoft, which had become Apple's chief competitor.
As the first step toward launching the PReP platform, Apple started the Power Macintosh line in 1994, using IBM's PowerPC processor. This processor utilized a RISC architecture, which differed substantially from the Motorola 68k series that had been used by all previous Macs. Apple's OS was rewritten so that most software for the older Macs could run on the PowerPC series (in emulation).
Throughout the mid to late 1990s, Apple tried to improve its operating system's multitasking and memory management. After first attempting to modify its existing code, Apple realized that it would be better to start with an entirely new operating system and then modify it to fit the Macintosh interface. Apple did some preliminary work with IBM towards this goal with the Taligent project, but that project never produced a replacement operating system. A new internal effort, Copland, ran afoul of Apple's now uncontrollable engineering and became a massive failure. A new attempt was made with the Gershwin operating system.
They then investigated using Be's BeOS, NeXT's NeXTSTEP OS, and also Microsoft's Windows NT. NeXTSTEP was chosen, and this supplied the platform for the modern Mac OS X. On February 7, 1997, Apple completed its purchase of NeXT and its NeXTSTEP operating system, thus bringing Steve Jobs back into Apple.[10] On July 9, 1997, Gil Amelio was ousted as CEO of Apple by the board of directors after overseeing a 12-year record-low stock price and crippling financial losses, despite an outstanding decade of innovation. Jobs stepped in as the interim CEO and began a critical restructuring of the company's product line.
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1998 to 2005: New beginnings
Steve Jobs introducing the original iMac computer in 1998.
On August 15, 1998, Apple introduced a new all-in-one Macintosh reminiscent of the original Macintosh 128K: the iMac. The iMac design team was led by Jonathan Ive, who later designed the iPod. While technically unimpressive, it featured an innovative new translucent plastic exterior, originally in Bondi Blue, but later many other colors. The iMac proved phenomenally successful, selling close to 800,000 units in its first five months and significantly boosting the company's revenue and profitability. Thanks in part to the iMac, fiscal 1998 was Apple's first profitable year since 1993. The iMac is now considered an industrial design icon of the late 90s.
At the National Association of Broadcasters convention, Apple purchased the Final Cut software from Macromedia, beginning their entry into the digital video editing market. iMovie was released in 1999 for consumers, and Final Cut Pro was released for professionals in the same year. Final Cut Pro has gone on to be a significant video-editing program. Similarly, in 2000 Apple bought Astarte's DVDirector software, which morphed into iDVD (for consumers) and DVD Studio Pro (for professionals) at the Macworld Conference and Expo of 2001.
In 2001, Apple introduced Mac OS X, the operating system based on NeXT's OPENSTEP and BSD Unix. Aimed at consumers and professionals alike, Mac OS X aims to marry the stability, reliability and security of the Unix operating system with the ease of use afforded by a completely overhauled user interface. To aid users in moving their applications from Mac OS 9, the new operating system allowed the use of OS 9 applications through Mac OS X's Classic environment. Apple's Carbon API also allowed developers to adapt their OS 9 software to use Mac OS X's features often with a simple recompile.
Company headquarters on Infinite Loop in Cupertino, California.
In May 2001, after much speculation, Apple announced the opening of the Apple retail stores, to be located in major U.S. consumer locations. These stores were designed for two purposes: to stem the tide of Apple's declining share of the computer market and to counter a poor record of marketing Apple products by third-party retail outlets.
On October 23, 2001 Apple introduced its first iPod portable digital audio player and released it on November 10 of that year, a product that has proven phenomenally successful. Nearly 60 million units have been sold even though it was not originally perceived to be a successful product.[11] Apple's iTunes Store was introduced soon after, offering online music downloads for US 99¢ a song and integration with the iPod. The service quickly became the market leader in online music services, with over one billion downloads by February 2006.[12]
In 2002 Apple purchased Nothing Real and their advanced digital compositing application Shake, raising Apple's professional commitment even higher. In the same year they also acquired Emagic, and with it, obtained their professional-quality music productivity application Logic, which led to the development of their consumer-level GarageBand application. With iPhoto's release in 2002, this completed Apple's collection of consumer and professional level creativity software, with the consumer-level applications being collected together into the iLife suite.
Apple progressively abandoned flashy colors in favor of white polycarbonate for consumer lines such as the iMac and iBook, as well as the educational eMac, and metal enclosures for the professional lines. This began with the 2001 release of the titanium PowerBook and was followed by the 2001 white iBook, the 2002 flat-panel iMac, the 2003 Power Mac G5 and the 2004 Apple Cinema Displays. Divergent to this consumer/professional identity, the low-cost Mac mini has an aluminum case while featuring the distinctive white polycarbonate top.
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2005-Present: The Intel partnership
Main article: Apple Intel transition
Targeted at a professional audience, the MacBook Pro is Apple's first laptop with an Intel microprocessor. The less expensive MacBook caters to the consumer market.
In a keynote address on June 6, 2005, Steve Jobs officially announced that Apple would begin producing Intel-based Macintosh computers beginning in 2006.[13] Jobs confirmed rumors that the company had secretly been producing versions of its current operating system Mac OS X for both PowerPC and Intel processors for the previous five years, and that the transition to Intel processor systems would last until the end of 2007.[14][15][16]
On January 10, 2006, Apple released its first Intel chip computers, a new notebook computer known as the MacBook Pro (a 15.4 inch laptop which is purportedly up to 4 times faster than the PowerBook models it replaced) and a new (though cosmetically identical) iMac with again purportedly two to three times faster performance. Both used Intel's Core Duo chip technology. Later in February, Apple introduced the new Intel-based Mac mini, running up to four times faster and also featuring Front Row, available with a Core Duo or Core Solo (single core) processor. The Apple online store sold out of 17 inch iMac G5 computers in February 2006, Apple ended the life of its 15 inch PowerBook G4 on February 22, 2006, and the G4 Mac mini was removed from the Apple online store on February 28, 2006 and replaced with the Intel Core Mac mini. On March 10, 2006 Apple retired the iMac G5 and in late May, replaced the iBook G4 with the MacBook. On August 7, 2006, the PowerMac was replaced with the Mac Pro, completing the transition of all Macintosh products, well in advance of their original prediction. On September 6, 2006, Apple updated its iMac line to include new Intel Core 2 Duo processors, and adding a model with a 24" screen to the line-up, as well as quietly bumping the speeds of their Mac mini. The XServe will also be transitioned in October.
Apple's current operating system, Mac OS X 10.4 "Tiger", runs natively on the new Intel machines, as do the Darwin open source underpinnings. Many applications, such as iLife '06, also run natively on Intel chips. Other applications, such as Microsoft Office and Adobe Photoshop, which have not been updated to run on the Intel architecture, run in emulation mode, using a technology known as Rosetta. Because Rosetta is a translation software that allows PowerPC programs to run on Intel processors, these PowerPC programs run slower than native applications. Programs compiled only for the PowerPC must be recompiled to run at full speed on the new Intel machines. Programs that have been designed to run on both PowerPC and Intel chips are certified as 'Universal' by Apple. The Intel-based machines also do not support Classic, which allows Mac OS X to run applications written for OS 9 and earlier, so applications that require this environment will not run on these machines. Apple currently has no plans to bring Classic support to the Intel platform.
The Intel chip also allows the new machines to run the Windows operating system. On March 16, 2006 a bootloader CD image[17] and a how-to for getting XP on your MacBook Pro, iMac, or mini was released to the Internet as an entry into a US$13,000 contest. Many hackers attempted over three months to win the prize by becoming the first to run Windows natively on a new Intel Mac. The Intel-based Macintoshes are now the only computers officially capable of running both Mac OS and Windows (and Linux) without emulation (a pre-release version of Mac OS X for Intel was patched to run on non-Apple PCs through the OSx86 community, however such procedure is illegal by the Apple EULA). Further, on 5 April 2006, Apple announced a new piece of software called Boot Camp that helps users install Windows XP on their Intel Mac alongside Mac OS X. Boot Camp (name not finalized) will also be included, as standard, in Apple's next OS release (10.5, “Leopard”).
The Apple/Intel partnership coined several catch phrases among Apple fanatics and parts of media. Some of the most widespread ones include "Mactel" and "Macintel", a response to the phrase "Wintel,” which is an informal moniker that describes all Intel-powered systems running the Microsoft Windows operating system. However, Apple itself has not publicly used these monikers.
In a broader view, Apple’s announcement that it would partner with longtime rival Intel was a reaffirmation of the company’s unique aesthetic philosophy in relation to the end-user experience. “The soul of a Mac is its operating system,” as Jobs proclaimed during the keynote, and indeed the Intel switch demonstrated how little it matters what brand of chip lies beneath the polish. Apple’s gradual discovery of itself as a platform, experience-centric company was complete.[18]
Apple's success during this period, begining in 1998, but accelerating between 2003 to 2005, was evident in its skyrocketing stock. Between early 2003 and January 2006, the price of a share of Apple's stock increased more than ten-fold, from a little more than $6 per share to more than $80 per share. After peaking at $86 per share in January 2006, the stock declined to trade briefly as low as $50 per share before recovering to a range of approximately $60-70 per share by September 2006.[19]