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Thursday, August 16, 2018

Apple: A Trillion Dollars and Beyond


For a company that has reported sales of about 1 billion iPhones over the past decade since the release of the first in 2007 and one whose stock price has skyrocketed by about 15,000%, Apple is a company everyone is familiar with. Recently, Apple became the very first company that is publicly traded to hit the 1 trillion dollar mark.

However, all of this success notwithstanding, Apple had a very rocky start, with former CEO and co-founder Steve Jobs even being kicked out of the company in 1985. For a company that was stated to be the most valuable in the world by 2012, Apple was bound to become the world’s first trillion dollar company. To achieve this great feat, Apple was aided by years of revolutionary tech innovations which not only took the world by storm but set the pace for other tech companies to follow.

Apple’s Tech History

Apple was founded by Steve Jobs, Ron Wayne, and Steve Wozniak in 1976. Steve Jobs, however, did not know much about computers, not even coding, as admitted by Wozniak in an email response to a fan. Wozniak wrote, “Steve did not ever code. He was not an engineer, and he did not do any authentic design, but he was technical enough to develop and change and add to other designs." Ron Wayne however, only 12 days after founding the company, decided to sell his 10% share to both Jobs and Wozniak for only 800 dollars. This, he attributed to the fact that the 2, both of whom were 20 years younger than him, were tech geniuses and he thus couldn’t keep up. In an interview with Cult of Mac Ron admitted, “I was 40, and these kids were in their 20s. They were whirlwinds...it was like having a tiger by the tail. If I had stayed with Apple, I probably would have wound up the richest man in the cemetery.”

At a time when computers were the average size of a room, Steve Wozniak saw a need to build a home computer. One that could easily be used at home and at the office, performing the same high-end tasks, but taking up as little space as possible. In 1975, Wozniak thus came up with the Apple 1. His friend, Steve Jobs, saw this and immediately convinced him that this is a product that could sell. They thus decided to venture into business as Apple Computers in 1976, with the very first Apple logo, that of Isaac Newton sitting under an apple tree. Wozniak then decided to completely reinvent the Apple 1 design and came up with the Apple 2, a device that was a significant improvement from its predecessor, having features like color graphics.

By the 80s, thanks to Wozniak’s innovations and Jobs’ marketing skills, Apple had become one of the biggest home computer manufacturers. This, despite, did not last very long as IBM released their own home computer to rival that of Apple’s, the IBM PC. Apple then decided to innovate even further and incorporate new ideas into their devices. They then went to Xerox where they saw the future of computing, that is, the utility of mouse commands instead of typed commands into a computer, a technology termed Graphical User Interface (GUI).

Apple then integrated GUI technology into Apple Lisa, a computer primarily marketed to businesses. Despite the GUI technology and multitask function, the Apple Lisa failed for the following reasons:

  • It was too overpriced at 9,000 dollars.
  • It was primarily a prototype device.
  • It was eclipsed by the success of the original Mac.

Given the size of the company, it was felt that Apple now needed a person at the top with experience. For this reason, Steve Jobs, being the great salesman that he was, convinced the then Pepsi-Cola head John Sculley to leave the company and become Apple’s CEO. This, he did, with the simple phrase, “would you preferably promote sugar water to children for whatever is left of your life, or would you like a prospect to change the world?" John Sculley, following quarrels with Jobs, was instrumental in getting Jobs kicked out Apple, a company he had co-founded.

After Jobs left, Apple suffered constant failure with the devices they released. Even the integration of GUI into their computers, an idea they pioneered, was taken up by Microsoft. Although Apple tried to sue Microsoft, they lost the legal battle. Later, under the leadership of Gil Amelio, Apple bought NeXT, in an attempt to introduce a new operating system into Apple. NeXT was started and owned by Steve Jobs, and this essentially brought Steve back into the company.

With Jobs as CEO, countless tech innovations and groundbreaking technology followed over the years, including:

  • The iMac
  • The iPod in 2001
  • The iTunes Store in 2003
  • The iPhone in 2007

Apple’s Stock History

In 1980, the company, Apple Incorporated decided to go public and sell its shares at 22 dollars a share. With this move, some of the company employees, Steve Jobs included, became instant millionaires given their shareholdings.

The company was however not always the success story on Wall Street it is today but suffered significant losses over the years. For this reason, The New York Times back in 1982 warned against making investments in seemingly promising tech companies. Any person who had Apple stock back in the 80s is most likely to have already offloaded them over the years. Steve Jobs himself, after being ousted from Apple, sold the majority of his shares, retaining only that which he needed to be privy to annual reports and an opportunity to attend the shareholder meetings.

Times when Apple stock plummeted below reasonable expectations included:

  • When they released the Apple Lisa.
  • When Jobs was kicked out of Apple.
  • When Windows OS dominated the software market.

However, after the release of the iPod in 2001 under Jobs’ leadership, Apple stock began to rise, transforming the company into a tech giant and eventually making the company the world’s first trillion dollar company. This, Apple was able to accomplish under the leadership of Tim Cook.

Apple’s Current Stock Valuation

With a valuation of 1 trillion dollars, Apple currently stands bigger than most of the countries across the globe. The world’s total GDP output stands at about 80 trillion dollars. At 1 trillion, this means that Apple now boasts a worth that’s over 1% of the world’s total GDP output.

To further understand this remarkable achievement by Apple, the World Bank currently has Gross Domestic Product data of about 199 countries. Of these 199, Apple, by becoming the world’s first trillion dollar company, is now bigger than 183 of these countries. Some of these include:

  • Sweden.
  • The Netherlands.
  • Argentina.
  • Saudi Arabia.

However, most people have expressed concerns that Apple can’t go any further and thus it’s wise to cash out now. This is, as explained by Tom McClellan who is the editor of the McClellan Market Report, not real. This is because, quarter after quarter, Apple has maintained a steady rise in its stock prices. Earnings reports usually have a significant effect on stock prices. This is because, right before the earnings report is released, everyone is generally worried and thus nobody is willing to buy. This is the best time to purchase any more or new Apple stock. For Apple, unlike other companies, the earnings report is usually higher than the previous quarter, and thus the company will undoubtedly continue to maintain a steady rise.

What of rogue events? What of unforeseen circumstances which may not be taken into account in the average stock chart predictions? An example of this would be Apple’s below average sales of the iPhone X.

Some of the reasons why the iPhone X did not make record sales include:

  • Lack of a fingerprint scanner.
  • Lack of a home button.
  • Whole new User Interface experience.
  • Defects of the face unlock feature.

Stock charts are similar to weather charts. This is to say, there are specific areas in the world where it’s generally expected that the weather will be cold or sunny. The same applies to the stock market. An individual company’s stock is expected to go up at certain times. For instance, Apple releases a new device every year around September. Around this quarter, stock prices are generally expected to go up. For Apple, however, regardless of patterns predictions and rogue events occurring, the company has maintained a steady rise as evidenced by an evaluation of their last quarters.

Apple’s Innovations

Apple was able to become the world’s first trillion dollar company mainly because of the tech innovations made by the company.

Apple was the first to release the following:

  • Smartphone with nonremovable battery.
  • Smartphone with multi-touch.
  • Smartphone with a smart OS.

Non-Removable Battery
In 2007, Steve Jobs announced that Apple will release 3 new features. These features, in his own words, are:

  • “Widescreen iPod with touch controls.”
  • “A revolutionary mobile phone.”
  • “A breakthrough internet communications device.”

All of these, Jobs later revealed, was to be incorporated into the iPhone, the very first of its kind. All iPhones, to this day, have a nonremovable battery. This is a trend that has been followed by most phone manufacturers regardless of the operating system their devices are running on. As with all tech innovations, the idea of a nonremovable battery has both its pros and its cons.

Pros of a nonremovable battery:

  • The final device is slimmer and more elegant.
  • The phone has a unibody thus inner parts are protected.
  • Continually removing a battery exposes the phone to unwanted particles like dust.

Cons of a nonremovable battery:

  • Very high maintenance.
  • Changing a battery is very expensive.
  • Changing the battery may damage the phone.

Multi-Touch Feature
Apple may not have invented multi-touch, but they were the first to integrate multi-touch into a smartphone. Just put, this feature allows a user to use only their fingers to interact with the device and send commands to the device. This is the feature common in all smartphones today with a touchscreen. An example of this would be the pinch to zoom feature.

This is a feature that had been in development within Apple for the iPad and Jobs simply decided to integrate it into the iPhone.

Pros of multi-touch:

  • Easy to use, for instance, “pinch to zoom” feature.
  • Allows for multitasking thus saving on time.
  • Saves on hardware, that is, no need for a keyboard.

Cons of multi-touch:

  • Not always responsive.
  • Constant touch may damage the screen.
  • Not easy to use for those who are visually impaired.

Smart Operating System
As stated by Jobs during his unveiling of the iPhone, most phones in that era were termed “smartphones” for 3 simple reasons, that is:

  • They could make calls.
  • They could connect you to the internet.
  • They could connect you to your email.

The iPhone however, when released, was released with the same operating system that was running the Mac. This was revolutionary, and to this day, Apple is praised for its closed and elite ecosystem, iOS, which provides a whole different user experience compared to other devices running other operating systems.

Pros of iOS:

  • iOS is generally faster than other operating systems.
  • iOS provides a better User Interface.
  • iOS connects all your Apple devices including those of friends and family.

The main disadvantage with iOS is the fact that it’s only supported by Apple thus can be very limiting to users. For instance, for security reasons, Apple doesn’t allow any external devices to interact with their own, specifically SD cards. Also, iOS users generally have less access to individual websites or apps.

Conclusion

The list of reasons why Apple became the world’s first trillion dollar company is virtually endless. As a company, Apple has always been dedicated to giving their users the best products and services, even though they may be forced to pay for the same.

This is a company that made headlines back in the 80s and continues to prove revolutionary to this day.

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