Apple Inc. Business Analysis

Business Analysis of Apple Inc.

On April 1, 1976 Steve Jobs, Steve Wozniak, and Ronald Wayne joined together to form Apple Computer Incorporated. The concept behind their company was the creation of an inexpensive, simple to use personal computer kit. Working out of Jobs' garage in Cupertino, California the trio designed and manufactured their first product in three months. They named this product the Apple I and it went on sale in July 1976 for $666.66. Six months after the release of the Apple I, Ronald Wayne opted to sell his share of the company back to Jobs and Wozniak for a meager $800. Soon thereafter multimillionaire Mike Markkula joined Apple and on January 3, 1977 the company was incorporated. Apple continued to gain momentum and was one of the fastest growing companies by the end of 1978. With the introduction of the Apple II plus, the company enjoyed a 400 percent increase in sales in 1979. In December of 1980 the company went public and within minutes the 4.6 million shares sold out at a price of $22 per share. An additional 2.6 million shares was also sold out by May 1981. However, the firm suffered its first major fallback with the release of the Apple III in September of 1980. The newest version had not undergone necessary testing due to time constraints and pressure from upper management. This proved to be extremely costly mistake and by 1984 the Apple III was discontinued. Below is a timeline with some of Apple's key dates from the company's short history.

1976: With $1,300, Steve Jobs and Steve Wozniak found Apple Computer, Inc.

1980: Apple converts to public ownership.

1982: Apple becomes the first personal computer company to reach $1 billion in annual sales.

1985: John Sculley assumes the helm after a management shakeup that causes the departure of Jobs and several other Apple executives.

1991: PowerBook line of notebook computers is released.

1994: Power Macintosh line is released.

1996: Acquisition of NeXT brings Steve Jobs back to Apple as a special advisor.

1997: Steve Jobs is named interim chief executive officer.

1998: The all-in-one iMac is released.

2000: Jobs, now firmly in command as CEO, oversees a leaner, more tightly focused Apple.

The company underwent some major changes in leadership in 1985. Despite being recruited by Jobs himself in 1983, John Sculley takes over as president of Apple and Steve Jobs leaves the company and builds another computer company called NeXT Incorporated. However, it was not until the 1990's that the company's poor management became a major problem. In 1993 John Sculley was forced out of presidency by the company's board of directors. Sculley was replaced by Michael Spindler. It was not long before Spindler made his first major mistake. Spindler's first major oversight was the new Power Macintosh line in 1994. Consumer demand for the new Macintosh line was much higher than the company anticipated and by 1995 Apple had an estimated $1 billion worth of unfilled orders (International Directory of Company Histories, 2001). This massive underestimation caused Apple's stock to drop 15% over a two-day period and ultimately spelled the end of Spindler's run as leader of Apple. In February of 1996 Apple introduced Gil Amelio as the new chief executive officer. With mounting financial losses throughout Amelio's 17 month reign as chief executive, the firm once again decided to go in another direction with their leadership. However, before Amelio's dismissal in July of 1997, Apple paid $377 million for a small company called NeXT. This happened to be the same company that was started by Steve Jobs twelve years ago in 1985. Jobs was immediately named interim chief executive officer following Amelio's dismissal and the company's return to profitability began. Jobs' first major decision was to put an end to the licensing agreement that former chief executive Michael Spindler had initiated. The next smart decision Jobs made was to focus the company's resources away from printers, scanners, portable digital assistants, and other product lines. Instead, Jobs decided for Apple to concentrate exclusively on desktop and portable Macintoshes for professional and consumer customers (International Directory of Company Histories, 2001). With guidance and oversight from Jobs, Apple released the successful iMAC in August of 1998. This marked Apple's return to profitability. In 2005 the company underwent another period of change. From 2005-07 Apple transitioned from PowerPC processors to Intel x86 processors. While the former PowerPC processors were supplied by Motorola and IBM, Steve Jobs stated Apple's lack of faith in Intel to meet the company's needs for the future. In January of 2007, Steve Jobs announced that the company would now be known as Apple Inc. during the Macworld Expo in San Francisco, California. The change in name signaled the company's change in focus from personal computers to mobile electronic devices (Macworld 2007).

Apple Incorporated's primary NAICS code is 334111. The company falls under the electronic computer manufacturing category. This U.S. industry's primary function is in manufacturing and/or assembling electronic computers. According to the U.S. Census Bureau from 2002 the industry has 489 establishments. The industry net selling values for 2002 were $47,728,633,000. The annual payroll in this industry was $3,274,317,000 distributed among 62,253 employees (U.S. Census Bureau 2002). A geographic distribution of the industry shows that approximately one third of the industry is located in the state of California. Of the 489 total employers, 151 of them are located in California and make up 33.68% of the industry net selling value. Texas has the second most establishments with forty-three, however North Carolina is the second highest state behind California, with 1.15% of the industry net selling value coming from the Tar Heel state. The top ten states comprise 281 of the 489 total establishments of the industry. These states include California, N. Carolina, Florida, Michigan, Washington, New York, Minnesota, Ohio, New Hampshire, and Maryland. These ten states make up 36.93% of the net selling value of the industry. Despite a reasonable number of employers in Texas, Massachusetts, Georgia, Pennsylvania, Colorado, and New Jersey these states only make up a minimal fraction of the industry net selling value.

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