This week in class, I will be presenting on Apple. Since Apple is such a massive company, it would be impossible to give a good presentation on everything that Apple offers. Therefore, my presentation will focus on CMO Phil Schiller, their headquarters that we will be touring, and recent developments with their stock price. This post will cover everything else that I didn’t include in my presentation.
The History of Apple
Apple was founded in 1976 by Steve Jobs, Steve Wozniak, and Ron Wayne in Cupertino, California, the same city in which Apple resides today. The first twenty years of Apple can be defined primarily by the sale of computers and not much more than that. Their early years found them in fierce competition with IBM to see who would control the PC market. None of their early models found significant breakthrough success.
However, in 1984, Steve Jobs unveiled the Macintosh. This model became widely used in cinema, music, advertising, publishing and the arts and was propelled by a classic 1984 Super Bowl ad.
A year later, however, Jobs was forced out of his own company by the board of directors. Him and then-CEO John Scully differed too greatly on their business philosophies. Sculley wanted to focus on markets that were less vulnerable to IBM competition while Jobs wanted to compete with IBM. Jobs went on to found NeXt computers and in 1997, Apple acquired this company which brought Jobs back.
While doing research, the most interesting thing I read about was how in 1997, Microsoft, one of Apple’s fiercest competitors, invested $150 million into Apple, which saved Apple from its struggles in exchange for allowing many Microsoft software features onto Apple computers. Bill Gates sold the Apple stock he acquired in this deal in 2003. Given the trajectory of Apple’s market cap since then, that was extremely foolish as that stock would be worth approximately $53 billion today.
In the early 2000s, Jobs wanted to expand Apple from being strictly a computer company to a company that offered simple and intuitive devices with impeccable design. Over the next two decades, Apple would unveil the iPod, iPhone, iPad, Apple Watch, and AirPods to accomplish this goal. Apple opened its first retail store in 2001 to allow consumers to get hands on with Apple’s products. This change in Apple’s mission has been the true driver of Apple’s skyrocketing market cap, and it is the creation of these handheld devices that has established Apple as the world’s most valuable company.
Apple in the Classroom
Apple gave a Keynote address in March of 2018 to announce a revamping of their education business model. The centerpiece of the hardware side of this rollout was the new 9.7 inch iPad designed for students equipped with Apple Pencil, a stylus that was designed to help students and teachers accomplish their tasks more efficiently.
Apple launched the Everyone Can Code and Everyone Can Create curricula, with a wide array of iPad exclusive apps, to allow for coding and art done on iPad to be integrated into the classroom. Two new apps developed by Apple to accompany this rollout are Apple Classroom, which allows teachers to monitor the academic activities of students and assist them in real time, and Apple Schoolwork to facilitate assignments. To implement all of this new hardware and software into large school districts, Apple created the new Apple School Manager portal to let school IT administrators set up and manage all of their Apple products while giving each student an Apple ID.
Many see this new rollout as a response to Google’s integration of its Google Classroom network with their Chromebooks. Thus, executives made sure to note at the spring 2018 education Keynote that the A10 fusion chip in the new iPad makes the device more powerful than every Chromebook model and most PC laptops. Apple also makes extensive efforts to make their products accessible to students with disabilities.
Apple in the Public Eye
With so many tech companies coming under fire from the public recently for a variety of reasons, how has Apple fared? Besides a few PR hiccups, the company has done relatively well in this regard. In 2017, it was revealed that Apple was intentionally slowing down older iPhones, which led to public outrage. The company claims that its reasoning for this move was to preserve battery life on these aging devices. They offered discounted prices on replacement batteries to try and regain favor from the public. Part of the reason that Apple has been relatively unscathed by scandals is due to the fact that their primary business is selling hardware rather than directly dealing with the data of consumers. The following New York Times article offers a really good analysis of why Apple has a unique advantage in this way, particularly compared to Facebook and Google.
For a brief period Apple also came under fire from President Trump. Since a key part of his campaign platform was trying to get US companies to stop manufacturing their goods in East Asia and instead manufacture in the US, and Apple is the US’s largest company, that made Apple an easy target. Apple has since expanded iPhone production in Wisconsin and has plans to build a new campus in Austin, Texas.
Dell and Lenovo are Apple’s two largest competitors in the computer/laptop space. When it comes to smartphones, Samsung has been doing damage to iPhone sales for years with their Galaxy line. Google’s Android line also has some market share when it comes to smartphones, particularly with their flagship Pixel phone. On all fronts, Apple has leveraged switching costs to keep consumers from leaving Apple. An example of a switching cost is iCloud, a data storage network that can be used across all Apple devices. Since entire families are connected to iCloud on multiple devices, it makes it extremely difficult to switch to a competitor without saying goodbye to all of your precious photos. Also, who would want to trade in the acutely designed iMessage for text messages?
Given Apple’s dominance throughout our lifetimes coupled with their recent struggles that will be addressed in my presentation, our visit to Apple will certainly be an insightful one!