Apple Inc.

Apple Inc.

Apple Inc., major manufacturer of personal computers and other digital devices, including the popular digital music player, the iPod, and the online music service known as the iTunes Music Store. With headquarters in Cupertino, California, Apple designs, produces, and sells personal computer systems for use in business, education, government, and the home. It also creates its own operating system software, server software, and World Wide Web browser. In addition to these products, Apple also makes printers, monitors, scanners, a cell phone, a digital video system, Web services, and networking products. Apple also operates a chain of retail outlets.

II

FOUNDING

Men Behind Apple Computer

Apple Computer cofounder Steven Jobs, left, CEO John Sculley, center, and cofounder Stephen Wozniak, right, are shown at the 1984 debut of the Apple IIc computer, which was introduced in the same year as the revolutionary Macintosh computer. All three played crucial roles in developing and marketing computers that are easy to learn and use.

Apple Computer was formed by Steven Jobs and Stephen Wozniak in 1976 to market the Apple I, a computer circuit board that they had designed and built in Jobs’s garage in Los Altos, California. They scrapped their plan to sell the board alone when Jobs’s first sales call yielded an order for 50 units. They were, however, sold without monitor, keyboard, or casing. The company was incorporated in January 1977 by the charismatic Jobs, the meditative inventor Wozniak, and their new partner and chairman, Mike Markkula. Markkula brought credibility, maturity, engineering and product management experience, and an extremely broad-based knowledge of the business world, as well as investment cash of his own and contacts among Silicon Valley’s venture capitalists. Markkula also recruited all of Apple’s outside board members and lured away managers from other major high-technology firms, including Hewlett-Packard, Intel, and National Semiconductor.

III

APPLE II AND MACINTOSH

Apple Macintosh Computer

The Apple Macintosh, released in 1984, was among the first personal computers to use a graphical user interface. A graphical user interface enables computer users to easily execute commands by clicking on pictures, words, or icons with a pointing device called a mouse.

In 1977 Apple introduced the Apple II, a personal computer able to generate color graphics, with its own keyboard, power supply, and eight slots for peripheral devices, which gave users wide possibilities for add-on devices and software programs. Apple established its corporate headquarters in Cupertino in 1978. The Apple III computer, introduced in 1980, sold poorly because of hardware problems and a high price.

With Apple II sales soaring, in 1982 Apple became the first personal-computer company to record annual sales of $1 billion. In 1983 Apple introduced the Lisa, a personal computer designed for business use that incorporated a handheld mouse to select commands and control an on-screen cursor. The Lisa was followed in 1984 by the Macintosh personal computer, based on the 68000 microprocessor manufactured by Motorola. Like the Lisa, the Macintosh, also known as the Mac, incorporated a graphical user interface, which made the computer easy to operate for the novice user. Apple entered the office market with the introduction of its LaserWriter printer in 1985 and Macintosh Plus computer in 1986, a combination that launched the desktop publishing revolution. Although the company prospered in the early 1980s, Wozniak left Apple in 1985 to start a company of his own. That same year disappointing sales and internal wrangling led to restructuring, the company’s first layoffs, and Jobs’s departure from the company. John Sculley, whom Jobs had hired in 1983 as Apple’s president and chief executive officer, replaced Jobs as chairman of the company’s board of directors.

IV

EXPANSION AND CHANGE

The late 1980s and early 1990s were times of growth and change at Apple. In the late 1980s Apple’s net income increased substantially, and in 1990 Apple introduced a new line of Macintosh computers, priced at 50 percent less than previous models to attract new customers to the Macintosh. In addition to expanding the Macintosh line, Apple extended its system software, the modular System 7. In 1991 Apple formed an alliance with International Business Machines Corporation (IBM) and Motorola to develop the PowerPC family of reduced instruction set computing (RISC) microprocessors. In 1992 Apple introduced the family of Macintosh PowerBook laptop computers, which offered built-in networking capabilities. That same year the company introduced its QuickTime software, which allowed computers to play video clips in multimedia applications.

In 1993 Michael Spindler replaced John Sculley as chief executive officer of Apple. That same year the company introduced the Newton, a handheld communications device with several functions including the ability to translate handwriting into typewritten text. The company also announced restructuring plans that included substantial layoffs, wage freezes, and changes at the executive level. In 1993 Apple discontinued its Apple II product line.

V

FINANCIAL WOES IN THE 1990S

In 1994 Apple launched the Power Macintosh line of high-performance computers, the first Macintosh computers based on Motorola’s PowerPC chip. The company also began licensing its operating system, Mac OS, to other computer manufacturers for the first time. After a year of solid growth, Apple’s fortunes declined again in 1995. A string of problems, including severe shortages of some computer models, led to sluggish sales and financial losses.

In 1996 Gilbert F. Amelio, a business executive credited with saving the National Semiconductor Corporation from financial ruin, replaced Spindler as Apple’s chief executive officer. Apple abandoned its plans to release a major upgrade of its operating system. Later in the year, the company paid $400 million to acquire NeXT Software, a company headed by Apple cofounder Jobs, and announced plans to release a new operating system based in part on NeXT technology. Jobs returned to Apple as a part-time consultant. Despite losing $816 million in 1996, Apple rejected a number of proposed mergers.

In 1997 the company’s sales continued to drop due to competition with manufacturers of Macintosh clones and computers using the Windows operating system developed by Microsoft Corporation. (Encarta Encyclopedia is published by Microsoft.) That year Apple laid off 4,100 workers, or about 30 percent of its workforce, as part of a sweeping reorganization designed to return the company to profitability. Also that year, Apple’s board of directors dismissed chief executive Amelio. At the time of his dismissal, Amelio had not managed to bring about a promised reversal of the company’s fortunes.

Although he held no formal position at Apple at the time of Amelio’s departure, Jobs embarked on a bold plan to turn the company around. He persuaded longtime rival Microsoft to invest $150 million in Apple, to pay sizable fees to license Apple technologies, and to develop new Macintosh versions of Microsoft Office, a suite of business application programs. In September 1997 Apple hired Jobs as interim chief executive officer, and he continued to make fundamental changes in Apple’s business strategy.

Jobs reversed the company’s decision to license the Mac OS to other computer manufacturers, which had taken away market share from Apple. He discontinued the Newton, Apple’s handheld computer that had never made a profit. The company also introduced a successful line of high-powered desktop and notebook computers based on the PowerPC G3 processor made by IBM and Motorola. In 1998 Apple introduced the iMac, a low-cost computer with an eye-catching design; this quickly boosted Apple’s share of the personal computer market. The same year it launched a new operating system, the Mac OS X. Building on the success of the iMac, Apple introduced the iBook laptop the following year.

VI

ENTERING THE 21ST CENTURY

The Mac Mini and the iPod Shuffle

Steve Jobs, chief executive officer of Apple Inc., holds the new Mac Mini computer in the palm of his hand, while wearing the iPod shuffle around his neck. The introduction of the iPod proved to be an enormous success and helped turn around the fortunes of the company in the early 21st century.

Under Jobs’s leadership, Apple experienced a significant financial rebound after years of losses, and the company’s profits steadily increased. In 2000 Jobs accepted the role of permanent chief executive officer and dropped the word interim from his title.

Apple began 2001 with a new round of product upgrades, but the most dramatic turnabout in its fortunes came with the introduction of the digital music player known as the iPod at the end of the year. The music player became extremely popular and was credited with helping turn the company around. The same year the company announced plans to open retail stores, which helped Apple provide better marketing support for its products. Following on the success of the iPod, Apple in 2003 debuted an online music site called the iTunes Music Store that enabled computer users to purchase and download music. The service quickly became one of the most popular music download sites on the Web.

iPod Digital Media Players

Three models of Apple's popular iPod MP3 and digital media players, from left to right: iPod shuffle, iPod nano, and iPod with video. The special-edition red iPod nano was issued as part of a campaign to raise funds to fight AIDS in Africa.

By 2005 Apple had opened more than 100 retail outlets in the United States, along with stores in Canada, Japan, and the United Kingdom. It continued to pioneer in music services, unveiling the iPod nano, a smaller, thinner version of the iPod. In 2006 Apple sold about 39 million iPods and announced that users had downloaded more than 2 billion songs from its iTunes Music Store.

Building on the success of the iPod, Apple continued to diversify its product line. In January 2007 the company renamed itself Apple Inc., dropping “Computer” from its title to signify that it was no longer just a personal computer company. The same month Apple announced the development of the iPhone, a cell phone capable of playing music and videos, surfing the Web, and sending e-mail, as well as making telephone calls. Although other companies had pioneered such “smartphones” long before, Apple brought its unique graphical user interface design to the product, including touchscreen capability rather than a built-in keyboard. The iPhone was to be made available by June 2007 through a single carrier, Cingular Wireless, and was expected to offer search functions and special applications from Google and Yahoo.

In 2007 Apple also introduced Apple TV, a digital video system that plugs into a television set and stores up to 50 hours of video. The system enables the wireless transfer of videos from a computer to the television set.