History of Apple: Company and Stock

It's hard to believe that Apple ($AAPL) once had to be rescued by Microsoft. Today, Apple is the largest company in the world by market cap , worth over $3 trillion.

Apple is a technology company based out of Cupertino, California. From its founding, Apple has been known for its signature approach of integrated hardware-software design. Every device that Apple makes is built around a proprietary operating system, typically either the Mac OS or the iOS.

This is central to the company's business model. Developing its own hardware and software gives Apple a degree of control effectively unique in the device industry, which has led to the company's reputation for reliable, powerful machines. However, this approach also contributes to high costs and low interoperability. Here's what you should know about the history of Apple.

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History

The tech industry has a deep image of founders starting from their garage and making billions. This is rooted in reality. Several globe-spanning firms began exactly that way, including Apple Computers. Founders Steve Jobs and Steve Wozniak launched the company in 1976. Both were in their 20s working out of Jobs' family garage and funded their startup by selling personal possessions.

Apple built its first product in 1977, and in those early days introduced several innovations that would come to define the computer industry. This included the disk drive, which made storing and moving information far more convenient, and user design, which emphasized making the product more accessible for general users. Initially Apple was mainly an institutional success, with customers in the data and educational worlds particularly. Arguably Apple's most important early strategy was to market heavily to public schools. The company's marketing and its emphasis on user design made this a success, and established its brand widely with the general public through its presence in school computer labs.

Apple broke into the home computer market in 1984 with the release of the Macintosh computer.

The Macintosh featured the industry's first GUI, or "graphical user interface," that allowed users to interact with the computer through a cursor and images rather than typing commands at a command prompt. It debuted with a particularly famous commercial "1984" in which Apple portrayed itself as rebelling against conformity and dystopia, an image that competitors would take advantage of in targeted ads against Apple 40 years later.

By 1985 both Jobs and Wozniak had left the company. Over the course of the 1980s and 1990s Apple gradually lost market share to what became known as the "PC" market. This was defined by competitor Microsoft's Windows operating system, a GUI largely modeled after Apple's own MacOS.

Microsoft licensed Windows widely, allowing any manufacturer to run the OS on their computers, which in turn led to significantly lower prices and broader adoption. This process accelerated significantly with the success of Microsoft's Windows 3.1, released in 1990. It would culminate in 1997, when Microsoft famously bailed out a struggling Apple and Jobs returned as CEO. What was in it for Microsoft? Apple promised to include Microsoft Office on Macs.

After 1997, Apple turned to a series of new innovations. They re-emphasized aesthetic design with the iMac series, and the success of this product moved the entire industry away from the traditional "beige boxes." But the company's true modern identity arguably began with the 2001 release of iTunes and the iPod, a media-focused approach that continues to this day.

In 2007, Apple released the iPhone based on the iterated design of its iPod line of products (which in turn would eventually be discontinued in 2022). The iPhone entered a market dominated by Blackberry, but its touch-screen design was a significant leap over Blackberry's models, and the legacy competitor would take years to catch up. In the 2000s, Apple emphasized its design and ad campaigns to establish a new image.

In 2010, Apple again defined a new space with the iPad. This device arguably created the tablet market. Despite criticism that the iPad was, effectively, little more than a large iPhone, it became quickly successful. To this day, the iPad holds a larger market share than any other Apple product.

In 2018, Apple became the first public company valued at $1 trillion. Now, the company is valued at over $3 trillion.

For help determining if Apple is an appropriate investment for your portfolio, consider consulting a financial advisor who can help you crunch the numbers.

Products and Business Lines

Like many large technology companies, Apple owns and operates a range of business and product lines. Among others, these include:

• Retail, through its Apple stores
• Software development
• Devices and peripherals
• TV and movies, through Apple+ and iTunes
• Music, through iTunes
• Sound engineering
• Publishing and podcasts
• Cloud computing
• Artificial intelligence
• Financial technology

Still, it's fair to say that three main product lines dominate Apple's business model: the App Store, iOS devices and the Macintosh computer.

The App Store

Apple's App Store is a successor to its iTunes Store. The latter began operating in 2003, on the heels of the then-urgent issue of music piracy and downloading. In the late 90s and early 2000s, software such as Napster and Limewire made it easy for users to illegally download media for free, and Apple began its per-track iTunes store in part as a response to that era.

Meanwhile, the App Store has turned into one of the company's most important products. Launched in 2008, the App Store is a platform installed on all iOS and Macintosh devices that allows users to download software directly from Apple. While it is a secondary product on Apple's computers, it is the only way to download new software to the iPhone and iPad. This has given the company a de facto gatekeeper role on these products that it does not enforce on Macintoshes which, in turn, has led to modern concerns over antitrust violations.

As it stands, however, that gatekeeper role has proven highly profitable for Apple. The company uses the App Store to distribute its own software and to facilitate transactions between third-party developers or advertisers and customers. While charges can vary, the company usually takes a 30% platform fee for all third-party transactions.

Getting exact numbers on App Store revenue is difficult. This is in part because Apple's business lines are so integrated that it can be difficult to distinguish between revenue sources. For example, an estimate by Deepwater Asset Management suggests that the company earned approximately $27 billion in 2022 from software and ad sales through the App Store. Another analysis published by CNBC suggests that Apple took in closer to $85 billion from App Store fees in that same year. In all cases, however, the App Store is undeniably a large and growing part of Apple's overall revenues.

iOS Devices

The term iOS devices refers to the iPhone and iPad, which run on Apple's proprietary iOS operating system. It is difficult to overstate how important these two devices, and particularly the iPhone, have become to Apple's business model. The iPhone alone, through sales, software and other revenue, accounts for more than 50% of the company's revenue. The iPhone has roughly 28% of the overall smartphone market.

In a very real way, modern Apple is a phone company that also makes computers. Based on most published information, iPhone sales appear to generate around $180 billion to $200 billion per year for the company.

Selling the iPhone is Apple's single biggest business, which has caused some concerns for the company in recent years. During the late 2000's and much of the 2010's, Apple could count on frequent upgrades from existing users as technology and features advanced significantly between models. However in recent years the iPhone has hit a plateau known as "commodification," in which the phones become less a feat of engineering and more of an ordinary product. This has significantly downshifted upgrade sales to existing customers, who have begun getting longer life from their existing phones.

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Macintosh Computers

The Macintosh computer is central to Apple's brand and history, and remains one of the company's core product lines. Today, these tend to come in two versions: high-powered desktop machines, typically associated with media creation, and more ubiquitous laptops, such as the MacBook Pro and the MacBook Air, typically prized for their small size relative to capabilities.

Macintosh computers are known for their design, reliability and performance, but the proprietary approach which allows that high-functionality also makes them more expensive with little software interoperability. Macs occupy about 15% of the computer market share.

Despite the company's legacy as a computer maker, today Macintosh sales only make up about 8% of Apple's overall revenue. In Q1 2024, this division brought in about $7.45 billion, and many analysts expect that to decline further. What is less clear is what drives these numbers. The computing market continues to diversify, as users spread more of their activity across phones, tablets and other devices. It is not entirely certain whether Mac sales represent a change in Apple's fortunes or a redistribution across the entire industry, as users who would otherwise have bought a computer now buy a tablet or a high-end phone.

Leadership: Apple Executives

Apple is led by CEO Tim Cook, a longtime computer industry executive. The company's leadership team also includes:

1. Tim Cook – Chief Executive Officer (CEO)
2. Jeff Williams – Chief Operating Officer (COO)
3. Luca Maestri – Chief Financial Officer (CFO)
4. Katherine Adams – Senior Vice President and General Counsel
5. Eddy Cue – Senior Vice President of Services
6. Craig Federighi – Senior Vice President of Software Engineering
7. John Giannandrea – Senior Vice President of Machine Learning and AI Strategy
8. Greg "Joz" Joswiak – Senior Vice President of Worldwide Marketing
9. Sabih Khan – Senior Vice President of Operations
10. Deirdre O'Brien – Senior Vice President of Retail
11. Johny Srouji – Senior Vice President of Hardware Technologies
12. John Ternus – Senior Vice President of Hardware Engineering

Apple’s leadership page lists more of the team.

Apple Stock Split History

Apple IPO’ed under the ticker $AAPL December 12, 1980. It has since undergone five stock splits :

• June 16, 1987 – 2-for-1 Split
• June 21, 2000 – 2-for-1 Split
• February 28, 2005 – 2-for-1 Split
• June 9, 2014 – 7-for-1 Split
• August 31, 2020 – 4-for-1 Split

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Apple Criticisms and Legal Challenges

Apple is one of the most profitable, successful technology companies in the world. Unlike many firms operating in this space, the company does not tend to rely on outside funding, debt, taxes or other financial mechanics to generate its outsized profits. Instead, most of its money comes from direct consumer/client-based revenue. This gives Apple a more steady and, arguably, stable financial base.

However, it has also made the company vulnerable in a few key ways. Two important issues to pay attention to with Apple are antitrust and innovation.

In recent years, Apple has come under increasing scrutiny for potential monopolistic practices in the smartphone market. In early lawsuits the company has had real, but mixed, success defending itself, but at time of writing the trend of criticism and the risks of antitrust enforcement appear to be growing.

At the same time, Apple has been criticized for having an innovation problem. Despite high-budget advertising campaigns to brand new products like the Apple Watch and ApplePay, the company's last two industry-defining products were the iPhone and iPad. It has been 14 years since the company had a true breakout success, and many analysts agree that both of these product lines have hit a development plateau. This intersects with the company's antitrust problems, as growing dissatisfaction with some of Apple's latest iOS designs have led more users to complain about using Apple's products through lock-in than choice.

Consider speaking with a financial advisor for professional advice about Apple’s investment potential.

The Bottom Line

Apple is a technology hardware and software company based out of Cupertino, California. The company has operated since 1976. While it historically began making computers, today it is primarily a leader in the phone, tablet and device space, and is the largest company in the world by market cap.

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