Chapter Introduction
Headquartered in Cupertino, California, Apple Inc. experienced many challenges throughout its
usiness history. In 1997 Apple's share price was $3.30. Fifteen years later its share price rose to
$ XXXXXXXXXXalthough its share price decreased to $425 the following year). In 2014 Apple split its
stock 7-1, meaning each share was worth a seventh of its previous value, and stockholders were
given seven extra shares of stock to make up the difference. Apple's stock price has become a
key benchmark for the technology sector. For the past eight years, Apple earned first place
among Fortune magazine's World's Most Admired Companies. To millions of consumers, the
Apple
and embodies quality, prestige, and innovation.
Although companies tried to copy the Apple business model, none have been able to discover
what it is that makes Apple so unique. Apple is ranked first in innovation by Fortune magazine
and is a market leader in the development and sales of mobile devices. Many believe Apple's
success stems from a combination of several factors, including the remarkable leadership skills
of former CEO Steve Jobs, a corporate culture of enthusiasm and innovation, and the high-tech
products for which Apple is known. These combining qualities allow Apple to revolutionize the
technology and retail industries.
Apple’s History
Apple's first product, the Apple I, was vastly different from the Apple products most are familiar
with today. This first handmade computer kit was constructed by Apple cofounder Steve
Wozniak. It lacked a graphic user interface (GUI), and buyers had to add their own keyboard and
display. Cofounder Steve Jobs convinced Wozniak that it could be sold as a commercial product.
In 1976 the Apple I was unveiled at the Home Brew Computer Club and put on sale for $666.66.
Jobs and Wozniak continued to create innovative products. Soon their new company, Apple
Computer Inc., surpassed $1 million in sales. However, the mid-1980s
ought difficult times for
Apple. In 1983 the company introduced the Apple Lisa for $10,000. The product flopped. In
1985 Steve Jobs was ousted after internal conflicts with the Apple CEO. Its computer products
the Mac I and the Newton were not successful, and the company underwent several CEO
changes. With declining stock prices, the future of Apple was in jeopardy.
Steve Jobs returned to Apple in 1997 to try and save the struggling company. The return of Jobs
introduced a new era for Apple. Jobs immediately began to change the company's corporate
culture. Before Jobs's return, employees were more open about Apple projects. After he returned,
Jobs instituted a “closed door” policy.
Aside from efforts to protect intellectual property internally, Jobs was also a proponent of using
litigation against rival companies suspected of patent infringement. Apple sued Nokia, HTC, and
Samsung in 2009, 2010, and 2011, respectively. Perhaps the most notable lawsuits were made
against Samsung, where both companies filed suits against each other across nine countries over
a three-year period. In total, Apple and Samsung filed over 40 patent infringement lawsuits and
counter suits related to intellectual property rights. The companies decided to end litigation
outside of the United States, choosing to focus instead on cases that are still active in the United
States. Today Apple continues to remain vigilant in protecting its technology and ensuring
information remains proprietary.
Jobs also created a flattened organizational structure; rather than go through layers of
management to address employees, he addressed them directly. Perhaps one of the most
noticeable changes, however, was Apple's expansion into new product lines within the
electronics industry. In 2001 Apple launched the iPod—a portable music player that forever
changed the music industry. The company also introduced iTunes, a type of “jukebox” software
that allowed users to upload songs from CDs onto their Macs and then organize and manage their
personalized song li
aries. Two years later Apple introduced the iTunes Store, where users
could download millions of their favorite songs for $0.99 each online.
The introduction of the iPhone in 2007 was a turning point for Apple and the beginning of a
paradigm shift for the entire world. The iPhone was a revolutionary new smartphone with the
music capabilities of an iPod. The success of the iPhone cannot be understated. In 2015 iPhone
market share was nearly tied with Android smartphones in the United States. The new generation
iPhone 6 accounted for close to half of all new smartphone sales.
The same year that Apple introduced the iPhone, Jobs announced Apple Computer, Inc. would
e renamed Apple Inc. This signified that Apple was no longer just a computer manufacturer but
also a driver in consumer electronics. Some saw this as a shift away from computers toward
consumer electronics such as Apple TV, iPods, iTunes, iPhones, and iPads. However, it may be
more accurate to say Apple is reinventing computers, or at least what they look like and how
they are used. With the introduction of tablet computers such as the iPad, Apple began to take
market share away from its top competitors in the computer industry, but in the process sales of
its Mac computer line were also cannibalized by consumers opting for a tablet. Sales of desktops,
laptops, and netbooks began to decline after tablet computers were introduced. Although analysts
elieved tablet sales would continue growing at a rapid rate, the tablet market became saturated
with fewer than expected customers upgrading their cu
ent tablets to newer versions. Because
nearly half of all U.S. households own at least one tablet, this has translated into stagnating
industry growth and low sales. Consequently, just as Apple cannibalized its own line of Mac
computers with the introduction of the iPad, it appears that its newest iPhone, which features a
larger screen, is eroding the iPad market. The dynamic fluctuation in PC and Mac computer sales
and the frequent introduction of new smartphones make it difficult to predict future sales of
Apple products. Only time will tell if Apple's devices improve in market share or are overtaken
y a rival platform.
Apple’s Corporate Culture
Apple's transition from a computer to a consumer electronics company is unprecedented—and
hard to replicate. Although many can only speculate about why Apple succeeded so well, they
tend to credit Steve Jobs's remarkable leadership abilities, Apple's highly skilled employees, and
its strong corporate culture.
The concept of evangelism is an important component of Apple's culture. Corporate evangelists
efer to people who extensively promote a corporation's products. Apple even had a chief
evangelist whose job was to spread the message about Apple and gain support for its products.
However, as the name evangelism implies, the role of evangelist takes on greater meaning.
Evangelists believe strongly in the company and will spread that belief to others, who in turn
convince other people. Therefore, evangelists are not only employees but loyal customers as
well. In this way, Apple was able to form what it refers to as a “Mac cult”—customers who are
loyal to Apple's Mac computers and who spread a positive message about Macs to their friends
and families.
Successful evangelism only occurs with dedicated, enthusiastic employees who are willing to
spread the word about Apple. When Jobs returned to Apple, he instituted two cultural changes:
he encouraged debate on ideas, and he created a vision employees could believe in. By
implementing these two changes, employees felt their input was important and they were a part
of something bigger than themselves. Such feelings created a sense of loyalty among many
working at Apple.
Apple prides itself on its unique corporate culture. On its job site for corporate employees, it
assures potential applicants that the organization has a flat structure, lacking the layers of
ureaucracy of other corporations. Apple also emphasizes that it does not adhere to the average
work day. Instead, Apple markets itself as a fast-paced, innovative, and collaborative
environment committed toward doing things “the right way.” By offering both challenges and
enefits to applicants, Apple hopes to attract those who fit best with its corporate culture.
Apple also looks for retail employees that fit well in its culture. It wants to ensure that its retail
employees make each consumer feel welcome. Inside Apple retailers are stations where
customers can test and experiment with the latest Apple products. Employees are trained to
speak with customers within two minutes of entering the store. To ensure its retail employees
feel motivated, Apple provides extensive training, greater compensation than employees might
eceive at similar stores, and opportunities to move up to manager, genius (an employee trained
to answer the more difficult customer questions), or creative (an employee who trains customers
one-on-one or through workshops). Apple also offers young people the chance to intern with the
firm, become student representatives at their schools, or work remotely during college as phone
customer support representatives.
Another benefit Apple offers combines employee concerns with concerns of the environment. In
an effort to reduce its overall environmental impact, Apple offers incentives such as transit
subsidies for employees who opt to use public transportation. Additionally, as part of its
long-term commitment to sustainability, Apple is spending $850 million for 25 years of solar
power. Its Cupertino facility runs on 100 percent renewable energy and is equipped with shuttles
for employees. Apple's free buses are powered by biodiesel. Apple also began construction on a
new headquarters facility, named Apple Campus 2. With a budget of $5 billion, the new facilities
will include a fitness center, underground auditorium, and 300 electric vehicle charging stations.
The new buildings, expected to be completed in 2016, will be LEED certified and incorporate
solar technology. The Campus is also conveniently located so that many employees can walk,
ide, or carpool to work. These incentives reduce fuel costs for employees while simultaneously
lowering emissions released into the environment.
Apple’s Ethics
Apple has tried to ensure its employees and those with whom they work display appropriate
conduct in all situations. It bases its success on “creating innovative, high-quality products and
services and on demonstrating integrity in every business interaction.” According to Apple, four
main principles contribute to integrity: honesty, respect, confidentiality, and compliance. To
thoroughly detail these principles, Apple