Apple has an "i" for revolutionary technology. Since its release, the company's iPhone has spurred a revolution in cell phones and mobile computing. It also continues to innovate its core Mac desktop and laptop computers, all of which feature its OS X operating system, including the iMac all-in-one desktop for the consumer and education markets, the MacBook Air ultra-portable laptop, and the high-end Mac Pro and MacBook Pro for consumers and professionals. Apple scored a runaway hit with its digital music players (iPod) and online music store (iTunes). Its popular iPad tablet computer has become another game-changer in the consumer market.
Apple gets nearly 40% of sales from domestic customers. Its international markets are Europe, Japan, Africa, the Middle East, and the Asia/Pacific.
The iPad fills a market niche between notebook computers, e-book readers, and smartphones. With its slightly larger touchscreen display, the tablet has a number of functions, such as playing games, music, movies, and videos; accessing the Web; keeping up with e-mail; and serving as an e-reader for books and periodicals. The company also unveiled iBookstore, used to buy and store e-books. Apple created another revenue stream through the App Store, which the company tightly controls.
The company recently released its iCloud offering, a set of free cloud services used to automatically and wireless store content and push it to multiple iOS (Apple's mobile operating system) devices, as well as Mac and Windows-based computers. iCloud enables simplified convergence among the many Apple devices, encouraging consumer loyalty to the brand. Among one of its benefits is that calendars, contacts, and e-mail are updated across all devices without the need to separately synchronize the data.
Apple's FileMaker subsidiary provides database software. Apple also offers application software that includes iWork (productivity suite), Garage Band (consumer music creation), Final Cut (video film and editing), and Logic Studio (high-end audio recording and production), among others.
Sales and Marketing
Apple sells its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. In addition, it sells a variety of third-party iPhone, iPad, Mac, and iPod compatible products, including application software, and various accessories, through its online and retail stores. Throughout 2012 it operated 250 retails stores in the US and 140 international retail stores.
Additionally, Apple enhances reseller sales by positioning Apple fixtures, merchandising materials, and other resources within selected third-party reseller locations. Through its Apple Premium Reseller Program, certain third-party resellers focus on the Apple platform by providing integration and support services, and product expertise.
Apple continued its path in 2012 as one of the most profitable and fast growing companies in the history of American business. Its overall sales continued to smash company records, skyrocketing by 45% from $108 billion to almost $157 billion in 2012. Its profits also surged significantly, rising 61% from $26 billion to $42 billion.
Double-digit growth continues to be the norm for most of Apple's product lines. Sales of the iPhone and related products were up by 71% for the year, but down from the 87% and 90% increases recorded in the prior two years. Sales for the iPad increased by 59% due to the launch of the new iPad in March 2012 and continued demand for the iPad 2.
Only the iPod saw a decline in sales for the year (by 25%) due to the ongoing contraction of the overall market for MP3 players.
Apple provides regular updates to its iPad, iPhone, and iPod products, generating excitement and buzz with additional features, faster speeds, and (sometimes) lower price tags. In 2012 it launched both the iPhone 5 (larger display, improved camera, longer-lasting battery) and the third-generation iPad (Retina display, quad-core graphics processor, 5 megapixel camera). A 2011 release of the iPhone 4 finally addressed the complaint that it was only available for use with AT&T - that year it became available on the Verizon Wireless network, substantially increasing its reach across the US.
Always a secretive company about its product designs, Apple has brought some chip design expertise in-house to reduce its dependence on outside semiconductor suppliers. The company still relies on silicon foundries (contract semiconductor manufacturers) for the physical fabrication of its chips, but the moves mean fewer outsiders will be involved in future designs of the iPad, the iPhone, and other mobile devices. Apple outsources production of hardware products to a few partners, primarily Hon Hai Precision Industry and Quanta Computer.
In August 2012 Apple won a patent infringement suit against Samsung Electronics in an ongoing battle between the two companies. The $1 billion verdict (Apple originally sought $2.75 billion in damages) found that Samsung violated a number of Apple patents related to elements such as the "bounce back" effect and physical design of the iPhone. While the case could eventually have far-flung consequences in the North American smartphone market, particularly for phones that use the Android operating system, the verdict is complicated by the fact that a South Korean court decided the same week that both companies had infringed on each others' patents, handing out bans and fines to both sides. Samsung, which continues to make some components for Apple's iPhone and iPad products, appealed the verdict.
Mergers and Acquisitions
Apple is "on the prowl" for acquisitions in the words of CEO Tim Cook, having made some two dozen mostly small purchases since late 2012 as it develops new products and improves existing ones. In 2014 it announced plans to pay $3 billion for the Beats companies, which includes streaming music service Beats Music and the headphones and speakers company, Beats Electronics. With the acquisition of Beats Music, Apple will have its own streaming music service to position itself against other players such as Amazon, Pandora, and Spotify. Also that year it bought start-up LuxVue Technology, which makes power-efficient displays for small consumer devices.
Apple's high-profile co-founder and former CEO Steve Jobs died on October 5, 2011. Tim Cook, who handled the company's day-to-day operations as COO during Jobs' leave prior to his death, was named CEO. Jobs left Apple with a stable of innovative products and a revolutionary distribution system for applications that continues to stimulate demand for those products.
Once the world's top PC maker, Apple was relegated to relative niche status in a market dominated by Microsoft Windows-based PCs. The company continues to lead the market in terms of design innovation. The graphical interface and form factor of Apple's computers reflect the aesthetic of Jobs, who had long championed the importance of visually attractive, user-friendly design. The features that distinguish Macs allowed the company to maintain a loyal following willing to pay premium prices and overlook any interoperability issues with Windows (a factor that Apple largely addressed with its OS X operating system).