Apple Inc. is an American multinational technology company that has been widely credited for the revolution of personal computers. Headquartered in Cupertino, California, Apple engages in the design, development and sale of consumer electronics like computers (iMacbook), smartphones (iPhone), tablet computer (iPad) portable media player (iPod), and the latest additions; The Apple Watch and the Apple TV digital media player.
The company also develops software for all of its products and provides online services. As of May 2016, Apple Inc is the most valuable company in the world, (a title it has held for 4 consecutive years) with a net worth/market capitalization of $586 billion. For the year 2016, Apple made $53 billion in profits making it the most profitable company in the world from sales revenue of $233.27 billion. Apple’s value is often surpassed by its fellow tech giant Goggle (now Alphabet), and faces competition from the likes of Facebook, Microsoft, and Amazon.
How The Tech Company Came About
Apple was birthed on April 1, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne to enable them sell their very first computer, The Apple I. Apple I which was single-handedly developed and designed by Wozniak in Job’s bedroom and garage became the very first computer to make use of a keyboard and a normal TV screen for display. Apple I sold for $666.66 each, an equivalent of $2,772 in 2016 dollar. Its commercial success lead the founders to form Apple Computer Incorporated on January 3, 1977. However, before this time Ronald Wayne sold his share of the company to the other two co-founders for $800.
Apple Inc. received a massive funding of $250,000 from multimillionaire entrepreneur Mike Markkula who later became the second CEO of the company. Thanks to his funding, Apple was able to launch their second product into the market- The Apple II which was also a commercial success. Faced with competitors like IBM and Microsoft, Apple upped their game with a third product called the Apple III.
It wasn’t long until Apple began experiencing massive growth rate. Annual sales grew exponentially from $775,000 to $118 million in the 1980’s. By the end of 1980, Apple Inc launched its IPO selling a share at $22. The launch made Apple the company with the highest generating capital and in turn made hundreds millionaires.
Challenges And More Successes
Like every other major tech company, Apple hasn’t been without challenges. After yet another commercial success with the launch of the Jobs-innovated Macintosh in 1984, Jobs was booted from the company in 1985 following an infighting. In Jobs’ absence between 1985 and 1997, Apple’s productivity waxed and waned.
However, the tech company was back on its feet after Jobs returned as an adviser in 1997. He later replaced the then CEO and revamped the entire company. Apple launched into a new era with the release of iMac which was followed by The MacBook Pro, its first laptop with Intel processor. Soon the iPod was launched followed by the iPhone in 2007 and the iPad in January 2010.
Apple grew exponentially at a very high rate and by 2009 it made over $1 billion in profits. By 2011, Apple became the world’s most valuable consumer-facing company. The same year, Apple had a financial reserve larger than that of the US government. Apple’s net worth/market value rose to a world-record $624 billion in August 2012 and $700 billion in November 2014. After Jobs’ death in October 2011, the COO, Tim Cook assumed the position of CEO.
Thanks to Apple’s high level of brand loyalty, over 1 billion of its products are in active use as of March 2016. Apple has over 115,000 permanent full-time employees and owns over 478 retail stores in 17 countries. Its iTunes Store is the world’s largest music retailer. Apple has recently ventured into Energy production; under its Apple Energy LLC, it produces and sells solar energy and owns solar farms in Nevada and California. Some of its future projects include the production of electric, autonomous driving cars by 2020.
In 2014, the European Union began an investigation into Apple to discover if they were benefiting from illegal special treatment, aka sweetheart deals from Ireland which exempts them from general tax rules thereby reducing its corporate tax compared to other businesses and increasing the individual party’s benefits. Apple initially struck deals with Ireland in 1991 and later in 2007. The three-year investigation was concluded in August 2016 and the EU Competition Commissioner found Apple guilty of receiving illegal state aid from Ireland. As a result, Apple was ordered to pay $14.5 billion in back taxes and interest.
According to EU Competition Commissioner, Margrethe Vestager; “this selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0.005% in 2014.”
Apple responded to the EU’s conclusion by acclaiming its job creation prowess in the country’s capital of Cork. However, this has been criticized as not enough reason as they only expand their market in Ireland due to the low tax rates. Ironically, Apple is the largest taxpayer in Ireland.
While $14.5 billion would seem small for a company worth almost $600 billion, the opposite is the case from a technical point of view. The tech company made $7.8 billion in the immediate quarter before the announcement. The amount is also 27% of the entire profit the company made in the 2015 fiscal year ($53.4 billion). Also, the EU’s decision on its own was hurtful to the company as its share price dipped a day after the announcement.