Apple Hits 30 on a High Note
Walaika K. Haskins, newsfactor.com
Thirty years ago today, a couple of college dropouts filed papers to start a company to build and sell personal computers. Some people might have wondered about the wisdom of embarking on such a venture on April Fools' Day, but Steve Jobs and Steve Wozniak had the last laugh.
In the years since the pair started Apple Computer in a Los Altos, California, garage, the company has changed the face of technology. It invented the graphical user interface (GUI) for home computing, which enabled anyone to use a computer with the click of a mouse. And while Apple does not command anywhere near the market share of its largest competitors in the PC arena, it has maintained a reputation for hipness and innovation.
Today, the company is enjoying fantastic success with the iPod media player and iTunes online music store. Apple has emerged as the leader in the digital-music market, and as it hits the big 3-0, its profile has never been higher. The company earned $14 billion in revenue for fiscal 2005 and employs 14,000 more people now than at the time of its IPO in 1980, when its workforce totaled 1,000. Its new computers featuring Intel processors have won praise and fueled speculation about a renewed war with Microsoft.
But Apple also is dealing with its share of headaches. Two legal imbroglios in Europe and recent reports of security flaws in the Mac OS have people wondering whether the company can continue to innovate amid the distractions that come with great success.
Changing the World
Missteps are nothing new to Apple. Remember the Newton personal digital assistant from the early nineties? But one thing that neither competitors nor critics can dispute is that through Apple, Jobs and Wozniak changed computing and, arguably, the world.
In 1977, the company's first mass-produced machine, the Apple II, was a big success and helped to usher in the home-computing era. It eventually accommodated a 5 1/4-inch floppy disk drive for external storage, an innovation that was an industry watershed.
In 1983, Apple introduced the Lisa, the first PC to offer a GUI and a mouse. At $9,995, it was a commercial failure. But one year later, a memorable ad during the Super Bowl heralded the arrival of what would become Apple's flagship product for many years: the Macintosh. Like the Lisa, the Mac's interface offered an alternative to entering line-by-line commands, and soon the terms "windows" and "point and click" became commonplace.
Jobs and Wozniak both left the company in 1985, Jobs forced out after a power struggle and Wozniak moving on to pursue other interests. A little-remembered third founder, Ronald Wayne, sold his 10 percent stake in Apple for $800 only a couple of months after the company started.
Jobs returned to Apple in 1997 and a year later the company rolled out another signature product, the iMac. With its colorful eggshell design, the machine was hailed as a radical reimagining of the PC and pulled the company out of a financial slump. It was followed in 2001 by OS X, Apple's Unix-based operating system, which earned praise for its stability and ease of use.
The iPod also made its debut in 2001, and iTunes emerged two years later. Since then, Apple has sold more than 42 million media players and the online music (and now video) store has sold more than one billion songs. Steve Jobs is now enough of a presence in pop culture to be lampooned on Saturday Night Live, and Disney's acquisition in January of Pixar Animation has made him the majority shareholder of the company Walt built.
Not too shabby for someone who started by assembling motherboards in his parents' garage.
Bumpy Road Ahead?
The latest news has not been all good for Apple, however. In February, security firms warned of critical flaws in OS X and several hackers took that as their cue to launch malware attacks against the system. Analysts said that the flaws have always been there, but hackers are only beginning to exploit them now due to the computer maker's heightened profile.
Apple also has been in the headlines lately because of recent challenges in France and England. In France, the government is trying to pass a law that would force Apple, and other companies, to share copy-protection formats with competitors. Right now, songs downloaded from iTunes will only work on an iPod. Many industry analysts maintain that if such a law takes effect, making the iPod compatible with rival music services, Apple would simply end sales of the iPod in France.
But even this scenario has a potential silver lining. "Apple could say that they are just pulling out of [France], but people in France can still access the Swiss or Canadian French iTunes site and buy an iPod by going across the border," said Mukul Krishna, an analyst at the consulting firm Frost & Sullivan.
What's more, the French government is at odds with teenagers and young adults over a new law making it easier for employers to fire people within the first two years. If young people see Apple as an antigovernment ally, and if the iPod suddenly becomes unavailable in France, the player could become even more of a cultural icon there than it is now, Krishna said.
In England, Apple is being sued by Apple Corps, the Beatles' record company, over the use of the Apple Computer logo on iTunes. At issue is whether a 1991 trademark agreement prohibits the computer company from using the Apple image to sell music. Apple Computer claims the provision does not apply because iTunes is an entity for digital distribution of data, not for the creation of music.
A Potential Bruise
Beyond any legal entanglements on foreign shores, Apple faces additional challenges with the iPod, according to Nitin Gupta, an analyst at the consulting and research company Yankee Group. As the company continues to develop and improve its line of iPods that play video, Gupta said it will have a more-difficult time gaining access to video content that it can sell on iTunes.
"It's going to be important for them to come up with a strategy to bring a lot more content to their solution and have a comprehensive library of content," Gupta said.
With music, Apple only had to go to four major record labels and say let's make a deal, Gupta said, but a similar arrangement is impossible with video because so much of it is owned by a smorgasbord of sources. Many owners of video content are looking into ways to sell it independently or are tied up by licensing agreements.
"Apple really does now [control] the market and there are no signs of them letting go of the market," Gupta said. "But it is going to be a challenge for them to move into video."
It's shaping up to be another memorable 30 years.
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