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The Apple Story

Apple, formerly known as Apple Computer, is today a multinational corporation that creates consumer electronics, personal computers, computer software and commercial servers & content.  Founders Steve Jobs and Steve Wozniak created Apple Computer on April 1, 1976, and incorporated the same in 1977. Back then the company was a manufacturer of personal computers only but they went through a rough patch which coincided with the period when Steve Jobs was ousted from the company.

Today Apple’s market capitalization is higher than Google and in fact from Microsoft as well, which still dominates the operating system platforms for desktops/laptops. Apple dropped the word computer from the company name in 2007 post their launch of IPod and ITunes. 2007 also marked their foray in the smart phone category which as we know revolutionized the entire category.

Apple financial statsThe first iPhone came in giving its consumers new and innovative features, such as a multi-touch interface and a new operating system. And they adopted a unique strategy of introducing new phones every year, where competition like Nokia believed in providing customers with phones that last for a lifetime. The models that followed the first generation are the iPhone 3G (July 2008), the iPhone 3GS (June 2009), the iPhone 4 (June 2010), the iPhone 4S (October 2011), the iPhone 5 (September 2012), the iPhone 5C / 5S (September 2013) and the iPhone 6 (September 2014).

Sales of the iPhone have risen strongly over the years, from around 1.4 million iPhones sold in 2007 to almost 170 million units worldwide in 2014. In total, Apple has sold more than 590 million new iPhones from 2007 to 2014 all around the world. In 2013, Apple has held a market share of 15.3 percent of new smartphone sales worldwide.

When it comes to smartphone upgrades, there are three different types of people. There are those who can’t wait to get their hands on any new model their brand of choice churns out. There are those who upgrade their device whenever their contract is up for renewal and there are those who stick to their device until it no longer works or becomes totally obsolete. Apple has truly taken innovation to a new level and it benchmarks its own products an year on year keep coming up with a better version.  And this strategy has worked wonderfully well for the company as they tapped a the first segment that is constantly wanting to update their gadgets. Although this segment may be a smaller segment as compared to the others but this segment has deeper pockets and hence in terms of revenue Apple scores far above competition.

Apple CEO Tim Cook told Bloomberg Businessweek in an interview last year, “We never had an objective to sell a low-cost phone. Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost.” Even his predecessor Jobs believed in generating more profits than capturing share. The company has always come up with products that are distinctly differentiated, making its products unique and attractive to consumers. They focussed on a particular customer segment and maintained a premium price that has created an artificial entry barrier for all its competitors.

Interestingly, was going through a Gallup study which revealed that iPhone users tend to upgrade their phones more frequently than those using Android devices. This chart shows how often smartphone users in the United States upgrade their devices.

apple iphone upgrade cycle

This clearly tells us that if there is well thought out long term strategy that is based foresight and on a excellent product / its experience the outcome will be beautiful. Take examples of companies that didn’t move with time IBM, Canon, etc they had excellent products but they didn’t move on and got stuck and today are paying the price for the same. Apple went on from Personal Computers to now Smart phones and media/content which is how they are at the the top of the pyramid.

Apple product portfolio