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Apple Company

Executive summary

The technology market is developing at a startling rate in recent decades. New computer companies raise their capital and displace from the market even more powerful but still less advanced competitors every year. The advantage of such companies is that they can stay at the peak of their development for a long time because after the market saturation by one product, they immediately produce another, which enjoys the same high demand. The future belongs to these companies as they invent and produce new devices for the different spheres of life. In my work, I want to introduce one of these giant companies, which has already won the love of millions of customers but still continues to evolve.

 

The name of the company is Apple Inc., formerly Apple Computer, Inc. It is the US technology company based in Cupertino City, California. Steve Jobs, Steve Wozniak, and Ronald Wayne founded the company on April 1, 1976. It designs and develops software, online services, and consumer electronics. Up to January 9, 2007, the official name of the corporation had been Apple Computer for 30 years. Disclaiming the word Computer in the name demonstrates the change of focus of the Corporation from its traditional computer market to the consumer electronics market (Petrov 186).

The company produces such devices as smartphone iPhone, iPad tablet, PC Mac, portable media player iPod and smart watches Apple Watch. Developed software comprises operating systems OS X and iOS, a media-player iTunes, web browser Safari, iLife and iWork applications. Online services provided by the company include Mac App Store, iTunes Store, iCloud and iOS App Store. Apple is the world's largest company in the field of information technology by the proceeds of volume, the first in the world company by assets and the third largest world manufacturer of mobile phones.

Company overview

In 2014, Apple became the largest public corporation in the whole world by market capitalization, except that the company was the first one in the United States the cost of which exceeded 700 billion dollars. The company has 115,000 workers on a permanent basis and more than 450 retail stores in 16 countries as of 2015. Annual revenues of the company amounted to 233 billion dollars as of the end of the fiscal year in 2015. As of October 16, 2012, the company received 5440 patents, including 4480 pieces of inventions and 914 pieces of design projects.

During its existing, the Apple Company has devoured different companies that have operated in the IT market several times. Among the largest deals were buying such companies as NeXT in 1996, for more than $ 400 million; PA Semi eight years ago, for almost $ 300 million; Quattro Wireless six years ago, for $ 275 million; Siri in 2010, for $ 200 million; Anobit Technologies in 2012, for about half a billion dollars; and others.

The Apple Company managed to achieve the success through the effective management of Steve Jobs, who is famous throughout the world. Under his management model, a true leadership consists of 10 parts of all leader functions, but the emphasis is on the strict control of all processes in the company. The hierarchical model that works at Apple since the days of Steve Jobs is very important for the successful development of the company. The model is presented in the figure below.

image1.jpg

Fig. 1. Steve Jobs and colleagues.

One of the differences between Apple CEOs John Sculley and Steve Jobs was the way of thinking about the organizational structure of the company. John Sculley saw the future of the functional organizational structure and eventually built it after the departure of the company's founder. Contrarily, Steve Jobs has always focused on the product, and Macintosh team has been a separate design team which has done everything separately from the main company. Steve was right: after almost twenty years, most companies use a matrix structure following the example of Apple. The functional organizational structure has remained in the last century.

In 2010, a nonprofit organization Climate Counts dedicated consumer focus towards green companies, having given 52 points out of 100 to Apple, which puts Apple in the highest category of "On the Road". It was a leap forward compared to May 2008, when Climate Counts gave only 11 points out of 100 to Apple, which placed the company in last place among manufacturers of electronics.

Industry analysis

The company operates in the areas such as hardware, software, consumer electronics and digital distribution. A schematic representation of dynamical changes of the company's products is presented on the picture below. As it is seen from the image, periods of rapid development of the company came at a time when Steve Jobs was the CEO of the company.

image2.png

Fig. 2. Structure of Apple company ( "Apple, MacIntosh & Mac - Evolution." University of Helsinki. Web. 19 Apr. 2016.)

The structure of Apple products includes the following: iPhone mobile phones; iPad tablets; Portable multimedia players - iPod classic, iPod Shuffle, iPod Nano and iPod Touch; professional notebooks - MacBook Pro; ultrathin laptops - MacBook Air; Mac Mini system units of personal computers in 2005; PCs "all in one" which includes a monitor, system unit, AV-periphery - iMac, submitted in 1998; Mac Pro-desktop class "workstation"; Thunderbolt Display- computer monitors, Mac Pro Server and Mac Mini Server; Apple TV- media players, Magic Mouse, Magic Track pad, and others. In addition, the company manufactures accessories in software for these products.

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The information technologies market now occupies the most significant share of the sales markets. It absorbs the largest share of investment, and thus brings the most profit. This market is very promising, since many companies are reporting early development of innovative projects using artificial intelligence. Already, many companies are providing such amazing products as Apple Watch, Google Glasses, Google Car, and so on. Ten of the most respected IT companies in the world include companies such as Google, Sony, Canon, Apple, Microsoft, Samsung, Intel, Philips, Amazon, and IBM. In 2014, Apple was ranked fourth on the list, which shows its importance and competitiveness. These giant companies, including Apple, invest heavily in the development of artificial intelligence and its application to improve many existing devices and creating new ones, such as Drones delivery of goods. However, it should be noted that many of the companies that are present in the list are not only competitors but also the partners of the Apple Company.

At the International Developers Conference on June 6, 2005, Steve Jobs announced that in 2006, Apple would start producing Macintosh computers with Intel processors. Indeed, on January 10, 2006, New MacBook Pro and iMac were presented as the first Apple computers which used processors Intel Core Duo.

On August 7, 2006, Apple completely shifted the entire Macintosh line of computer chips to Intel. Power Mac, iBook, and PowerBook were laid off, and their heirs were MacPro, MacBook and MacBook Pro. Apple also introduced a program called Boot Camp to help users install Windows XP or Windows Vista on a Mac, along with Mac OS X.

Fundamental and technical financial analysis

The success of Apple in this period led to the growth of its shares. Between 2003 and 2006, the price rose more than ten times - from $ 6 per share to $ 80, and in May 2007, the price was over $ 100. On February 25, 2012, stock price of Apple made a new record - up to $ 535.4 per share. At the beginning of 2014, the price of Apple shares was about $ 650 per share, so the company decided to break the shares. Therefore, each share was divided into seven shares worth $ 92 each. Thus, the value of financial securities, which were in the hands of shareholders, has not changed, but the number of shares has.

In the period from 2009 to 2011, the company earned $ 38 billion, of which $ 21 million was paid as taxes to the US Treasury. However, already in 2013, it was known that the company had earned more than 37 million net profit for a year, that is indicating the rapid development of the company.

The following table clearly demonstrates the dynamics of the financial condition of the company during last thirteen years (see table 1). It shows the turnover of the company, its net income, assets, and equity (EDGAR Online 46). However, this table does not provide data for 2001, the first year when the assets, turnover and value of the company were on par with the figures for 2002, but the net profit was then equal to -0,025 billion dollars. It means that the company suffered losses. Now the company has reached such heights that there is every reason to believe that such incidents will not happen again.

Table 1

Financial results in billions dollars of USA

Year

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Turnover

5,7

6,2

8,3

13,9

19,3

24,6

37,5

42,9

65,2

108,3

156,5

170,9

182,8

233,7

Net profit

0,07

0,07

0,3

1,4

1,99

3,5

6,12

8,24

14,01

26,9

41,7

37,04

39,5

53,4

Assets

6,3

6,8

8,05

11,6

17,2

24,9

36,2

47,5

75,2

116,4

176,1

207

231,8

290,5

Equity

4,01

4,2

5,08

7,5

9,98

14,5

22,3

31,6

47,8

76,6

118,2

123,5

111,5

119,5

Source:EDGAR Online. Apple Inc. Annual Report, 2005.

Competitor analysis

In the last years, there has been a huge competition among two world-known companies, namely Apple and Samsung. Samsung is the main competitor of Apple as sales of its smartphones are gradually catching up with the famous iPhone, which is why Apple's share of the market has been slowly declining for several years.

The market shares of such companies as Nokia and RIM declined to a critical parameter, which does not allow competing with the giants like Apple and Samsung. Despite nearly a dominant position in the technology market, the company Google has become on a par with Apple and Samsung. Therefore, thanks to the Android operating system, sales of Google's smartphones increase by about 5% every year.

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Production of little-known Chinese brands is becoming more popular in the market. Such manufacturers as Huawei, Meizu, Xiaomi, and others literally breathe in the back of Apple and Samsung. Due the combination of low price and satisfactory quality, these manufacturers have gradually increased their market shares, especially in Europe.

Company Microsoft with its sensational product Windows Phone gathered momentum only in the first period after release. Although the Corporation presented new products in 2015 fiscal year, they have not yet shown the expected success precisely because they have increased corporate expenses in the total amount by 35%. Microsoft stopped supporting XP and put all their efforts on the development of a new version of the OS, which can later compete with iOS. In general, almost all segments of the Corporation are afloat and give good prospects for future development. However, now, Microsoft is not a direct competitor to Apple (Khan Ali 997).

In 2011, the HTC manufacturer began to increase its sales rapidly. In just two quarters, the company's sales have doubled. Even then, Apple realized that a list of its competitors can be extended to another company. HTC actively updates the device range, offering not only inexpensive solutions in the same price segment as Apple, but also interesting and balanced products. In addition, in 2011, the company actively promoted their devices in the global market. However, only two years later, HTC sales were down 35%. Now the company is an outsider in the Apple competitors list. However, the company looks forward to 2016, in which it has already started selling the helmet of the virtual reality - HTC Vive, challenging Mattel View-Master Virtual Reality Starter Pack, which is a product of Apple.

Conclusion

To summarize, it should be noted that the Apple Company is one of the strongest players in the IT segment. For the most part, its great success is bound to the great managers, talented designers and engineers, and, of course, the brilliant marketing strategy. Thanks to innovative technology and aesthetic design, Apple has created a unique reputation comparable to the cult in the consumer electronics industry. Strategic thinking of the founders helped to build a competitive corporation and to bring it to the leaders in the international market. In order to maintain their image and keep pace with the times ahead of its competitors, the company is making enormous investments in new technologies and development of new devices.

There is a tough competition in the information technology market, but the Apple Company has already absorbed several companies since its foundation, and it indeed has an experience in the conduct of the competition. The company is profitable to invest in because of its net profit growing every year in the first place. Secondly, the market of IT is really the best area for investment in the modern world. However, the greatest benefit is received by those who managed to buy the company's shares during the period of its development, when their cost was in a few dozen times cheaper. Sales growth and expansion of the range which the company is now engaged in are a great opportunity to increase its profits, win new fans, confirm its reputation, and beat the competition some more times.

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