An Apple A Day: The Fall and Rise of Apple, Inc.

A little over a decade ago, around 1996, the world believed that Apple Computer was on its deathbed. The company lacked a marketing plan. Its less efficient computers were priced significantly higher than the competition. And by 1996, the company had fallen out of the top 5 in U.S. sales. Nearly 15 years later, on May 26th, 2010, a transformation was completed. Wall Street valued Apple at $222.12 billion and Microsoft at $219.18 billion. Apple is now only second only to Exxon Mobil in market capitalization. We can officially call Apple the new “King of Tech”.

Surpassing Microsoft marks one of the most dramatic turnarounds in the history of business. It is a change that has been spurred by persistent innovation and an unrivaled mass appeal. While Microsoft still maintains a wide lead over Apple in the operating system battle with nearly 90 percent of the market, Apple has achieved its success by expanding to a new market, the personal digital device market. Instead of putting its product in your house, Apple has managed to put its product in the hands of nearly 1 in 3 Americans. This success hasn’t come because Apple has tried to beat Microsoft at its own game; rather Apple’s success can can be attributed to the “user-friendly” reputation of its products.

The iPod, released in 2001, marked the beginning of the Apple revolution. The personal digital device market had developed a mainstream market with appliances like digital cameras and camcorders and Apple decided to market what they believed would be the first convenient, functional, and highly marketable MP3 player. When the product released on October 23rd, it was an instant success. While it didn’t necessarily introduce many new features (except for the Apple click wheel), it appealed to all ages, and it sold quickly. The “1000 songs in your pocket” marketing campaign sparked new interest in MP3 players, especially the iPod.

The introduction of the iTunes Music Store, the online digital media store run by Apple, in 2003 made the product substantially more user friendly. This market place that Apple created allowed users to download music from the biggest music library on the web, directly to their MP3 players. The store is incredibly easy to navigate and quickly became the number-one music vendor in the United States. iTunes managed to fuel sales of the iPod, and today Apple’s iPod comprises nearly 75% of the MP3 player market; the iTunes Store accounts for 70% of all worldwide digital music purchases.

Apple has been successful with its other, more expensive products as well, because it continues to innovate and make its products even easier to use. The iPhone, iPad, and MacBook popularized consumer-friendly features which quickly caught on. Apple’s iSight webcam, for example, was by no means unique. Yet since Apple was one of the first companies to include a webcam in all of its laptops and its iMac computers and it bundled its Photo Booth software with it, Apple computer were know for their webcams. And just as Apple lagged and struggled to innovate in the 1990s, competitors in the computer and electronics industries simply cannot compete with the user-friendliness, and efficiency of Apple products.

When we look at Apple and Microsoft today, we see two incredibly successful businesses with two very distinct approaches to the future of the personal computer. Microsoft strives to maintain the status quo, and remains the most popular personal computer software manufacturer. It rarely updates products in any dramatic fashion. Apple, on the other hand, remains determined to appeal to consumers through continuous innovation. However, Microsoft remains the dominant force in desktop operating systems. Apple is also beginning to see competition from Google on its mobile devices front.

But this should not detract Apples already unbelievable achievement. Steve Jobs has resurrected the company because he “saw way early on, and way before Microsoft, that hardware and software needed to be married into something that did not require effort from the user,” said Scott G. McNealy, the co-founder and longtime chief executive of Sun Microsystems. Now Apple has established itself as arguably the most powerful force in the technology world. Given the company’s current momentum, it seems poised to pull even further ahead of the competition in the coming years.

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