The Apple Journey: From near Bankruptcy to World’s Biggest Tech Company

Apple is now at the top of the world’s tech business. Hailed as the first American company to reach USD 3PHP 176INR 254EUR 3CNY 22 trillion market cap, which it briefly achieved on January 3, 2022, Apple has diversified its tech offerings since being founded on April 1, 1976 with its initial focus on computer development. It has become a globally recognized brand. What may be unthinkable in the present would be Apple’s history of nearing bankruptcy.

Apple co-founder and former chief executive officer (CEO) Steve Jobs said it himself in at least one interview: in 1997, Apple was 90 days away from going broke and its entire workforce going jobless. How did things turn around for today’s captain of tech industry? To attempt summing it up in one word: Coopetition.

Coopetition is defined as the act of working together with a person or company who is your business competitor in a way that benefits both of you. How did Apple cooperate with its rivals and how did this affect their future prospects?

PC Wars? Carving computer history

Since at least the Second World War, computers used to be bulky and unable to fit the home despite having a fraction of the processing power we enjoy with our daily drivers today. Technology has progressed thereafter, making computers smaller and more efficient. Computer use had also moved from mainly military purposes to civil as well.

Apple’s entry in the personal computer (PC) industry meant going into an already crowded field. When the company churned out 200 units of their Apple I from 1976 to 1977, there were earlier designs in the market which looked similar to what Apple offered. Take for example Computer Terminal Corporation and their Datapoint 2200 (released 1970), Kenbak Corporation’s Kenbak-1 (released 1971), International Business Machine Corporation and their IBM 5100 (released 1975), Sord Corporation’s M200 Smart Home Computer (released 1977), and the Xerox Alto released by the Xerox Palo Alto Research Center (PARC) in 1973.

Yes, that Xerox which also produced photocopiers, and had permeated Filipino tech slang to refer to said machines. So, next time you say “pa-Xerox naman,” you might want to be aware that it is a trademarked name.

Going back, it was through Apple’s exchange with Xerox, a three-day access to PARC for pre-IPO stocks with Apple, which helped Jobs and his team develop their new kind of PC. Apparently, they were not so much on the lookout for photocopying machines, but for Xerox PARC’s computers.

For all intents and purposes, Xerox Alto was considered as the world’s first computer with graphical user interface (GUI), a system that allows users to interact with their devices through visual icons and audio prompts instead of being purely text-based. Apple I and its successor Apple II were part of the latter technology. They looked more like typewriters than today’s PCs. You cannot really fault them for this, as it was the trend of the time. Even for IBM.

Xerox Alto, on the other hand, introduced the mouse as we use it today, and featured one of the first networked multiplayer games, the Alto Trek. With GUI, a user will no longer have to memorize text commands to get things done. In retrospect, some would like to argue that Xerox received less benefits from this instance of coopetition than did Apple. Xerox Alto was apparently not geared for commercial purposes, but Apple’s next PC was.

Within Apple, it became a race between developing the Locally Integrated Software Architecture, or LISA, and the Macintosh, or simply Mac. Both incorporated GUI, influenced by their experience at Xerox PARC, but the more expensive and higher specced LISA had to bow out of contention. The hybrid objectives in marketing LISA, aimed for both business and personal use, somehow failed to compete with the simplicity and affordability of Macintosh.

In 100 days since its release, Macintosh sold 70,000 units, and was projected to have 25 percent share of the desktop computer market within the USD 1,000PHP 58,686INR 84,750EUR 952CNY 7,278 to USD 10,000PHP 586,855INR 847,498EUR 9,523CNY 72,783 range by the end of 1984. Apple’s commercial for Macintosh, which derived inspiration from George Orwell’s novel 1984, was also believed to have helped sparked interest.

Apple without Jobs: Beginning of the end?

In 1985, Steve Jobs left Apple and founded his own tech company called NeXT. It would soon receive new investments that kept it running, including that from billionaire and future presidential candidate Ross Perot. By this time, Jobs also turned his attention to animation, becoming a majority shareholder of Pixar in 1986. If you know your movie history, Jobs was actually credited as the executive producer of the first “Toy Story” film in 1995.

Apple, meanwhile, had to deal with intense competition. In terms of hardware, IBM has pretty much established itself as the industry leader, while Microsoft was taking the lead in software development. Since IBM could run Microsoft’s more encompassing operating systems (OS), including MS-DOS and Windows, it did not make sense for consumers to purchase Apple’s computers which offered their own OS for Mac units. In addition to this challenge in compatibility, Apple continued to release new computers which performed relatively poor in the market.

By 1991, Apple teamed up with IBM and Motorola to form the so-called “AIM Alliance,” which developed a hardware and software combination that would later become the PowerPC architecture. It did not, however, meet the most optimistic expectations of being a unifying product. Windows remained strong in the software world, and it was only reinforced by the 1994 Supreme Court decision on Apple Computer, Inc. v. Microsoft Corporation and Hewlett-Packard Co., which decided for the most part in Microsoft’s favor regarding Apple’s claims on GUI infringement.

To recall, Xerox also made a similar claim against Apple, but had similarly failed in this legal pursuit by 1990. Some would like to argue that if Apple won against Microsoft in its lawsuit, Xerox could have pursued its own claims.

Jobs returns: “The world’s a better place”

Acquiring NeXT in 1996, Apple had Steve Jobs back along with its technology, but the situation was already precarious. Without sufficient financing, not even a new line of products could save the tottering company in time. The solution? A partnership with its rival Microsoft.

As Jobs put it, Apple had to reorient its goals and reimagine its offerings. The objective was not to beat Microsoft, but for Apple to win. This would only be possible through remembering Apple’s identity.

“To me, it was pretty essential to break that paradigm,” said Jobs. “And it was also important that, you know, Microsoft was the biggest software developer outside of Apple developing for the Mac. So it was just crazy what was happening at that time. And Apple was very weak and so I called Bill up and we tried to patch things up.”

In entering this deal, Microsoft may have also its own interest in mind. The Federal Trade Commission began its inquiry in 1992 on whether Microsoft was being a monopoly for its dominance in PC operating systems. Without a viable competitor in the market, it would be more difficult for Microsoft to defend its case. Coopetition is at work.

Besides fiscal considerations, it was judged in retrospect as a win-win situation. Microsoft programs began to enter the Mac, improving compatibility, while Apple managed to discontinue program licensing to third-party machines. To this day, Apple and Microsoft are among the biggest tech companies in the world in terms of market cap.

Launching the iRevolution: from iPod to iOS

Some may recall how portability made possible the success of pocket-sized transistor radios in the 1950s, but by the 1990s, personalized audio libraries of your own would be the trend, characterized by Sony’s Walkman, among others. Thus, Apple found a potential expansion in entering the music player market, and the release of the first iPod in 2001 gave consumers not only a smaller alternative to some existing portable players, it also accompanied its own software where you can obtain songs. This is what became known as iTunes.

What would become the most recognizable driver of Apple growth in recent years, however, would be the iPhone. First launched in 2007, Statista showed that the iPhone has since registered somewhere between 40 and 70 percent of Apple revenue in at least the past ten years (2012-2022). From USD 7.48PHP 439INR 634EUR 7CNY 54 billion market cap in 2001, Apple has grown to USD 73.89PHP 4,336INR 6,262EUR 70CNY 538 billion in 2007. We have entered the “smartphone” era.

This time, Apple had little time to bask on its success. Android developed its OS for phones in the same year (2007). While Apple also went to court against Samsung, the smartphone rivalry became more of a race for innovation in the long run. Similar to how Apple treated its MacOS, the iOS it developed for their phones remained exclusive, but it did not stop Apple from retaining a considerable share in the smartphone market (27.5 percent as per StatCounter). This is higher than the share of MacOS when it comes to desktop computers (15.3 percent as per StatCounter).

Conclusion

From near bankruptcy decades back, Apple has proved its resilience and innovative sense, even in the midst of a pandemic economy. As the largest tech company in the world, it is financially geared to invest in the future. As to how it would look like in the coming years, we will have to see. Apple learned long ago that the best technology out there did not necessarily become the most profitable. It did not necessarily mean that people do not have technical sense, as this generation may well have been more receptive to technology than their ancestors. However, technology is meant to allow people to work smarter, capable of doing more with less. To strike a fair balance between corporate goals and public demand is a challenge not only for the captains of industry, but also for every tech company.