The $3tn question: can anything stop Apple?
The tech giant’s stock value has tripled within four years under Tim Cook, the CEO who’s truly emerged from the long shadow cast by his visionary predecessor, Steve Jobs
Less than a fortnight after co-founding the Apple Computer Company in 1976, Ronald Wayne sold his 10% holding in the fledgling business back to Steve Wozniak and Steve Jobs for $800. If he’d retained his stake, it would have been worth about $300bn (£220bn) at the start of this year, when Apple’s market capitalisation hit the $3tn mark, making it the first company to reach that milestone.
Despite relinquishing his share of what has become the world’s most valuable plc, its lesser-known third founder had no regrets. “Nobody could have anticipated how big Apple would become,” Wayne told Cult of Mac in 2014.
Indeed, there were some serious bumps on Apple’s journey to becoming the behemoth it is today. Work on the firm’s first computer, the Apple I, initially took place in Jobs’ bedroom and his parents’ garage. The product was sold as little more than a circuit board, without a keyboard or monitor, and only 200 were ever made.
But the company’s fortunes changed with the Apple II. Sales of Wozniak’s second PC design soared, thanks mainly to VisiCalc – a spreadsheet program that made the product popular with commercial customers. In its various iterations, the Apple II sold more than 5 million units, with the series remaining in production from 1977 to 1993.
Apple goes public
Off the back of the Apple II’s success, the company went public at the end of 1980, offering 4.6 million shares to the market at $22 apiece. It was the biggest flotation since the Ford Motor Company went public in 1956. By the end of the first day of trading, Apple’s stock price had risen to $29.
But later computers, such as the Apple III and Lisa, were nowhere near as popular as their predecessor. In 1983, Jobs persuaded PepsiCo executive John Sculley to join Apple as CEO, asking him: “Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?”
Under Sculley’s 10-year tenure, annual sales at the company rose from $800m to $8bn. But tensions between him and Jobs increased even more quickly. By 1985, Sculley and Apple’s board forced Jobs out. Unhappy at being jettisoned from the business he’d created, he set up another computer company, NeXT.
It wouldn’t be until Jobs and Apple were reunited, after the latter’s acquisition of NeXT for $400m in 1997, that Apple’s fortunes would improve once more. At the time of his return as CEO (the first time he’d assumed the role), the company was in deep trouble. He quickly axed several failing products and persuaded Bill Gates, co-founder and CEO of fierce rival Microsoft, to make a $150m investment, which helped to stave off bankruptcy.
Leander Kahney, author of The Cult of Mac and Tim Cook: the genius who took Apple to the next level, believes that Apple “would have gone out of business within a few months if Jobs hadn’t returned and reset the company. He did a masterful job, rightly remembered as one of the most amazing turnarounds in business history.”
Jobs oversaw the launch of products such as the iMac computer, the iPod music player and the all-conquering iPhone, which today accounts for nearly 47% of the company’s total revenue. He helped Apple to streamline its offering and placed a greater emphasis on design and the user experience.
“The iPod was a transformative product, completely changing Apple inside and out,” Kahney argues. “The company had been dependent on computers, but the iPod enabled it to diversify its products. And what it learnt from the iPod it then applied to the iPhone, which has been the singular most successful product of all time.”
The influence of Tim Cook
While Jobs is widely hailed as the charismatic creative force who set Apple on its way to sustained success after his second coming, the company has experienced its most dramatic growth under Tim Cook’s leadership.
Having served as Apple’s COO since 2007, Cook became CEO just before Jobs’s death in 2011. At the time, many observers were sceptical that he could have the same impact on the company as his predecessor and mentor.
“Cook was completely underestimated. Many people were saying that the appointment was going to be a disaster,” Kahney recalls. “If you look back at the articles published at the time, pundits were predicting that Apple would coast along for a few years and then slowly fade into irrelevance.”
Proving the doubters wrong in the most spectacular possible way, Cook has overseen a decade of unparalleled growth at Apple. For instance, its annual revenue more than tripled between 2011 to 2021, from $108bn to $366bn. The company also became the first to achieve a market cap of $1tn in 2018.
Cook’s expertise in operations and supply chains has been key to the company’s success according to Kahney, who says: “He was able to take Jobs’ and Sir Jony Ives’ designs and deliver them in their millions all over the world.”
While Jobs is often remembered for his innovative product launches, Cook has overseen the releases of the Apple Watch and the AirPods range of wireless headphones. Both have been successes, commanding global market shares of 31% and 29% respectively.
But it’s the expansion of Apple’s services that has perhaps been the most significant development under Cook’s stewardship. In recent years, the company has taken on the likes of Spotify and Netflix with Apple TV+, Apple Music and its mobile gaming service, Apple Arcade. Collectively, these services account for nearly 22% of the company’s revenue.
This successful expansion into new markets, while continuing to generate large revenues from its core product suite, means that Apple is unlikely to be toppled from its perch as the world’s most valuable plc any time soon. The market cap of its closest competitor, Microsoft, is a mere $2.27tn.
“I don’t see any other companies overtaking Apple in the short term,” Kahney predicts. “It’s only going to get bigger and more dominant.”