How Apple became the first $1 trillion company
Can it stay on top? Yesterday, Apple unveiled a range of new iPhones. The original handset was launched in 2007, sparking a phenomenon that made Apple the global tech superpower it is today.
If Apple was a country, it would be the 26th richest in the world: ahead of Malaysia, Argentina and the Netherlands.
Just how powerful the company has become was emphasised last month, when its valuation topped $1 trillion. That is enough money to give everybody on the planet $135, or to buy the world’s most expensive house 2,000 times over.
A highly symbolic moment, it is also the first time any public company has reached the landmark, cementing Apple’s position as the world’s most valuable corporation, ahead of rivals Amazon, Alphabet, Facebook and Microsoft.
Despite this, CEO Tim Cook downplayed the breakthrough. In a memo to employees, he insisted that a company’s valuation is “not the most important measure” of progress.
By the time Cook took charge of Apple in 2011, its success had already been established — built on pioneering product design which, as journalist Alex Hern writes, “revolutionised computing, upended industries and ultimately reshaped society.”
The one product that achieved all of these things more than any other is the iPhone. Launched in 2007, its creator Steve Jobs hailed it as “revolutionary” — he was not wrong.
In the 11 years since its launch, smartphones have transformed society, creating new industries and gig economies with apps, putting internet access in the pockets of billions, and supercharging the spread of social media.
They also made photography part of everyday life (85% of the 1.2 trillion photos taken in 2017 were taken with a phone), cut the amount of time people spend reading newspapers and listening to the radio, and even caused a crash in chewing gum sales.
While the iPhone was the catalyst for Apple’s success, the company has diversified. It now makes around $10 billion every three months from selling apps, cloud storage and music streaming.
This is a long way from the company’s humble origins — born in Steve Jobs’s California garage in 1976, with the original intention to build and sell desktop computers.
But how long can Apple stay at the top?
Top of the tree
Nothing lasts forever, some argue. Only 12% of world’s 500 biggest companies in 1955 survived into the 2010s. Apple depends on people buying hardware: its phones, laptops and PCs — technology which could be obsolete in future decades. Furthermore, its “cool” branding is always vulnerable to the fickle tastes of consumers.
Do not be so sure, others respond. Behind the scenes, Apple are working on more than just the next iPhone. Artificial Intelligence, autonomous vehicles and renewable energy: all futuristic technologies that the company wants to establish a stake in. Its era of dominance may only just be beginning.
- Have smartphones changed society for the better?
- Will Apple still be the world’s most valuable company in 100 years’ time?
- Imagine you had $1 trillion to spend on making the world a better place. How would you divide up the money?
- Read the last link under Become An Expert — it discusses how smartphones have changed the world in 10 charts. In your opinion, what is the most significant change that smartphones have caused? Could you live without a smartphone? Why/why not?
Some People Say...
“Stay hungry, stay foolish.”Steve Jobs
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Q & A
- What do we know?
- The success of the iPhone has been fundamental to Apple’s growth. Since its release in 2007, Apple shares have increased by 1,100%. Since the company was first listed on the stock market in 1980, its shares have increased in value by 50,000%. In 2017, its sales hit $229 billion, with profits of $48.4 billion — making it the most profitable listed company in America.
- What do we not know?
- Stock markets are volatile and we do not know how Apple’s share price will change over the coming years. Increased competition may come from Chinese companies, particularly the smartphone maker Huawei. South Korean giant Samsung will also pose a threat.
- Based on countries by GDP (Purchasing Power Parity) as calculated by the International Monetary Fund.
- The technical term for this kind of valuation is “market capitalisation”. This figure is reached by multiplying the number of shares in a company by the current share price.
- $1 trillion
- Expensive house
- Known as “The One”, it is located in Bel-Air, Los Angeles, and is on the market for $500 million. It has 20 bedrooms, a commercial size beauty salon and a jellyfish aquarium.
- Holding company of Google.
- For example, the Uber app has created a new gig economy for taxi drivers, while dating apps like Tinder are changing the way people interact.
- Chewing gum sales
- Market research by Euromonitor International shows a 15% decline in chewing gum sales since the iPhone was released. This could be because customers in supermarkets are less likely to make impulse purchases as they are distracted by their phones.