The $3tn question: can anything stop Apple?

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.” 

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