Apple doesn’t often fail, and when it does, it isn’t a pretty sight at 1 Infinite Loop. In the summer of 2008, when Apple(aapl) launched the first version of its iPhone that worked on third-generation mobile networks, it also debuted MobileMe, an e-mail system that was supposed to provide the seamless synchronization features that corporate users love about their BlackBerry smartphones. MobileMe was a dud. Users complained about lost e-mails, and syncing was spotty at best. Though reviewers gushed over the new iPhone, they panned the MobileMe service.
Steve Jobs doesn’t tolerate duds. Shortly after the launch event, he summoned the MobileMe team, gathering them in the Town Hall auditorium in Building 4 of Apple’s campus, the venue the company uses for intimate product unveilings for journalists. According to a participant in the meeting, Jobs walked in, clad in his trademark black mock turtleneck and blue jeans, clasped his hands together, and asked a simple question:
“Can anyone tell me what MobileMe is supposed to do?” Having received a satisfactory answer, he continued, “So why the fuck doesn’t it do that?”
For the next half-hour Jobs berated the group. “You’ve tarnished Apple’s reputation,” he told them. “You should hate each other for having let each other down.” The public humiliation particularly infuriated Jobs. Walt Mossberg, the influential Wall Street Journal gadget columnist, had panned MobileMe. “Mossberg, our friend, is no longer writing good things about us,” Jobs said. On the spot, Jobs named a new executive to run the group.
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Jobs’ handling of the MobileMe debacle offers a rare glimpse of how Apple really operates. To Apple’s legion of admirers, the company is like a tech version of Wonka’s factory, an enigmatic but enchanted place that produces wonderful items they can’t get enough of. That characterization is true, butApple also is a brutal and unforgiving place, where accountability is strictly enforced, decisions are swift, and communication is articulated clearly from the top. (After Jobs’ tirade, much of the MobileMe team disbanded, and those left behind eventually turned MobileMe into the service Jobs demanded.)
Apple’s ruthless corporate culture is just one piece of a mystery that virtually every business executive in the world would love to understand: How doesApple do it? How does a company with more than 50,000 employees and with annual revenue approaching $100 billion grow 60% a year? How does it churn out hit after hit? Those are questions Apple has no desire to answer. This past January, when a Wall Street analyst asked Tim Cook, Apple’s low-key chief operating officer, how far out the company conducts long-term planning, Cook replied with an artful brushoff. “Well, that is a part of the magic ofApple,” he said. “And I don’t want to let anybody know our magic because I don’t want anybody copying it.”
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Just because a magician doesn’t want to reveal his tricks doesn’t mean it’s impossible to figure them out. Fortune conducted dozens of interviews over several months with former Apple employees and others in the Apple orbit to try to explain the phenomenon of life inside Apple. Few agreed to speak on the record; the fear of retribution persists for years. Once they get talking, however, the former Apple-ites paint a picture of a company that time and again thumbs its nose at modern corporate conventions in ways that let it behave more like a cutting-edge startup than the consumer-electronics behemoth it is.
Whether Apple’s startup ways are sustainable or the result of the sheer will of Steve Jobs is the great unknown in explaining how Apple works. Every conversation with insiders about Apple, even if it doesn’t start out being about Jobs, eventually comes around to him. The creative process at Apple is one of constantly preparing someone—be it one’s boss, one’s boss’s boss, or oneself—for a presentation to Jobs. He’s a corporate dictator who makes every critical decision—and oodles of seemingly noncritical calls too, from the design of the shuttle buses that ferry employees to and from San Francisco to what food will be served in the cafeteria.
But just as Jobs sees everything going on at the company, he’s not blind to the fact that things will be radically different without him at the top. Jobs currently is on his third medical leave in seven years—he survived a rare form of pancreatic cancer and later received a liver transplant—and his absence has only fueled the fascination with him. Jobs is still heavily involved in Apple, of course. He personally took charge of Apple’s response to the recent Locationgate, for example, granting interviews to several news outlets to answer accusations that Apple is tracking the whereabouts of iPhone users. On a more strategic level, these days he’s especially focused on institutionalizing his ways of doing business. His mission: to turn the traits that people most closely associate with Jobs—the attention to detail, the secrecy, the constant feedback—into processes that can ensure Apple’s excellence far into the future.
Apple CEO and co-founder Steve Jobs on March 2, 2012, emerged from a medical leave of absence to introduce the second generation of the iPad.Photograph by Kimihiro Hoshino — Getty Images
So exalted is Steve Jobs that often he is compared, metaphorically at least, to Jesus Christ. (Exhibit A: Alan Deutschman’s revealing 11-year-old book, The Second Coming of Steve Jobs.) True to form, the shepherd to his Apple flock often teaches in parables. One such lesson could be called the “Difference Between the Janitor and the Vice President,” and it’s a sermon Jobs delivers every time an executive reaches the VP level. Jobs imagines his garbage regularly not being emptied in his office, and when he asks the janitor why, he gets an excuse: The locks have been changed, and the janitor doesn’t have a key. This is an acceptable excuse coming from someone who empties trash bins for a living. The janitor gets to explain why something went wrong. Senior people do not. “When you’re the janitor,” Jobs has repeatedly told incoming VPs, “reasons matter.” He continues: “Somewhere between the janitor and the CEO, reasons stop mattering.” That “Rubicon,” he has said, “is crossed when you become a VP.” (Apple has about 70 vice presidents out of more than 25,000 non-retail-store employees.)
Jobs indoctrinates a culture of responsibility by hosting a series of weekly meetings that are the metronome that sets the beat for the entire company. On Mondays he meets with his executive management team to discuss results and strategy as well as to review nearly every important project in the company. On Wednesdays he holds a marketing and communications meeting. Simplicity breeds clarity, as Jobs himself explained in a 2008 interview with Fortune. “Every Monday we review the whole business,” he said. “We look at every single product under development. I put out an agenda. Eighty percent is the same as it was the last week, and we just walk down it every single week. We don’t have a lot of process at Apple, but that’s one of the few things we do just to all stay on the same page.” It’s one thing when the leader describes the process. It’s another thing altogether when the troops candidly parrot back the impact it has on them. “From a design perspective, having every junior- level designer getting direct executive-level feedback is killer,” says Andrew Borovsky, a former Apple designer who now runs 80/20, a New York design shop. “On a regular basis you either get positive feedback or are told to stop doing stupid shit.”
Read More: Exclusive Q&A — Apple CEO Tim Cook
The accountability mindset extends down the ranks. At Apple there is never any confusion as to who is responsible for what. Internal Applespeak even has a name for it, the “DRI,” or directly responsible individual. Often the DRI’s name will appear on an agenda for a meeting, so everybody knows who is responsible. “Any effective meeting at Apple will have an action list,” says a former employee. “Next to each action item will be the DRI.” A common phrase heard around Apple when someone is trying to learn the right contact on a project: “Who’s the DRI on that?”
Simplicity also is key to Apple’s organizational structure. The org chart (see next page) is deceptively straightforward, with none of the dotted-line or matrixed responsibilities popular elsewhere in the corporate world. There aren’t any committees at Apple, the concept of general management is frowned on, and only one person, the chief financial officer, has a “P&L,” or responsibility for costs and expenses that lead to profits or losses. It’s a radical example of Apple’s different course: Most companies view the P&L as the ultimate proof of a manager’s accountability; Apple turns that dictum on its head by labeling P&L a distraction only the finance chief needs to consider. The result is a command-and-control structure where ideas are shared at the top—if not below. Jobs often contrasts Apple’s approach with its competitors’. Sony, he has said, had too many divisions to create the iPod. Apple instead has functions. “It’s not synergy that makes it work” is how one observer paraphrases Jobs’ explanation of Apple’s approach. “It’s that we’re a unified team.”
Jobs’ inner circle includes (from left) Jonathan Ive, Phil Schiller, Eddy Cue, and Scott Forstall.Photograph by Robyn Twomey
For Apple the result is an ability to move nimbly, despite its size. “Constant course correction” is how one former executive refers to the approach. “If the executive team decides to change direction, it’s instantaneous,” this ex-Apple honcho says. “Everybody thinks it’s a grand strategy. It’s not.” As an example, Apple’s management has been known to change its pricing 48 hours before a product launch. When it misses a seemingly obvious idea—such as not anticipating the need for an App Store to satisfy the third-party developers who wanted to create programs for the iPhone—it shifts gears quickly to grab the opportunity.
One of Apple’s greatest strengths is its ability to focus on just a few things at a time, an entrepreneurial trait difficult to imagine at a corporation with a market value of $320 billion. Saying no at Apple is as important as saying yes. “Over and over Steve talks about the power of picking the things you don’t do,” says one recently departed executive. Obvious? Perhaps. Yet few companies Apple’s size—and very few of any size—are able to focus so well and for so long.
Jobs himself is the glue that holds this unique approach together. Yet his methods have produced an organization that mirrors his thoughts when—and this is important—Jobs isn’t specifically involved. Says one former insider: “You can ask anyone in the company what Steve wants and you’ll get an answer, even if 90% of them have never met Steve.”
There is a small group at Apple that most certainly has met Steve Jobs. It’s called the Top 100, and every year or so Jobs gathers these select few for an intense three-day strategy session at a proverbially secure, undisclosed location. Everything about this Top 100 meeting is shrouded in secrecy, starting with its very existence. Those tapped to attend are encouraged not to put the meeting on their calendars. Discussing their participation is a no-no, even internally. Attendees aren’t allowed to drive themselves to the gathering. Instead they ride buses that depart from Apple’s Cupertino, Calif., headquarters to places like the sumptuous Chaminade Resort & Spa in Santa Cruz, Calif., which satisfies two Jobs requirements: good food and no golf course. Apple goes so far as to have the meeting rooms swept for electronic bugs to stymie snooping competitors.
The Top 100 meeting is an important managerial tool for Jobs. He and his chief lieutenants use it to inform a supremely influential group about whereApple is headed. The elaborately staged event also gives Jobs an opportunity to share his grand vision with Apple’s next generation of leaders. The Top 100 meeting is part strategic offsite, part legacy-building exercise.
Jobs generally kicks things off personally. Each session is as well crafted as the public product debuts for which the CEO is so famous. For presenters the career stakes are high, and the pressure is nerve-racking. “The Top 100 was a horrifying experience for 10 or so people,” recalls one former vice president, who took the stage some years ago. “For the other 90 it’s the best few days of their life.” Jobs sometimes uses the occasion to unveil important initiatives. “I was at a Top 100 when Steve showed us the iPod,” says Mike Janes, who worked at Apple from 1998 to 2003 and remains close to Apple executives. “Apart from a tiny group, no one knew anything about it.”
To be selected for the Top 100 is to be anointed by Jobs, an honor not necessarily based on rank. Jobs referred to the group, but not the conclave, in an interview several years ago with Fortune. “My job is to work with sort of the Top 100 people,” he said. “That doesn’t mean they’re all vice presidents. Some of them are just key individual contributors. So when a good idea comes … part of my job is to move it around [and] … get ideas moving among that group of 100 people.” Privately Jobs has spoken even more strongly about the Top 100’s importance. “If he had to recreate the company, these are the 100 people he’d bring along” is how one former Apple executive describes Jobs’ characterization.
Though its name isn’t to be uttered, the blessed nature of the gathering creates a caste system at Apple. Inclusion is by no means permanent. According to Jobs’ whims, attendees can be bumped from one year to the next, and being kicked out of this exclusive club is humiliating. For those left behind in Cupertino, chattering begins as soon the chosen few have departed. “We’d tongue-and-cheek have a Bottom 100 lunch after we were done preparing the people who’d left,” recalls one nonparticipant. Says another: “We weren’t supposed to know where they were. But we all knew.”
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Apple is now 35 years old, an extremely mature company by Silicon Valley standards, and there’s a grownup atmosphere at headquarters: You won’t find a lot of people dressed in board shorts and flip-flops, or zanily decorated cubicles. The vibe is the opposite of the jocularity that Google—with its wear-your-pajamas-to-work day and all-you-can-eat cafeterias—has fostered. There literally is no free lunch at Apple—though meals are subsidized and generally quite good.
Yet Apple also consciously tries to behave like a startup, most notably by putting small teams on crucial projects. To wit: Just two engineers wrote the code for converting Apple’s Safari browser for the iPad, a massive undertaking. In a 2010 interview at a technology conference, Jobs verbalized Apple’s do-more-with-less mentality. “Apple is a company that doesn’t have the most resources,” he said, referring to Apple’s response to a technical debate raging at the time. “And the way we’ve succeeded is by choosing which horses to ride very carefully.” On the face of it, the statement is absurd. Times certainly once were tough at Apple, breeding an underdog culture. Today, with $66 billion in the bank, nothing could be further from the truth, yet Apple continues to behave like a scrappy upstart. “We’ve always fought for resources,” says a former executive. “Steve and Tim in general want to be sure you need what you’re asking for.”
Apple insiders say the notion of scarce resources has less to do with money than it does with finding enough people to perform critical tasks. Once Applemoves, though, it spends whatever it takes. It contracted the London Symphony Orchestra to record trailer soundtracks for its latest iMovie software. Years ago it sent a camera crew to Hawaii to film a wedding for a demo video; then, to get a different take, it staged fake nuptials in a San Francisco church, withApple employees playing both guests and the betrothed.
Learning to work at Apple takes time. To echo its own famous ad campaign, Apple thinks differently about business. Often as not it simply ignores traditional notions of business opportunities. An executive who has worked at Apple and Microsoft describes the differences this way: “Microsoft tries to find pockets of unrealized revenue and then figures out what to make. Apple is just the opposite: It thinks of great products, then sells them. Prototypes and demos always come before spreadsheets.”
Specialization is the norm at Apple, and as a result, Apple employees aren’t exposed to functions outside their area of expertise. Jennifer Bailey, the executive who runs Apple’s online store, for example, has no authority over the photographs on the site. Photographic images are handled companywide by Apple’s graphic arts department. Apple’s powerful retail chief, Ron Johnson, doesn’t control the inventory in his stores. Tim Cook, whose background is in supply-chain management, handles inventory across the company. (Johnson has plenty left to do, including site selection, in-store service, and store layout.)
Jobs sees such specialization as a process of having best-in-class employees in every role, and he has no patience for building managers for the sake of managing. “Steve would say the general manager structure is bullshit,” says Mike Janes, the former Apple executive. “It creates fiefdoms.” Instead, rising stars are invited to attend executive team meetings as guests to expose them to the decision-making process. It is the polar opposite of the General Electric-like notion of creating well-rounded executives.
Such rigidity—coupled with the threat of being called on the carpet by Jobs—would seem to make Apple an impossibly difficult workplace, yet recruiters say turnover at Apple is exceedingly low. “It is a happy place in that it has true believers,” says a headhunter who has worked extensively with Apple to hire engineers. “People join and stay because they believe in the mission of the company, even if they aren’t personally happy.” Many of Apple’s rank-and-file technical employees have dreamed of working at Apple since they got their first Macs as children. “At Apple you work on Apple products. If you’re a diehard Apple geek, it’s magical,” says Andrew Borovsky, the former designer. “But it’s also a really tough place to work.” In short, it is an environment that shuns coddling. “Apple’s attitude is, ‘You have the privilege of working for the company that’s making the fucking coolest products in the world,’ ” says one former product management executive. ” ‘Shut up and do your job, and you might get to stay.’ ”
Courtesy of Apple
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For years Steve Jobs was uninterested in the human resources department at Apple. Then, three years ago, just before his second medical leave, he hired Joel Podolny, dean of the Yale School of Management, to head something called Apple University. Podolny had been a widely quoted management guru. Yet when he joined Apple, typically, he vanished from sight. No one even seemed to notice when he was named vice president of human resources a couple of years later.
It turns out that Podolny has been busy working on a project that speaks directly to the delicate topic of life at Apple after Jobs. At Jobs’ instruction, Podolny hired a team of business professors, including the renowned Harvard veteran and Andy Grove biographer Richard Tedlow. This band of eggheads is writing a series of internal case studies about significant decisions in Apple’s recent history. It’s exactly the sort of thing the major business schools do, except Apple’s case studies are for an Apple-only audience. Top executives, including Tim Cook and Ron Johnson, teach the cases, which have covered subjects including the decision to consolidate iPhone manufacturing around a single factory in China and the establishment of Apple’s stores. The goal is to expose the next layer of management to the executive team’s thought process.
All this raises the question of whether Jobs has adequately prepared Apple for the day he isn’t around anymore. It’s an impossible question to answer. According to one person who knows Jobs, he acknowledges his dictatorial powers but insists he’s not the only one who can wield them. “Single-cell organisms aren’t interesting,” he told this person. “Apple is a complex, multicellular organism.”
Those who believe Apple can’t survive Jobs’ departure—and there are many—would call this wishful thinking. Apple may be a multicellular organism, but its life source is Jobs. For now this is all in the realm of opinion. Jobs himself believes he has set Apple on a course to survive in his absence. He has created a culture that, while not particularly jolly, has internalized his ways. Jobs even is ensuring that his teachings are being collected, curated, and preserved so that future generations of Apple’s leaders can consult and interpret them. It’s about all a savior could possibly ask for.
Additional reporting: Doris Burke
A version of this article was originally published in the May 23, 2011 issue of Fortune.
For more general information about the company, see Apple Inc.
Apple Inc., formerly Apple Computer, Inc., is a multinational corporation that creates consumer electronics, personal computers, servers, and computer software, and is a digital distributor of media content. The company also has a chain of retail stores known as Apple Stores. Apple's core product lines are the iPhonesmart phone, iPadtablet computer, iPodportable media players, and Macintosh computer line. Founders Steve Jobs and Steve Wozniak created Apple Computer on April 1, 1976, and incorporated the company on January 3, 1977, in Cupertino, California.
For more than three decades, Apple Computer was predominantly a manufacturer of personal computers, including the Apple II, Macintosh, and Power Mac lines, but it faced rocky sales and low market share during the 1990s. Jobs, who had been ousted from the company in 1985, returned to Apple in 1996 after his company NeXT was bought by Apple. The following year he became the company's interim CEO, which later became permanent. Jobs subsequently instilled a new corporate philosophy of recognizable products and simple design, starting with the original iMac in 1998.
With the introduction of the successful iPod music player in 2001 and iTunes Music Store in 2003, Apple established itself as a leader in the consumer electronics and media sales industries, leading it to drop "Computer" from the company's name in 2007. The company is now also known for its iOS range of smart phone, media player, and tablet computer products that began with the iPhone, followed by the iPod Touch and then iPad. As of 30 June 2015[update], Apple was the largest publicly traded corporation in the world by market capitalization, with an estimated value of US$695 billion as of February 9, 2017. Apple's worldwide annual revenue in 2010 totaled US$65 billion, growing to US$127.8 billion in 2011 and $156 billion in 2012.
1975–1985: Jobs and Wozniak
Steve Jobs and Steve Wozniak had withdrawn from Reed College and UC Berkeley respectively by 1975. Wozniak designed a video terminal that he could use to log on to the minicomputers at Call Computer. Alex Kamradt commissioned the design and sold a small number of them through his firm. Aside from their interest in up-to-date technology, the impetus for Jobs and Wozniak, also referred to collectively as "the two Steves", seems to have had another source. In his essay From Satori to Silicon Valley (published 1986), cultural historian Theodore Roszak made the point that the Apple Computer emerged from within the West Coast counterculture and the need to produce print-outs, letter labels, and databases. Roszak offers a bit of background on the development of the two Steves' prototype models.
In 1975, Wozniak started attending meetings of the Homebrew Computer Club. New microcomputers such as the Altair 8800 and the IMSAI inspired him to build a microprocessor into his video terminal and have a complete computer.
At the time the only microcomputerCPUs generally available were the $179 Intel 8080 (equivalent to $814 in 2017), and the $170 Motorola 6800 (equivalent to $773 in 2017). Wozniak preferred the 6800, but both were out of his price range. So he watched, and learned, and designed computers on paper, waiting for the day he could afford a CPU.
When MOS Technology released its $20 (equivalent to $86 in 2017) 6502 chip in 1976, Wozniak wrote a version of BASIC for it, then began to design a computer for it to run on. The 6502 was designed by the same people who designed the 6800, as many in Silicon Valley left employers to form their own companies. Wozniak's earlier 6800 paper-computer needed only minor changes to run on the new chip.
Wozniak completed the machine and took it to Homebrew Computer Club meetings to show it off. At the meeting, Wozniak met his old friend Jobs, who was interested in the commercial potential of the small hobby machines.
Apple I and company formation
The two Steves had been friends for some time, having met in 1971, when their mutual friend, Bill Fernandez, introduced then 21-year-old Wozniak to 16-year-old Jobs. They began their partnership when Wozniak, a talented, self-educated electronics engineer, began constructing boxes which enabled one to make long-distance phone calls at no cost, and sold several hundred models. Later, Jobs managed to interest Wozniak in assembling a computer machine and selling it.
Jobs approached a local computer store, The Byte Shop, who said they would be interested in the machine, but only if it came fully assembled. The owner, Paul Terrell, went further, saying he would order 50 of the machines and pay US $500 each on delivery (equivalent to $2,200 in 2017). Jobs then took the purchase order that he had been given from the Byte Shop to Cramer Electronics, a national electronic parts distributor, and ordered the components he needed to assemble the Apple I Computer. The local credit manager asked Jobs how he was going to pay for the parts and he replied, "I have this purchase order from the Byte Shop chain of computer stores for 50 of my computers and the payment terms are COD. If you give me the parts on a net 30-day terms I can build and deliver the computers in that time frame, collect my money from Terrell at the Byte Shop and pay you."
The credit manager called Paul Terrell, who was attending an IEEE computer conference at Asilomar in Pacific Grove, and verified the validity of the purchase order. Amazed at the tenacity of Jobs, Terrell assured the credit manager if the computers showed up in his stores, Jobs would be paid and would have more than enough money to pay for the parts order. The two Steves and their small crew spent day and night building and testing the computers, and delivered to Terrell on time to pay his suppliers and have a tidy profit left over for their celebration and next order. Steve Jobs had found a way to finance his soon-to-be multimillion-dollar company without giving away one share of stock or ownership.
The machine had only a few notable features. One was the use of a TV as the display system, whereas many machines had no display at all. This was not like the displays of later machines, however; text was displayed at 60 characters per second. However, this was still faster than the teleprinters used on contemporary machines of that era. The Apple I also included bootstrap code on ROM, which made it easier to start up. Finally, at the insistence of Paul Terrell, Wozniak also designed a cassette interface for loading and saving programs, at the then-rapid pace of 1200 bit/s. Although the machine was fairly simple, it was nevertheless a masterpiece of design, using far fewer parts than anything in its class, and quickly earning Wozniak a reputation as a master designer.
Joined by another friend, Ronald Wayne, the two Steves started building the machines. Using a variety of methods, including borrowing space from friends and family, selling various prized items (like Wozniak's HPscientific calculator and Jobs' VWbus) and scrounging, Jobs managed to secure the parts needed while Wozniak and Wayne assembled them. Building such a machine was going to be financially burdensome, and the owner of the Byte Shop was expecting complete computers, not just printed circuit boards. The boards being a product for the customers, Terrell still paid them. Jobs started looking for cash, but banks were reluctant to lend him money; the idea of a computer for ordinary people seemed absurd at the time. Jobs eventually met Mike Markkula who co-signed a bank loan for $250,000 (equivalent to $1,080,000 in 2017), and Jobs, Wozniak and Wayne formed Apple Computer on April 1, 1976. Wayne was somewhat gun-shy due to a failed venture four years earlier and soon dropped out of the company, leaving the two Steves as the active primary co-founders. The name Apple was chosen because the company to beat in the technology industry at the time was Atari, and Apple Computer came before Atari alphabetically and thus also in the phone book. Another reason was that Jobs had happy memories of working on an Oregon apple farm one summer. Eventually, 200 of the Apple I's were built.
Main article: Apple II series
Wozniak had soon moved on from the Apple I. Many of the design features of the I were due to the limited amount of money they had to construct the prototype, but with the income from the sales Wozniak was able to start construction of a greatly improved machine, the Apple II; the two Steves presented it to the public at the first West Coast Computer Faire on April 16 and 17, 1977. On the first day of the exhibition, Jobs introduced the Apple II to a Japanese chemist named Toshio Mizushima, who became the first authorized Apple dealer in Japan.
The main difference internally was a completely redesigned TV interface, which held the display in memory. Now not only useful for simple text display, the Apple II included graphics and, eventually, color. Jobs meanwhile pressed for a much improved case and keyboard, with the idea that the machine should be complete and ready to run out of the box. This was almost the case for the Apple I machines sold to The Byte Shop, but one still needed to plug various parts together and type in the code to run BASIC.
With both cash and a new case design in hand thanks to designer Jerry Manock, the Apple II was released in 1977 and was one of the three "1977 Trinity" computers generally credited with creating the home computer market (the other two being the Commodore PET and the Tandy Corporation TRS-80). Millions were sold well into the 1980s. A number of different models of the Apple II series were built, including the Apple IIe and Apple IIGS, which continued in public use for nearly two decades thereafter.
Main article: Apple III
While the Apple II was already established as a successful business-ready platform because of Visicalc, Apple was not content. The Apple III was designed to take on the business environment. The Apple III was released on May 19, 1980.
The Apple III was a relatively conservative design for computers of the era. However, Steve Jobs did not want the computer to have a fan; rather, he wanted the heat generated by the electronics to be dissipated through the chassis of the machine, forgoing the cooling fan.
However, the physical design of the case was not sufficient to cool the components inside it. By removing the fan from the design, the Apple III was prone to overheating. This caused the integrated circuit chips to disconnect from the motherboard. Customers who contacted Apple customer service were told to "raise the computers six inches in the air, and then let go", which would cause the ICs to fall back into place.
Thousands of Apple III computers were recalled. A new model was introduced in 1983 to try and rectify the problems, but the damage was already done.
In the July 1980 issue of Kilobaud Microcomputing, publisher Wayne Green stated that "the best consumer ads I've seen have been those by Apple. They are attention-getting, and they must be prompting sale." In August, the Financial Times reported that
Apple Computer, the fast growing Californian manufacturer of small computers for the consumer, business and educational markets, is planning to go public later this year. [It] is the largest private manufacturer in the U.S. of small computers. Founded about five years ago as a small workshop business, it has become the second largest manufacturer of small computers, after the Radio Shack division of the Tandy company.
On December 12, 1980, Apple launched the Initial Public Offering of its stock to the investing public. When Apple went public, it generated more capital than any IPO since Ford Motor Company in 1956 and instantly created more millionaires (about 300) than any company in history. Several venture capitalists cashed out, reaping billions in long-term capital gains.
In January 1981, Apple held its first shareholders meeting as a public company in the Flint Center, a large auditorium at nearby De Anza College (which is often used for symphony concerts) to handle the larger numbers of shareholders post-IPO. The business of the meeting had been planned so that the voting could be staged in 15 minutes or less. In most cases, voting proxies are collected by mail and counted days or months before a meeting. In this case, after the IPO, many shares were in new hands.
Steve Jobs started his prepared speech, but after being interrupted by voting several times, he dropped his prepared speech and delivered a long, emotionally charged talk about betrayal, lack of respect, and related topics.
The IBM PC
By August 1981 Apple was among the three largest microcomputer companies, perhaps having replaced Radio Shack as the leader.IBM entered the personal computer market that month with the IBM PC, but Apple had many advantages. While IBM began with one microcomputer, little available hardware or software, and a couple of hundred dealers, Apple had five times as many dealers in the US and an established international distribution network. The Apple II had an installed base of more than 250,000 customers, and hundreds of independent developers offered software and peripherals; at least ten databases and ten word processors were available, while the PC had no databases and one word processor. The company's customers gained a reputation for devotion and loyalty. BYTE in 1984 stated that
There are two kinds of people in the world: people who say Apple isn't just a company, it's a cause; and people who say Apple isn't a cause, it's just a company. Both groups are right. Nature has suspended the principle of noncontradiction where Apple is concerned.
Apple is more than just a company because its founding has some of the qualities of myth ... Apple is two guys in a garage undertaking the mission of bringing computing power, once reserved for big corporations, to ordinary individuals with ordinary budgets. The company's growth from two guys to a billion-dollar corporation exemplifies the American Dream. Even as a large corporation, Apple plays David to IBM's Goliath, and thus has the sympathetic role in that myth.
The magazine noted, however, that the loyalty was not entirely positive for Apple; customers were willing to overlook real flaws in its products, even while comparing the company to a higher standard than for competitors. The Apple III was an example of the company's reputation among dealers that one described as "Apple arrogance". After examining a PC and finding it unimpressive, Apple confidently purchased a full-page advertisement in The Wall Street Journal with the headline "Welcome, IBM. Seriously". Microsoft head Bill Gates was at Apple headquarters the day of IBM's announcement and later said "They didn't seem to care. It took them a full year to realize what had happened". By 1983 the PC surpassed the Apple II as the best-selling personal computer. By 1984 IBM had $4 billion in annual PC revenue, more than twice that of Apple and as much as the sales of it and the next three companies combined. Most Apple II sales had been to companies, but a Fortune survey found that 56% of American companies with personal computers used IBM PCs, compared to 16% for Apple. Small businesses, schools, and some homes became the II's primary market.
Xerox PARC and the Lisa
Main article: Apple Lisa
Apple Computer’s business division was focused on the Apple III, another iteration of the text-based computer. Simultaneously the Lisa group worked on a new machine that would feature a completely different interface and introduce the words mouse, icon, and desktop into the lexicon of the computing public. In return for the right to buy US$1,000,000 of pre-IPO stock, Xerox granted Apple Computer three days access to the PARC facilities. After visiting PARC, they came away with new ideas that would complete the foundation for Apple Computer's first GUI computer, the Apple Lisa.
The first iteration of Apple's WIMP interface was a floppy disk where files could be spatially moved around. After months of usability testing, Apple designed the Lisa interface of windows and icons.
The Lisa was introduced in 1983 at a cost of US $9,995 (equivalent to $24,600 in 2017). Because of the high price, Lisa failed to penetrate the business market.
Macintosh and the "1984" commercial
Main article: Macintosh
The Macintosh 128k was announced to the press in October 1983, followed by an 18-page brochure included with various magazines in December. Its debut, however, was announced by a single national broadcast of the now famous US$1.5 million television commercial, "1984" (equivalent to $3,500,000 in 2017). It was directed by Ridley Scott, aired during the third quarter of Super Bowl XVIII on January 22, 1984, and is now considered a "watershed event" and a "masterpiece."1984 used an unnamed heroine to represent the coming of the Macintosh (indicated by her white tank top with a Picasso-style picture of Apple’s Macintosh computer on it) as a means of saving humanity from "conformity" (Big Brother). These images were an allusion to George Orwell's noted novel, Nineteen Eighty-Four, which described a dystopian future ruled by a televised "Big Brother."
For a special post-election edition of Newsweek in November 1984, Apple spent more than US$2.5 million to buy all 39 of the advertising pages in the issue. Apple also ran a “Test Drive a Macintosh” promotion, in which potential buyers with a credit card could take home a Macintosh for 24 hours and return it to a dealer afterwards. While 200,000 people participated, dealers disliked the promotion, the supply of computers was insufficient for demand, and many were returned in such a bad shape that they could no longer be sold. This marketing campaign caused CEO John Sculley to raise the price from US$1,995 (equivalent to $4,700 in 2017) to US$2,495 (equivalent to $5,900 in 2017).
Two days after the 1984 ad aired, the Macintosh went on sale. It came bundled with two applications designed to show off its interface: MacWrite and MacPaint. Although the Mac garnered an immediate, enthusiastic following, it was too radical for some, who labeled it a mere "toy". Because the machine was entirely designed around the GUI, existing text-mode and command-driven applications had to be redesigned and the programming code rewritten; this was a challenging undertaking that many software developers shied away from, and resulted in an initial lack of software for the new system. In April 1984 Microsoft's MultiPlan migrated over from MS-DOS, followed by Microsoft Word in January 1985. In 1985, Lotus Software introduced Lotus Jazz after the success of Lotus 1-2-3 for the IBM PC, although it was largely a flop. Apple introduced Macintosh Office the same year with the lemmings ad, infamous for insulting potential customers. It was not successful.
Macintosh also spawned the concept of Mac evangelism which was pioneered by Apple employee, and later Apple Fellow, Guy Kawasaki.
Despite initial marketing difficulties, the Macintosh brand was eventually a success for Apple. This was due to its introduction of desktop publishing (and later computer animation) through Apple's partnership with Adobe Systems which introduced the laser printer and Adobe PageMaker. Indeed, the Macintosh would become known as the de facto platform for many industries including cinema, music, advertising, publishing and the arts.
1985: Jobs leaves Apple
Sculley and Jobs' visions for the company greatly differed. The former favored open architecture computers like the Apple II, sold to education, small business, and home markets less vulnerable to IBM. Jobs wanted the company to focus on the closed architecture Macintosh as a business alternative to the IBM PC. President and CEO Sculley had little control over Chairman of the Board Jobs' Macintosh division; it and the Apple II division operated like separate companies, duplicating services. Although its products provided 85% of Apple's sales in early 1985, the company's January 1985 annual meeting did not mention the Apple II division or employees. Many left, including Wozniak, who stated that the company had "been going in the wrong direction for the last five years" and sold most of his stock.
The Macintosh's failure to defeat the PC strengthened Sculley's position in the company. In June 1985, the board of directors sided with Sculley and Jobs was stripped of all duties. Jobs, while taking the position of Chairman of the firm, had no influence over Apple's direction and subsequently resigned. Sculley reorganized the company, unifying sales and marketing in one division and product operations and development in another. In a show of defiance at being set aside by Apple Computer, Jobs sold all but one of his 6.5 million shares in the company for $70 million. Jobs then acquired the visual effects house, Pixar for $5M (equivalent to $11,200,000 in 2017). He also went on to found NeXT Inc., a computer company that built machines with futuristic designs and ran the UNIX-derived NeXTstep operating system. NeXTSTEP would eventually be developed into Mac OS X. While not a commercial success, due in part to its high price, the NeXT computer would introduce important concepts to the history of the personal computer (including serving as the initial platform for Tim Berners-Lee as he was developing the World Wide Web).
1985–1997: Sculley, Spindler, Amelio
See also: List of mergers and acquisitions by Apple
Under leadership of John Sculley, Apple issued its first corporate stock dividend on May 11, 1987. A month later on June 16, Apple stock split for the first time in a 2:1 split. Apple kept a quarterly dividend with about 0.3% yield until November 21, 1995. Between March 1988 and January 1989, Apple undertook five acquisitions, including software companies Network Innovations, Styleware, Nashoba Systems, and Coral Software, as well as satellite communications company Orion Network Systems.
Apple continued to sell both lines of its computers, the Apple II and the Macintosh. A few months after introducing the Mac, Apple released a compact version of the Apple II called the Apple IIc. And in 1986 Apple introduced the Apple IIgs, an Apple II positioned as something of a hybrid product with a mouse-driven, Mac-like operating environment. Even with the release of the first Macintosh, Apple II computers remained the main source of income for Apple for years.
The Mac family
See also: Timeline of Macintosh models
At the same time, the Mac was becoming a product family of its own. The original model evolved into the Mac Plus in 1986 and spawned the Mac SE and the Mac II in 1987 and the Mac Classic and Mac LC in 1990. Meanwhile, Apple attempted its first portable Macs: the failed Macintosh Portable in 1989 and then the more popular PowerBook in 1991, a landmark product that established the modern form and ergonomic layout of the laptop. Popular products and increasing revenues made this a good time for Apple. MacAddict magazine has called 1989 to 1991 the "first golden age" of the Macintosh.
On February 19, 1987, Apple registered the "Apple.com" domain name, making it one of the first hundred companies to register a .com address on the nascent Internet.
In the late 1980s, Apple's fiercest technological rivals were the Amiga and Atari ST platforms. But computers based on the IBM PC were far more popular than all three, and by the 1990s, they finally had a comparable GUI thanks to Windows 3.0, and were out-competing Apple.
Apple's response to the PC threat was a profusion of new Macintosh lines such as Quadra, Centris, and Performa. However, these new lines were marketed poorly by what was now "arguably one of the worst-managed companies in the industry". For one, there were too many models, differentiated by very minor graduations in their tech specs. The excess of arbitrary model numbers confused many consumers and hurt Apple's reputation for simplicity. Apple's retail resellers like Sears and CompUSA often failed to sell or even competently display these Macs. Compounding matters was the fact that, although the machines were cheaper than a comparable PC (when taken into account all the components built-in which had to be added to the 'bare bones PC'), the poor marketing gave the impression that the machines were more expensive. Inventory grew as Apple consistently underestimated demand for popular models and overestimated demand for others.
In 1991, Apple partnered with long-time competitor IBM and Motorola to form the AIM alliance. The ultimate goal was to create a revolutionary new computing platform, known as PReP, which would use IBM and Motorola hardware and Apple software. As the first step toward the PReP platform, Apple started the Power Macintosh line in 1994, using PowerPC processors from Motorola and IBM. These processors used a RISC architecture, which differed substantially from the Motorola 680X0 series that were used by all previous Macs. Parts of Apple's operating system software were rewritten so that most software written for older Macs could run in emulation on the PowerPC series. Apple also refused IBM's offer to purchase the company, but later unsuccessfully sought another offer from IBM, and at one point was "hours away" from an acquisition by Sun Microsystems.
In addition to computers, Apple has also produced consumer devices. In 1993, Apple released the Newton, an early personal digital assistant (PDA). It defined and launched the PDA category and was a forerunner and inspiration of devices such as Palm Pilot and Pocket PC.
In 1994 Apple launched eWorld, an online service providing email, news and a bulletin board system to replace AppleLink. It was shut down in 1996.
During 1995, a decision was made to (officially) start licensing the Mac OS and Macintosh ROMs to 3rd party manufacturers who started producing Macintosh “clones”. This was done in order to achieve deeper market penetration and extra revenue for the company. This decision lead to Apple having over a 10% market share until 1997 when Steve Jobs was re-hired as interim CEO to replace Gil Amelio. Jobs promptly found a loophole in the licensing contracts Apple had with the clone manufacturers and terminated the Macintosh OS licensing program, ending the Macintosh clone era. The result of this action was that Macintosh computer market share quickly fell from 10% to around 3%.
In 1996, the struggling NeXT company beat out Be Inc.'s BeOS in its bid to sell its operating system to Apple. Apple purchased Steve Jobs' company, NeXT on December 10, 1996, and its NeXTstep operating system. This would not only bring Steve Jobs back to Apple's management, but NeXT technology would become the foundation of the Mac OS X operating system.
1997–2001: Apple's comeback
Return of Steve Jobs
On July 9, 1997, Gil Amelio was ousted as CEO of Apple by the board of directors. Jobs stepped in as the interim CEO to begin a critical restructuring of the company's product line. He would eventually become CEO and served in that position until August 2011. On August 24, 2011 Steve Jobs resigned his position as chief executive officer of Apple before his long battle with pancreatic cancer took his life on October 5, 2011.
On November 10, 1997, Apple introduced the Apple Store, an online retail store based upon the WebObjects application server the company had acquired in its purchase of NeXT. The new direct sales outlet was also tied to a new build-to-order manufacturing strategy.
At the 1997 Macworld Expo, Steve Jobs announced that Apple would be entering into a partnership with Microsoft. Included in this was a five-year commitment from Microsoft to release Microsoft Office for Macintosh as well as a US$150 million investment in Apple. As part of the deal Apple and Microsoft agreed to settle a long-standing dispute over whether Microsoft's Windows operating system infringed on any of Apple's patents. It was also announced that Internet Explorer would be shipped as the default browser on the Macintosh, with the user being able to have a preference. Microsoft chairman Bill Gates appeared at the expo on-screen, further explaining Microsoft's plans for the software they were developing for Mac, and stating that he was very excited to be helping Apple return to success. After this, Steve Jobs said this to the audience at the expo:
If we want to move forward and see Apple healthy and prospering again, we have to let go of a few things here. We have to let go of this notion that for Apple to win, Microsoft has to lose. We have to embrace a notion that for Apple to win, Apple has to do a really good job. And if others are going to help us that's great, because we need all the help we can get, and if we screw up and we don't do a good job, it's not somebody else's fault, it's our fault. So I think that is a very important perspective. If we want Microsoft Office on the Mac, we better treat the company that puts it out with a little bit of gratitude; we'd like their software.
So, the era of setting this up as a competition between Apple and Microsoft is over as far as I'm concerned. This is about getting Apple healthy, this is about Apple being able to make incredibly great contributions to the industry and to get healthy and prosper again.
The day before the announcement Apple had a market cap of $2.46 billion, and had ended its previous quarter with quarterly revenues of US$1.7 billion and cash reserves of US$1.2 billion, making the US$150 million amount of the investment largely symbolic. Apple CFO Fred Anderson stated that Apple would use the additional funds to invest in its core markets of education and creative content.
iMac, iBook, and Power Mac G4
While discontinuing Apple's licensing of its operating system to third-party computer manufacturers, one of Jobs's first moves as new acting CEO was to develop the iMac, which bought Apple time to restructure. The original iMac integrated a CRT display and CPU into a streamlined, translucent plastic body. The line became a sales smash, moving about one million units each year. It also helped re-introduce Apple to the media and public, and announced the company's new emphasis on the design and aesthetics of its products.
In 1999, Apple introduced the Power Mac G4, which utilized the Motorola-made PowerPC 7400 containing a 128-bit instruction unit known as AltiVec, its flagship processor line. Also that year, Apple unveiled the iBook, its first consumer-oriented laptop that was also the first Macintosh to support the use of Wireless LAN via the optional AirPort card that was based on the 802.11b standard; it helped popularize the use of Wireless LAN technology to connect computers to networks.
Mac OS X
Main article: Mac OS X
In 2001, Apple introduced Mac OS X (now known as macOS), an operating system based on NeXT's NeXTSTEP and incorporating parts of the FreeBSD kernel. Aimed at consumers and professionals alike, Mac OS X married the stability, reliability and security of Unix with the ease of a completely overhauled user interface. To aid users in transitioning their applications from Mac OS 9, the new operating system allowed the use of Mac OS 9 applications through the Classic environment. Apple's Carbon API also allowed developers to adapt their Mac OS 9 software to use Mac OS X's features.
Main article: Apple Store
In May 2001, after much speculation, Apple announced the opening of a line of Apple retail stores, to be located throughout the major U.S. computer buying markets. The stores were designed for two primary purposes: to stem the tide of Apple's declining share of the computer market and to respond to poor marketing of Apple products at third-party retail outlets.
2001–2007: iPods, iTunes Store, Intel transition
Main article: iPod
In October 2001, Apple introduced its first iPod portable digital audio player. Then iPod started as a 5 gigabyte player capable of storing around 1000 songs. Since then it has evolved into an array of products including the Mini (now discontinued), the iPod Touch, the Shuffle (now discontinued), the iPod Classic (also discontinued), the Nano (now discontinued), the iPhone and the iPad. Since March 2011, the largest storage capacity for an iPod has been 160 gigabytes. Speaking to software developers on June 6, 2005, Steve Jobs said the company's share of the entire portable music device market stood at 76%.
The iPod gave an enormous lift to Apple's financial results. In the quarter ending March 26, 2005, Apple earned US$290 million, or 34¢ a share, on sales of US$3.24 billion. The year before in the same quarter, Apple earned just US$46 million, or 6¢ a share, on revenue of US$1.91 billion.
Moving on from colored plastics and the PowerPC G3
In early 2002, Apple unveiled a completely redesigned iMac, using the G4 processor and LCD display. The new iMac G4 design had a white hemispherical base and a flat panel all-digital display supported by a swiveling chrome neck. After several iterations increasing the processing speed and screen sizes from 15" to 17" to 20" the iMac G4 was discontinued and replaced by the iMac G5 in the summer of 2004.
In 2002, Apple also released the Xserve1Urack mounted server. Originally featuring two G4 chips, the Xserve was unusual for Apple in two ways. It represented an earnest effort to enter the enterprise computer market and it was also relatively cheaper than similar machines released by its competitors. This was due, in no small part, to Apple's use of Fast ATA drives as opposed to the SCSI hard drives used in traditional rack-mounted servers. Apple later released the Xserve RAID, a 14 drive RAID which was, again, cheaper than competing systems.
In mid-2003, Steve Jobs launched the Power Mac G5, based on IBM's G5 processor. Its all-metal anodized aluminum chassis finished Apple's transition away from colored plastics in their computers. Apple claims this was the first 64-bit computer sold to the general public. The Power Mac G5 was also used by Virginia Tech to build its prototype System X supercomputing cluster, which at the time garnered the prestigious recognition of the third fastest supercomputer in the world. It cost only US$5.2 million to build, far less than the previous No. 3 and other ranking supercomputers. Apple's Xserves were soon updated to use the G5 as well. They replaced the Power Mac G5 machines as the main building block of Virginia Tech's System X, which was ranked in November 2004 as the world's seventh fastest supercomputer.
A new iMac based on the G5 processor was unveiled August 31, 2004 and was made available in mid-September. This model dispensed with the base altogether, placing the CPU and the rest of the computing hardware behind the flat-panel screen, which is suspended from a streamlined aluminum foot. This new iMac, dubbed the iMac G5, was the "world's thinnest desktop computer", measuring in at around two inches (around 5 centimeters).
2004, however, was a turning point for Apple. After creating a sizable financial base to work with, the company began experimenting with new parts from new suppliers. As a result, Apple was able to produce new designs quickly over a short amount of time, with the release of the iPod Video, then the iPod Classic, and eventually the iPod touch and iPhone.
On April 29, 2005, Apple released Mac OS X v10.4 "Tiger" to the general public.
Apple's wildly successful PowerBook and iBook products relied on Apple's previous generation G4 architecture which were produced by Freescale Semiconductor, a spin-off from Motorola. Engineers at IBM had minimal success in making their PowerPC G5 processor consume less power and run cooler but not enough to run in iBook or PowerBook formats. As of the week of October 24, 2005 Apple released the Power Mac G5 Dual that features a Dual-Core processor. This processor contains two cores in one rather than have two separate processors. Apple has also developed the Power Mac G5 Quad that uses two of the Dual-Core processors for enhanced workstation power and performance. The new Power Mac G5 Dual cores run individually at 2.0 GHz or 2.3 GHz. The Power Mac G5 Quad cores run individually at 2.5 GHz and all variations have a graphics processor that has 256-bit memory bandwidth.
Retail store expansion
Initially, the Apple Stores were only opened in the United States, but in late 2003, Apple opened its first Apple Store abroad, in Tokyo's Ginza district. Ginza was followed by a store in Osaka, Japan in August 2004. In 2005, Apple opened stores in Nagoya, the Shibuya district of Tokyo, Fukuoka, and Sendai. Another store was opened in Sapporo in 2006. Apple's first European store opened in London, on Regent Street, in November 2004. A store in the Bullring shopping centre in Birmingham opened in April 2005, and the Bluewater shopping centre in Dartford, Kent opened in July 2005. Apple opened its first store in Canada in the middle of 2005 at the Yorkdale Shopping Centre in North York, Toronto. Later on in 2005 Apple opened the Meadowhall Store in Sheffield and the Trafford Centre Store in Manchester (UK). Recent additions in the London area include the Brent Cross Apple Store (January 2006), the Apple Store in Westfield in Shepherd's Bush (September 2008) and the Apple Store in Covent Garden (August 2010), which is currently the largest store in the world.
Also, in an effort to court a broader market, Apple opened several "mini" stores in October 2004 in an attempt to capture markets where demand does not necessarily dictate a full scale store. The first of these stores was opened at Stanford Shopping Center in Palo Alto, California. These stores follow in the footsteps of the successful Apple products: iPod mini and Mac mini. These stores are only one half the square footage of the smallest "normal" store and thus can be placed in several smaller markets.
Apple and "i" Web services
In 2000, Apple introduced its iTools service, a set of free web-based tools that included an email account, internet greeting cards called iCards, a service called iReview that gave internet users a place to read and write reviews of Web sites, and a tool called KidSafe which promised to prevent children from browsing inappropriate portions of the web. The latter two services were eventually canceled because of lack of success, while iCards and email became integrated into Apple's .Mac subscription based service introduced in 2002 and discontinued in mid-2008 to make way for the release of the new MobileMe service, coinciding with the iPhone 3G release. MobileMe, which carried the same US$99.00 annual subscription price as its .Mac predecessor, featured the addition of "push" services to instantly and automatically send emails, contacts and calendar updates directly to users' iPhone devices. Some controversy surrounded the release of MobileMe services to users resulting in expected downtime and a significantly longer release window. As a result of this, Apple extended the subscriptions of existing MobileMe subscribers by an additional 30 days free-of-charge. At the WWDC event in June 2011, Apple announced its most up to date cloud service, iCloud, replacing MobileMe. This service kept most of the core services that MobileMe offered, however dropping iDisk, Gallery, and iWeb. Additionally, it added a number of other features to the group, including Find my Mac, iTunes Match, Photo Stream, Documents & Data Backup, and iCloud backup for iOS devices. The service requires users to be running iOS 5 and OS X 10.7 Lion.
Main article: iTunes Store
The iTunes Music Store was launched in April 2003, with 2 million downloads in the first 16 days. Music was purchased through the iTunes application, which was initially Macintosh-only; in October 2003, support for Windows was added. Initially, the music store was only available in the United States due to licensing restrictions.
In June 2004 Apple opened their iTunes Music Store in the United Kingdom, France, and Germany. A version for the European Union version opened October 2004, but it was not initially available in the Republic of Ireland due to the intransigence of the Irish Recorded Music Association (IRMA) but was opened there a few months later on Thursday January 6, 2005. A version for Canada opened in December 2004. On May 10, 2005, the iTunes Music Store was expanded to Denmark, Norway, Sweden, and Switzerland.
On December 16, 2004, Apple sold its 200 millionth song on the iTunes Music Store to Ryan Alekman from Belchertown, Massachusetts. The download was The Complete U2, by U2. Just under three months later Apple sold its 300 millionth song on March 2, 2005. On July 17, 2005, the iTunes Music Store sold its 500 millionth song. At that point, songs were selling at an accelerating annualized rate of more than 500 million.
On October 25, 2005, the iTunes Store went live in Australia, with songs selling for A$1.69 each, albums at (generally) A$16.99 and music videos and Pixar short films at A$3.39. Briefly, people in New Zealand were able to buy music off the Australian store. However, that loophole was quickly closed.
On February 23, 2006, the iTunes Music Store sold its 1 billionth song.
The iTunes Music Store changed its name to iTunes Store on September 12, 2006 when it began offering video content (TV shows and movies) for sale. Since iTunes' inception it has sold over 2 billion songs, 1.2 billion of which were sold in 2006. Since downloadable TV and movie content was added 50 million TV episodes and 1.3 million movies have been downloaded.
In early 2010, Apple celebrated the 10 billionth song downloaded from the iTunes Music Store.
Main article: Apple–Intel transition
In a keynote address on June 6, 2005, Steve Jobs officially announced that Apple would begin producing Intel-based Macintosh computers beginning in 2006. Jobs confirmed rumors that the company had secretly been producing versions of its current operating system Mac OS X for both PowerPC and Intel processors over the past 5 years, and that the transition to Intel processor systems would last until the end of 2007. Rumors of cross-platform compatibility had been spurred by the fact that Mac OS X is based on OpenStep, an operating system that was available for many platforms. In fact, Apple's own Darwin, the open source underpinnings of Mac OS X, was also available for Intel's x86 architecture.