Why Is Apple Successful?

In 1976 Steve Jobs and Steve Wozniak created their first computer, the Apple I.This vignette is based on an honors thesis written by Danielle M. Testa, “Apple, Inc.: An Analysis of the Firm’s Tumultuous History, in Conjunction with the Abounding Future” (Lehigh University), November 18, 2007. They invested a mere $1,300 and set up business in Jobs’s garage. Three decades later, their business—Apple Inc.—has become one of the world’s most influential and successful companies. Did you ever wonder why Apple flourished while so many other young companies failed? How did it grow from a garage start-up to a company generating $24 billion in sales? How was it able to transform itself from a nearly bankrupt firm to a multinational corporation with locations all around the world? You might conclude that it was the company’s products, such as the Apple I and II, the Macintosh, or more recently its wildly popular iPod and iPhone. Or you might decide that it was its people: its dedicated employees and loyal customers. Perhaps you will decide it was luck—Apple simply was in the right place at the right time. Or maybe you will attribute the company’s success to management’s willingness to take calculated risks. Perhaps you will attribute Apple’s initial accomplishments and reemergence to its cofounder, Steve Jobs. After all, Jobs was instrumental in the original design of the Apple I and, after being ousted from his position with the company, returned to save the firm from destruction and lead it onto its current path.

Before we decide what made Apple what it is today and what will propel it into a successful future, let’s see if you have all the facts about the possible choices: its products, its customers, luck, willingness to take risks, or Steve Jobs. We’re confident that you’re aware of Apple’s products and understand that “Apple customers are a loyal bunch. Though they’re only a small percentage of all computer users, they make up for it with their passion and outspokenness.”Ellen Lee, “Faithful, sometimes fanatical Apple customers continue to push the boundaries of loyalty,” San Francisco Chronicle, March 26, 2006. We believe you can understand the role that luck or risk taking could play in Apple’s success. But you might like to learn more about Steve Jobs, the company’s cofounder and CEO, before arriving at your final decision.

Growing up, Jobs had an interest in computers. He attended lectures at Hewlett-Packard after school and worked for the company during the summer months. He took a job at Atari after graduating from high school and saved his money to make a pilgrimage to India to search for spiritual enlightenment. Following his India trip, he attended Steve Wozniak’s “Homebrew Computer Club” meetings, where the idea for building a personal computer surfaced.Lee Angelelli, “Steve Paul Jobs,” http://ei.cs.vt.edu/~history/Jobs.html (accessed November 2, 2008). “Many colleagues describe Jobs as a brilliant man who can be a great motivator and positively charming. At the same time his drive for perfection is so strong that employees who do not meet his demands are faced with blistering verbal attacks.”Lee Angelelli, “Steve Paul Jobs,” http://ei.cs.vt.edu/~history/Jobs.html (accessed November 2, 2008). Not everyone at Apple appreciated Jobs’s brilliance and ability to motivate. Nor did they all go along with his willingness to spend whatever it took to produce an innovative, attractive, high-quality product. So at age thirty, Jobs found himself ousted from Apple by John Sculley, whom Jobs himself had hired as president of the company several years earlier. It seems that Sculley wanted to cut costs and thought it would be easier to do so without Jobs around. Jobs sold $20 million of his stock and went on a two-month vacation to figure out what he would do for the rest of his life. His solution: start a new personal computer company called NextStep. In 1993, he was invited back to Apple (a good thing, because neither his new company nor Apple was doing well).

Figure 1.1

A new iPhone 3G is displayed at the Apple store at the Grove where it went on sale in Los Angeles, California. New iPhone buyers, along with owners of the previous version who were upgrading to newer software, experienced massive gridlock on the phone’s network as millions attempted to activate or upgrade service.

Photo by Valerie Macon/Getty Images

Steve Jobs is definitely not humble, but he is a visionary and has a right to be proud of his accomplishments. Some have commented that “Apple’s most successful days have occurred with Steve Jobs at the helm, both in the early days with the original Macintosh and more recently with the first iMac and the iPod.”Cyrus Farivar, “Apple’s first 30 years; three decades of contributions to the computer industry,” Macworld, June 2006, 2. Jobs did what many successful CEOs and managers do: he learned, adjusted, and improvised.Dan Barkin, “He made the iPod: How Steve Jobs of Apple created the new millennium’s signature invention,” Knight Ridder Tribune Business News, December 3, 2006, 1. Perhaps the most important statement that can be made about him is this: he never gave up on the company that once turned its back on him. So now you have the facts. Here’s a multiple-choice question that you can’t get wrong: Apple’s success is due to (a) its products, (b) its customers, (c) luck, (d) willingness to take risks, (e) Steve Jobs, or (f) some combination of these options.