April 1, 2016 Leave a comment
ON THIS DAY IN HISTORY… APRIL 1, 1976
APPLE FOUNDED, TURNING 40 TODAY
Now the World’s Most Valuable Company
40 years ago, on April 1, 1976, college dropout Steve Jobs and his friends Steve Wozniak and Ronald Wayne incorporated Apple Computer. At the time, few could have imagined that what started in Jobs’ parents’ garage would become one of the greatest success stories in corporate history.
While remarkably successful from the start – Apple went from zero to one and a half billion dollars in revenue within eight years – there were some ups and downs in the company’s early days. It wasn’t until Steve Jobs’ second stint as CEO that Apple became what it is today: the most valuable company in the world.
With the release of the iPhone in 2007, Apple’s revenue (and profit for that matter) started to skyrocket, reaching a record $234 billion in fiscal 2015.
ALTZAR – A PERSONAL HISTORICAL MEMORY
As a computer industry veteran of 47 years, I remember that early Apple very well. Back in 1977, I was a product line manager at IBM in charge of the “white space” – i.e., new entry-level product development and opportunities.
Sensing that we might be at the doorstep of a major industry transformation, I urged the senior IBM executives to invest in new “entry systems,” as we called them back then. (That was 3 years before the term “PC” was born). They refused. They thought companies like Apple, Atari, Osborn were “just” a “hobbyist” market.
“No money in it,” someone said. And also below the dignity of the industry leader like IBM.
So I left IBM in May 1978 to start my own business – Annex Computer which later morphed into Annex Research (http://djurdjevic.com/). I also bought an Apple II but I didn’t like it. I returned it to the store and got my money back.
Soon, IBM realized it was missing the boat. So it hurriedly invested in the development of a “Personal Computer” (PC), using a “borrowed” operating system (Microsoft DOS) and other hardware it could quickly assemble from various suppliers. The first PC that premiered in 1981 was that kind of a “hybrid.” Still, it became a success and gave the whole “entry systems” industry segment its name. Which has lasted to this today.
Meanwhile, Apple was plodding along, struggling as often as succeeding. Its business actually shrank in the late 1990s.
In 1996, I suggested to the relatively new CEO (Louis Gerstner), who was brought in to save the good old IBM, that the company might be missing the boat once again by not being in the low-end market. I showed him my forecast which predicted the consumer market to grow MUCH faster than the large enterprise business (19% vs. 1% per year – see the chart).
Like his predecessors in the late 1970s, Louis dismissed it as a “dumb idea” (see “Louis XIX of Armonk,” Aug 1996). And just like back then, IBM again missed the boat.
Today, consumer companies like Apple, Google and Microsoft are worth 3-4 times more than IBM. In fact, they are the three most valuable companies in the world, period. Bigger than Exxon or any other industrial dinosaurs. As for Big Blue, IBM is no longer even in the top 10.
So it goes… when companies stop reinventing themselves, they stagnate. And eventually perish. Like Kodak.
Happy April Fools’ Day!
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