JEFF CHIU ASSOCIATED PRESS Apple CEO Steve Jobs acts as if his 34-year-old company is a startup, tech analysts say.
A P P L E S C O R E V A L U E S
Tech leader ended 2010 with record profits, having boosted R&D, added jobs
SAN JOSE, Calif. — Much of the tech world is struggling to regain its footing after a difficult recession — and then there’s Apple. Never has this venerable company, which at age 34 is a grizzled veteran by Silicon Valley standards, stood so firmly atop the high-tech industry.
- Last year, Apple’s market capitalization surpassed that of Microsoft, making it the most valuable property in the tech universe.
- And during its just-completed fiscal year, it broke four consecutive quarterly records for revenue and profit. Amid the worst recession in decades, Apple hired thousands while others cut jobs.
It also weathered the announcement last week that it will be without its CEO, Steve Jobs, at least for a while. He’s taking another medical leave of absence and hasn’t said when he expects to return. It’s his third such leave —— he has survived pancreatic cancer and a liver transplant — leaving some worried about the fate of the company now that its legendary leader is sidelined.
But Apple has entered 2011 in better shape than many of its competitors, Jobs’ health aside. While other tech titans spent 2010 cutting costs and acquiring new technology through mergers, the $65 billion company is innovating like a startup. “It has a different cultural mind-set,” said Charles Wolf, an analyst with Needham & Co. “They are acting like a startup though they are becoming a $100 billion company.”
Its iPhone revolutionized the market for smart phones, the must-have product of the decade. Its iPad is creating consumer electronics’ most promising new market: tablet computers. “This past year has arguably been among Apple’s best, if not the best, year,” said Kaufman Brothers analyst Shaw Wu. Experts point to three key factors that drive Apple’s relentless innovation: It invests heavily in research and development, is unafraid to cannibalize or kill its own products, and is able to extend its core technology across a host of products to create a dominant ecosystem of consumer gadgets.
“Never in our history has one company done so much to drive personal technology,” said Mark Gilmore, co-founder of Wired Integrations, a technology-consulting firm. “IBM developed the PC, but that was really geared to businesses. Ford developed the assembly line to help consumers have more access to automobiles, but that is really a single product. Sony has developed several consumer gadgets over the years, but none as game-changing as what Apple has done.”
Apple, no matter how many economic dark clouds may hover, never skimps on research and development. In 2009, at the nadir of the Great Recession, Apple’s R&D spending jumped 20 percent to $1.4 billion. That contrasted with a 4 percent drop in spending on research among the SV150, the San Jose Mercury News’ annual report on Silicon Valley’s 150 largest publicly traded companies. While the SV150 cut payrolls by 6 percent, Apple went on a hiring binge, adding 2,300 employees to the fold, a 7 percent increase in its work force.
The pace of hiring accelerated in the company’s fiscal 2010, which ended Sept. 25. In that year, Apple added another 12,300 employees, raising its number of full-time workers to 46,600, a 36 percent jump. Over the same period, Apple’s R&D spending soared 38 percent, and it opened 44 retail stores, ending the year with 317.
Apple’s innovation is not only relentless but also ruthless. No company is more willing to kill its babies. Rather than wait for competitors to draw the knife, Jobs does the deed himself. In 2005, Apple killed off the popular iPod Mini to make way for the even-sleeker digital music player, the iPod Nano. Apple executives readily acknowledge that the iPhone is cannibalizing its iPods, and the iPad tablet ultimately could threaten the company’s core laptop business.
PAUL SAKUMA ASSOCIATED PRESS Apple’s iPad may threaten its core product — laptops. Apple’s willingness to kill off older products in favor of more-innovative ones is key to its success, experts say.
PAUL SAKUMA ASSOCIATED PRESS Among Apple’s innovations is the iPhone. When it premiered in 2007, it revolutionized the market for smart phones, the must-have product of the decade.
App store hits 10 billion downloads
NEW YORK (AP) — Apple says that its app store has hit the 10 billion downloads mark. The milestone was announced Saturday on Apple Inc.’s website. The company has sold tens of millions of iPhones since the device launched in 2007 and continues to expand the use of apps with its iPad tablet computer. Its app store has drawn an army of software developers hoping to piggyback on the company’s success. The store boasts more than 350,000 programs for the iPhone, iPod Touch or iPad. Apple had said it would give the 10 billionth person to download an app a $10,000 gift card to its iTunes store. The winner is Gail Davis of Orpington, Kent, in England.
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