From Near Bankruptcy to World Dominance: The Apple Story

From near-bankruptcy to global dominance: the technology company was founded on April 1, 1976.

An estimated 2.8 billion people worldwide own an iPhone or other Apple device, roughly 27 percent of the global population. Were Apple a country, its population would be larger than that of India or China. And 50 years after the company’s founding on April 1, 1976, the complete of its success is nowhere in sight, with Apple selling an estimated 220 million iPhones each year.

The circumstances surrounding Apple’s birth were, still, extraordinary. The meeting of founding fathers Steve Jobs and Steve Wozniak might never have occurred were it not for Bill Fernandez. Fernandez was a school friend of Jobs – and also a neighbor of Wozniak. And when Jobs visited him one day, Fernandez, as he recently recounted, thought, “One is interested in electronics, the other is interested in electronics, they would probably like to meet each other.” Jobs was 15 at the time, and Wozniak nearly five years older.

Nearly Imprisoned with the “Blue Box”

The pair’s first joint project almost landed them both in jail. They built “Blue Boxes,” devices used to manipulate the U.S. Telephone system to make free long-distance calls. For “Woz,” as his friends called him, it was merely a hobby. Steve Jobs, however, recognized the commercial potential. But after nearly being caught by the police, they abandoned the illegal activity.

Both Steves then dreamed of owning their own computer. Computer systems at the time were as large as refrigerators and inaccessible to ordinary people. The ingenious tinkerer Wozniak, however, refused to be discouraged and built his own computer using the first available chips – the Apple I, the world’s first personal computer. Jobs immediately knew that the Apple I could not only impress friends in the computer club but also generate significant business. “I never tried to start a business or an industry,” the now 75-year-old Wozniak recently said at a commemorative event. “I just wanted other engineers to look at my designs and say, ‘Wow, he thinks differently.’” Jobs, however, saw the business potential – also given that he was constantly broke, Wozniak chuckled. “We had no money, we had no resources, we had no business experience.” Wozniak initially offered the computer design to his then-employer, Hewlett-Packard, but they passed.

The Teddy Bear and the Businessman

The initial spark came from an order placed by Jobs with the computer store “Byte Shop” in Mountain View: owner Paul Terrell agreed to purchase 50 computers for $500 each. “I remember a teddy bear named Steve Wozniak and a businessman named Steve Jobs,” Terrell said recently. The written commitment of $25,000 allowed the two Steves to secure the necessary components on credit. The soldering took place in Jobs’ parents’ garage. To acquire the business on track, Apple Computer Company was founded on April 1, 1976. “Apple’s particular strength certainly lay in the combination of Steve Wozniak and Steve Jobs, who complemented each other almost perfectly,” said Michael Mikolajczak, curator at the Heinz Nixdorf MuseumsForum. “Wozniak was the technical brain. Jobs, however, was the aesthetic and marketing genius.”

The Forgotten Third Founder

The founding contract was signed not only by the two Steves but also by Ron Wayne, then 41, who was intended to play the role of the adult in the room. The now-almost-forgotten third founder, however, had cold feet just days after signing the contract and feared the liability risk. Wayne withdrew from the company and received a check for $800 from Steve Jobs after a few weeks, with no comment. “To be honest, I thought it was a tip. And a pretty measly one at that. I had done quite a bit of work,” Wayne said at an event at the Computer History Museum in Silicon Valley celebrating Apple’s 50th anniversary. His shares would now be worth billions of dollars.

After the Apple I was offered as a kit, both Steves quickly realized that only a complete, “finished” computer was viable. With the Apple II, “Woz” implemented this idea: a computer with an integrated keyboard, appealing design, and the ability to connect directly to a television. “Wozniak had created a computer that appealed to the end consumer and not just to tech freaks and tinkerers,” said computer historian Mikolajczak.

However, a lack of start-up capital hindered higher-volume production. This was then provided by Mike Markkula, who played an key role at Apple for many years as an investor, mentor, and strategist. The commitment paid off. Apple sold over six million units of the Apple II and successfully launched an initial public offering in December 1980.

The Difficult Search for a Successor to the Apple II

The start-up Apple then struggled to repeat its initial success. Early attempts to develop a graphical user interface for computers failed miserably. In the second attempt, with the Apple Macintosh in 1984, it was possible to provide the graphical user interface for the mass market. However, the hardware proved to be too weak at the beginning to run the software smoothly.

The sales problems of the Macintosh also led to Steve Jobs leaving Apple in 1985. In a dramatic showdown, he was unable to prevail against then-Apple CEO John Sculley with his ideas. Jobs wanted to drastically reduce the price of $2,500 for a Mac, even at the expense of the Apple II. Sculley, however, opposed prematurely slaughtering the Apple II cash cow.

Steve Jobs in Exile

After Steve Jobs left Apple, the company soon went off course. Everything seemed simply wrong: the products, the distribution channels, the marketing, and the production. Unsold goods piled up in warehouses. And when a product proved to be a bestseller, Apple often couldn’t deliver.

John Sculley, the former Pepsi manager at the helm of Apple, last tried to turn things around with the Apple Newton, but these efforts were also unsuccessful. The “Personal Digital Assistant” (PDA) could not meet the requirements placed on it. The project was ahead of its time.

On June 19, 1993, Sculley resigned as CEO of Apple. His successor on the executive board was Michael Spindler, born in Berlin. But “The Diesel” also failed to achieve the turnaround, also because the outdated Macintosh software could not stop the rise of Windows 95. In the Christmas quarter of 1995, Spindler reported a catastrophic loss of $69 million. Apple was on the verge of bankruptcy.

From Near-Bankruptcy to Global Leadership

That this hopeless case of restructuring became the world’s most valuable company is due to Steve Jobs’ return. After being brought back into the company by restructuring expert Gil Amelio, Jobs initially radically streamlined Apple’s overly complicated product range. At the same time, he discovered Jony Ive, a frustrated super-talent in Apple’s design department. The British designer no longer had to work for the trash can but was able to bring his ideas into product development almost unhindered, contributing significantly to Apple’s success.

Jobs recruited logistics expert Tim Cook from then-PC market leader Compaq to eliminate the operational chaos in the supply chain and inventory management. The numbers-obsessed Cook quickly reduced inventory from a former two months to a remarkable two days.

At the same time, Jobs, Ive, and the new team were able to score points with innovative products. In 2001, shortly after the September 11 attacks, Jobs introduced the iPod. Despite the difficult starting conditions, the MP3 player established itself as Apple’s most successful product in the years that followed.

Triumph with the iPhone

The first iPhone in 2007 was revolutionary: it combined a mobile phone, a widescreen iPod, and a usable internet device. Instead of a fixed plastic keyboard, there was a large display with touch operation, a flexible software keyboard, and the new swipe gesture “Slide to unlock” to unlock the device.

In the third quarter of 2009, the iPhone also rose to the top position among the company’s most revenue-generating product categories for the first time. Apple has been the iPhone company ever since. Steve Jobs personally did not experience the dimensions of the iPhone’s triumph. He died on October 5, 2011, at the age of 56 in Palo Alto, succumbing to the consequences of a long-term battle with pancreatic cancer.

After the death of the charismatic co-founder Jobs, skeptics predicted a bleak future for Apple. His successor, Tim Cook, however, led Apple to the historic market capitalization of four trillion dollars. Under his leadership, the company technologically emancipated itself from partners such as Intel through its own chip technology (Apple Silicon), created new product categories in which it dominates with the Apple Watch and AirPods, and built the service business into a highly profitable second pillar.

While Apple shareholders are consistently satisfied, fans are waiting for the next big “One more thing.” Cook attempted to set his own, bold accent in the field of spatial computing with the Vision Pro, but the success of the data glasses has so far fallen short of expectations.