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Inside Apple's 20-year march to US$1t from the brink of bankruptcy
IN 1997, Apple was on the ropes. The Silicon Valley pioneer was being decimated by Microsoft and its many partners in the personal-computer (PC) market. It had just cut a third of its workforce, and it was about 90 days from going broke, Apple's late co-founder, Steve Jobs, later said.
On Thursday, Apple became the first publicly traded US company to be worth more than US$1 trillion when its shares climbed 3 per cent to end the day at US$207.39. The gains came two days after the firm announced the latest in a series of remarkably profitable quarters.
Apple's ascent from the brink of bankruptcy to the world's most valuable public company has been a business tour de force, marked by rapid innovation, a series of smash-hit products and the creation of a sophisticated, globe-spanning supply chain that keeps costs down while producing enormous volumes of cutting-edge devices.
That ascent has also been marked by controversy, tragedy and challenges. Apple's aggressive use of outside manufacturers in China, for example, has led to criticism that it is taking advantage of poorly paid workers in other countries and robbing Americans of good manufacturing jobs. The company faces numerous questions about how it can continue to grow.
And Mr Jobs, admired for his dazzling product demonstrations and feared for his blunt management style, was arguably the tech industry's most famous figure when he died in 2011 after a battle with pancreatic cancer. He was 56.
Apple was founded in 1976 with the mission of making computers - then bulky, complicated industrial machines - cheap, small and simple so they could become a mass-market product. By the 1980s, the company was one of the world's best-known brands.
But in 1985, Mr Jobs was ousted in a boardroom coup. In the following years, the company was increasingly outgunned and outmaneuvered in the PC market it helped invent. Apple, hamstrung by a lack of new ideas, failed products and leadership turmoil, had lost its way. By the end of 1996, Apple had lost US$867 million and the total value of its shares was less than US$3 billion.
The ailing company decided to take a gamble. It bought Next, a tech firm run by Mr Jobs, for US$400 million. Mr Jobs, still synonymous with the Apple brand, would return to the company he founded. "It was on the rocks," Mr Jobs later recalled. "It was much worse than I thought." Mr Jobs slashed 70 per cent of Apple's product plans, commissioned the company's "Think Different" ad campaign and re-imagined how it put its products together.
The focus on simplicity became a hallmark of Apple, from the way Mr Jobs dressed - jeans and black mock turtlenecks became his uniform of sorts - to the way his products operated to the eventual look of his company's retail stores.
In 1998, Apple introduced the iMac G3, a round, colourful, all-in-one desktop computer. It became a hit. Apple had its swagger back.
The company's revitalisation was confirmed with the iPod, the portable music player that almost immediately changed consumers' relationship with music. The iPod, which debuted in 2001 and went on to sell more than 400 million units, showed that Apple was not just a computer company. The device was paired with iTunes, the company's music store, which would help upend the recording industry. And it portended a bigger product to come.
The iPhone transformed the way society interacts with technology, and quickly became one of the best-selling products ever: more than 1.4 billion have been sold since it was introduced in 2007.
No product or decision was remotely as instrumental to Apple's rise to US$1 trillion as the iPhone. When Mr Jobs first announced the iPhone, Apple was worth US$73.4 billion.
Former employees and analysts said that while Mr Jobs deserved credit for overseeing the reinvention of the company's vision and its innovation, his successor, Tim Cook, had also played a crucial role in the turnaround by overhauling the way Apple built its products.
Mr Cook, as chief operating officer under Mr Jobs, remade Apple's distribution pipeline to heavily rely on contract manufacturers in China, which gave it the flexibility, cost savings and scale to build such a big business.
As chief executive, Mr Cook has also overseen most of the rise in Apple's value. He has been a steady, if unflashy, hand as chief executive, building the iPhone into a huge business, including sales of accessories and services off it.
Now, with Apple reaching the US$1 trillion milestone and the iPhone turning 11 years old, pressure is likely to increase for the company to develop a hit new product.
"It's been one of the most miraculous corporate turnarounds in business history," said Tim Bajarin, a technology analyst and consultant. "The question going forward is: can Apple continue to innovate?" NYTIMES