Research paper Apple Inc (2 to 3 pages)

Apple Inc. (Apple or “the company”) designs, manufactures, and markets mobile communication and media devices, personal computers (PCs), and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications.The company primarily operates in the US, Europe and Asia Pacific. It is headquartered in Cupertino, California and employed 92,600 people as of September 27, 2014.

The company recorded revenues of $182,795 million during the financial year ended September 2014 (FY2014), an increase of 7% over FY2013.The operating profit of the company was $52,503 million in FY2014, an increase of 7.2% over FY2013.The net profit of the company was $39,510 million in FY2014, an increase of 6.7% over FY2013.

Apple Inc.

Apple Inc.

Apple Inc. Page 2

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Apple Inc. (Apple or the company) is a technology company that offers personal communication devices and related software and solutions.The company’s products and services include iPhone; iPad; Mac; iPod; Apple TV; a portfolio of consumer and professional software applications; the iOS and OS X operating systems; iCloud ; and a variety of accessory, service and support offerings.The company also sells and delivers digital content and applications through the iTunes Store, App Store, iBooks Store, and Mac App Store. Apple sells its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and value-added resellers. In addition, the company sells a variety of third-party products that are compatible with iPhone, iPad, Mac and iPod, including application software, and various accessories, through its online and retail stores. Apple sells its products to consumers; small and mid-sized businesses (SMB); and education, enterprise and government customers.The company has operations in Americas, Europe, and Asia Pacific.

The company manages its business primarily on geographic basis: the Americas, Europe, Japan, Greater China, rest of Asia Pacific and retail operations. Each operating segment provides similar hardware and software products and similar services.The Americas segment includes both North and South America.The Europe segment includes European countries, as well as India, the Middle East and Africa.The Greater China segment includes China, Hong Kong and Taiwan.The rest of Asia Pacific segment includes Australia and Asian countries, other than those countries included in the company's other operating segments.The retail segment operates Apple retail stores in various countries, including the US.

Apple offers products, operating system software, application software, and accessories.

The company’s products include iPhone; iPad; Mac; iPod; iTunes and the iTunes Store; Mac App Store; iCloud; and Apple Pay.

iPhone is the company's line of smartphones that combine a phone, music player, and internet device in one product, and is based on Apple's iOS Multi-Touch operating system. iPhone has an integrated photo and video camera and photo library app, and on qualifying devices, also includes Siri, a voice activated intelligent assistant. iPhone uses Apple's iTunes Store, App Store and iBooks Store to purchase and organize music, movies, television (TV) shows, podcasts, books, and apps. Apple's iPhone is compatible with both Mac and Windows personal computers (PCs) and Apple's iCloud services which provide synchronization of mail, contacts, calendars, apps, music, photos, documents, and more across users' devices.The company sold approximately 169.2 million iPhones during the financial year ended September 2014 (FY2014).

iPad is the company's line of multi-purpose tablets based on Apple's iOS Multi-Touch operating system, which includes iPad Air and iPad mini. iPad has an integrated photo and video camera and photo library app, and on qualifying devices, also includes Siri. iPad works with the iTunes Store, the iBooks Store and the App Store for purchasing, organizing and playing music, movies, TV shows, podcasts, books and apps. iPad is compatible with both Mac and Windows PCs and Apple’s iCloud services. Apple sold approximately 68 million iPads in FY2014.

Mac is the company's line of desktop and portable PCs. Macs feature Intel microprocessors, the OS X operating system and include mail, Safari web browser, messages, calendars, reminders, contacts and the iLife apps.The company's desktop computers include iMac, Mac Pro and Mac mini. Its portable computers include MacBook Pro and MacBook Air.The company sold approximately 18.9 million Mac products in FY2014.

The company's iPod line of portable digital music and media players includes iPod touch, iPod nano, iPod shuffle and iPod classic. iPods work with iTunes to purchase and synchronize content. iPod touch, based on the company's iOS Multi-Touch operating system, is a flash memory- based iPod with an integrated photo and video camera and photo library app, and also includes Siri. iPod touch is compatible with both Mac and Windows PCs and Apple’s iCloud services. Apple sold approximately 14.4 million iPods in FY2014.

Apple's iTunes app, available for iOS devices, Mac and Windows PCs and Apple TV, keeps users' music, movies, and TV shows organized in one place. iTunes is integrated with the iTunes Store, the App Store, the iBooks Store, iTunes U and iTunes Radio.The iTunes Store allows users to purchase and download music and TV shows, rent or purchase movies and download free Podcasts. The App Store allows customers to discover and download apps and purchase in-app content.The iBooks Store features e-books from major and independent publishers. iTunes U allows users to download free lectures, videos, and more from top universities, museums, and other institutions. iTunes Radio provides a free internet streaming service that allows users to personalize radio stations featuring music from the iTunes Store.The company also owns Beats Music, which offers a subscription streaming music service that offers a curated listening experience and complements the company’s other music services and offerings.

The Mac App Store allows customers to discover, download and install Mac apps.The Mac App Store offers applications in education, games, graphics and design, lifestyle, productivity, utilities and other categories. iCloud is the company's cloud service, which stores music, photos, applications, contacts, calendars, documents and more, and is made available to multiple iOS devices and Mac and Windows PCs and Apple TV. iCloud's services include iTunes in the cloud; iCloud Drive; iCloud Photo Sharing; Family Sharing; Find My iPhone; and iPad or Mac and iCloud Backup for iOS devices. Apple Pay is a service aimed at making mobile payments easy, secure and private.

Apple’s operating system software includes iOS and OS X. iOS is the company's Multi-Touch operating system that serves as the foundation for iOS devices. Apps delivered with iOS for qualifying devices include Safari web browser, FaceTime video calling, maps, mail, contacts, calendar, clock, weather, calculator, notes, reminders, stocks, compass and messages. Its other features include predictive typing for Apple’s QuickType keyboard, a Health app, and Family Sharing, which easier sharing of purchases, photos and calendars within the same household. Devices running iOS are compatible with both Mac and Windows PCs and Apple’s iCloud services.

OS X, the company's Mac operating system, is built on an open-source UNIX-based foundation and provides an intuitive and integrated computer experience. OS X Yosemite is the latest version of OS X. Support for iCloud is built into OS X so users can access content and information from their other Macs, their iOS devices and other supported devices and access downloaded content and apps from the iTunes Store. Apps delivered with OS X include mail, Safari web browser, messages, calendar, reminders, contacts, maps, iBooks and the iLife apps. OS X Yosemite incorporates additional continuity features including Handoff, which allows users to start an activity on one Mac or iOS device and pass it to another Mac or iOS device.

Apple’s application software includes iLife, iWork, and other application software.

iLife for Mac is the company's consumer-oriented digital lifestyle software application suite included with all Mac computers. iLife features iPhoto, a digital photo application for storing, viewing, editing and sharing photos; iMovie, a digital video editing application; and GarageBand, a music creation application that allows customers to play, record and create music. iWork for Mac is the company's integrated productivity suite designed to help users create, present, and publish documents, presentations, and spreadsheets. iWork includes Pages for word processing and page layout, Keynote for presentations, and Numbers for spreadsheets. Apple’s other application software includes Final Cut Pro, Logic Pro X and FileMaker Pro database software.

The company sells a variety of Apple-branded and third-party Mac-compatible and iOS-compatible accessories, including Apple TV, headphones, cases, displays, storage devices and various other connectivity and computing products and supplies. It also offers headphones, speakers and audio software under the brand name of Beats.

Apple TV connects to consumers' high definition (HD) TVs and enables them to access iTunes content directly for streaming HD video, playing music and viewing photos. Content from iTunes Radio, Beats Music and other media services, including Netflix, YouTube, Flickr, Hulu Plus, Vevo,

Major League Baseball (MLB), National Basketball Association (NBA) and National Hockey League (NHL) is available on Apple TV. Apple TV allows streaming iTunes content from Macs and Windows PCs through Home Share and through AirPlay from compatible Mac and iOS devices.

Apple Watch is a personal electronic device that combines a watch technology with an iOS-based user interface created specifically for a smaller device. Apple Watch features Digital Crown, a navigation tool that allows users to scroll, zoom and navigate. Apple Watch enables customers to communicate in new ways from their wrist and features Force Touch, a technology that senses the difference between a tap and a press and allows users to access controls within apps.

Apple also offers products support and services under the brand name of AppleCare, which includes a range of support options for the company’s customers.These include assistance that is built into software products, printed and electronic product manuals, online support including comprehensive product information as well as technical assistance, the AppleCare Protection Plan (APP) and the AppleCare+ Protection Plan (AC+). APP is a fee-based service that typically includes two to three years of phone support, hardware repairs and dedicated web-based support resources. AC+ is a fee-based service available in certain countries for iPhone and iPad. AC+ offers additional coverage under some circumstances for instances of accidental damage in addition to the services offered by APP.

In addition to the above offerings, the company offers iOS and Mac Developer Programs to support app developers with the development, testing and distribution of iOS and Mac apps through the App Store and the Mac App Store. Development tools included with the company’s Developer Programs include Xcode, the company’s integrated development environment for creating apps for iOS devices and Mac.

In December 2014, Apple and IBM delivered the first wave of IBM MobileFirst for iOS solutions in a new class of made-for-business apps and supporting cloud services that bring IBM’s big data and analytics capabilities to iPhone and iPad users in the enterprise. In the same month, Apple’s models of iPad Air 2 and iPad mini 3 with cellular networking were made available in China.

Apple Inc.

Business Description

Apple Inc.

Business Description

Apple Inc.

Business Description

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Apple Inc. (Apple or “the company”) was incorporated in 1977. It was co-founded by Steven Wozniak and Steven P. Jobs.They introduced the first Apple I computer in 1976.The company offered its initial public offering (IPO) in the year 1980.

In early 1980, competition from the personal computer (PC) market and internal difficulties led to critical management changes. By 1983, Apple faced stiff competition with the entry of International Business Machines Corporation (IBM) into the PC market, and the failure of its Apple III version computer. Apple introduced its first mouse driven PC, the Macintosh (Mac), in 1984.

By 1990, the market was flooded with cheap PC clones and Microsoft had launched Windows 3.0 and these factors further intensified competition. In 1994, the company launched the PowerPC chip based PowerMac, which allowed Mac to compete with the speed of Intel's PC processors. Apple still had problems though and in 1995, the company had a $1 billion order backlog.These problems were compounded by the launch of Windows 95.The company's performance nosedived during 1995-96 when it lost $68 million.

In 1996, Apple acquired NeXT, and by virtue of which, its operating system (OS), Rhapsody, became Apple's next-generation OS. By 1997, Apple had incurred huge losses running into millions of dollars. Mr. Jobs, the co-founder returned as the interim Chief Executive Officer. Under his leadership, Apple reorganized to concentrate on its more profitable competencies, and divested its unsuccessful businesses as spin-offs. Among the spin-offs was Newton, its personal digital assistant (PDA) line of products.

Soon after Mr. Jobs returned, the company entered into an agreement with Microsoft which was subsequently followed with the appearance of MS Office on Mac PCs. In 2001, the company acquired PowerSchool, one of the providers of web-based student information systems for K-12 schools and school districts, and Spruce Technologies, a privately-held company involved in developing and marketing digital versatile disk (DVD) authoring products.

In the following year, Apple, Ericsson and Sun Microsystems formed an alliance to create a standard format for delivering multimedia content to wireless devices, such as smartphones and PDAs.The alliance combined Apple's QuickTime video creation software, Sun's content distribution software and hardware, and Ericsson's mobile infrastructure and services expertise.

Apple pursued a number of acquisitions during 2002.The company acquired Prismo Graphics, Silicon Grail, certain assets of Zayante, and also acquired the German based specialist music software manufacturer, Emagic. Additionally, in 2002, the company acquired certain assets of Nothing Real, a privately-held company engaged in the development of high performance tools designed for the digital image creation market.

Apple launched its iTunes music store, an online store for downloading music tracks and albums, in 2003. In the following year, the company signed licensing agreements with three of the largest European independent music labels, Beggars Group, Sanctuary Records Group and V2, adding additional independent tracks from leading artists to the iTunes music store in the UK, France and Germany. In the same year, Apple introduced its fourth generation (4G) iPod portable digital music player.

In 2005, the company made an agreement to use Intel microprocessors in its Mac PCs. Later in the year, the company collaborated with Acura, Audi, Honda and Volkswagen to deliver iPod with their car stereos for 2006 model lines, and also introduced mobile phone with iTunes in collaboration with Motorola and Cingular Wireless.

Chrysler, in association with Apple, integrated iPod option in the audio systems in its 2006 models. In 2005, Apple sold its student information systems (SIS) division, PowerSchool, to Pearson. Later in the same year, Ford, General Motors and Mazda teamed up with Apple to integrate iPod across their brand and models. In 2006, Apple teamed up with Air France, Continental, Delta, Emirates, KLM and United Airlines to integrate iPod with in-flight entertainment systems.

The company changed its name from Apple Computer, Inc to Apple Inc. in 2007, representing its expanding product portfolio and increased focus on consumer electronics market. In the same year, Apple resolved its 'iPhone' trademark issue with Cisco Systems by entering into an agreement. According to the agreement, both the companies acknowledged the ownership rights and will use the trademark in their products. Subsequently, Apple launched its revolutionary product, iPhone, a smartphone device, and also launched iPod nano, featuring two inch display.

In 2008, the company introduced Mac Pro with eight processor cores, and MacBook Air, a thin notebook, which measures a maximum height of 0.76-inch. In the same year, Apple introduced Xsan 2, the first major upgrade to its enterprise class storage area network (SAN) file system for Mac OS X. Subsequently, the company introduced MobileMe, a new internet service that offers push email, push contacts and push calendars to native applications on iPhone, iPod touch, Macs and PCs. Also in 2008, Apple launched iPod touch.

In 2009, Apple introduced iWork '09, a new version of Apple's office productivity suite, and iLife '09, which features major upgrades to iPhoto, iMovie and GarageBand, and included iDVD and an updated version of iWeb. Subsequently, the company introduced the iPhone 3GS, Apple's third-generation smartphone with new features such as, longer battery life, high-quality three megapixel autofocus camera, easy to use video recording and hands free voice control. Later in the year, Apple launched its iTunes Store in Mexico with a selection of Mexican and international music from all the major labels and independent labels. During 2009, the company updated its MacBook with light emitting diode (LED)-backlit display, Apple Multi-Touch track pad and built-in seven-hour battery, and subsequently, introduced its wireless Magic Mouse, the world's first mouse to use Apple's Multi-Touch technology.

In 2010, Apple announced iPad, a high-resolution, multi-touch display device for browsing the web, reading, sending email, and viewing entertainment content. In the same year, Apple filed a lawsuit against HTC for infringing 20 of Apple's patents related to the iPhone's user interface, underlying architecture and hardware. Subsequently, the company's iPad, was made available in the US,

Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland and the UK, and sold 300,000 units on the first day of its launch in the US. During the same year, the company previewed its iPhone OS 4 software and released a beta version of the software to iPhone Developer Program members. Apple introduced the new iPhone 4 featuring FaceTime, which allows video calling, and Apple's new

Retina display which enhances the text, images and video. Subsequently, Apple released Safari 5.0.1 with extensions that supports allowing developers to create extensions with HTML5, CSS3 and JavaScript web standards. Also, Apple updated its all-in-one iMac line, with the Intel Core i3, Core i5 and Core i7 processors and new graphics.

During 2010, Apple introduced iTunes 10 with Ping, a new music-oriented social network.The company announced the new Apple TV which allows viewers to watch high-definition (HD) movies and television (TV) shows. Apple introduced the Apple Store in China (apple.com.cn) which allows Chinese customers to shop online for Apple products.The company unveiled a new MacBook Air, in 2010. In the same year, iPad was made available at over 2,000 Verizon Wireless Stores in the US. Apple and the Dentsu Group formed a partnership to expand Apple's iAd mobile advertising network to Japan. As part of the agreement, Dentsu will be responsible for the sales and creative execution of iAds in Japan, and Apple will host, target and deliver the iAds to its iPhone and iPod touch users.

In 2011, Apple launched the Mac App Store with more than 1,000 free and paid applications. Subsequently, Apple updated its MacBook Pro family with next generation processors and graphics, high-speed Thunderbolt I/O technology and a new FaceTime HD camera. During the same year, the company made iWork available for iPhone and iPod touch users. Apple launched iCloud, a set of free cloud services that work with applications on iPhone, iPad, iPod touch and Mac to automatically and wirelessly store content in iCloud and automatically and wirelessly push it to all devices. Further in 2011, the company unveiled the Apple Thunderbolt display, a display with Thunderbolt I/O technology for Mac notebook.The company launched its 4G iPhone and 5G iOS, in 2011. Apple launched iTunes Store in Brazil and in 15 other countries in Latin America during the same year.

In 2012, the company launched its new iPhone 4S in China and 21 additional countries.To strengthen its presence in the education market, Apple launched iTunes U app, which provides educators and students access to teaching and taking entire courses on their iPad, iPhone and iPod touch. Subsequently, the company launched iBooks 2 for iPad, featuring iBooks textbooks. During the same year, the company launched its third generation of iPad. Apple previewed iOS 6, introducing over 200 new features to the mobile operating system, and released a beta version to iOS Developer Program members.The company updated MacBook Air with the latest Intel Core processors. Subsequently, Apple unveiled new 15-inch MacBook Pro featuring a Retina display.The company launched the iTunes Store in Hong Kong, Singapore, Taiwan and nine additional countries in Asia, in the same year.

Apple launched its new third generation iPad in China in 2012. In the same year, the company introduced the new lineup of iPod touch and iPod nano. Subsequently, Apple introduced iPhone 5 smartphone. During the same year, the company introduced a version of its MacBook Pro featuring Retina display and flash storage in a new compact design. Apple introduced iPad mini, a smaller version of the iPad with 7.9-inch display. HTC and Apple reached a global settlement for the dismissal of all current lawsuits and a 10-year license agreement.The license extends to current and future patents held by both parties. Subsequently, Apple launched the iTunes Store in Russia, Turkey, India, South Africa and 52 additional countries.

In January 2013, the company launched the wireless fidelity (Wi-Fi) + Cellular versions of iPad mini and the new fourth generation iPad with Retina display, in China. In March 2013, Apple launched the iBookstore in Japan featuring titles from independent publishers, including a selection of books from Kodansha, KADOKAWA, Bungeishunju, Gakken and Gentosha.

In June 2013, Apple received a $30 million commitment from the US' second largest public school district, the Los Angeles School Board of Education's. As part of this phase which is the first phase of the larger roll out, the company began offering iPad to students across the school district. During the same month, the company launched iTunes Radio, a free internet radio service featuring over 200 stations and a catalog of music from the iTunes Store.

In July 2013, Apple launched Logic Pro X which offers advanced tools and new interface designed to streamline the process of creating professional quality music.

In September 2013, Apple launched the iPhone 5S and iPhone 5C smartphone models in the US,

Australia, Canada, China, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the

UK. During the same month, Apple and NTT Docomo teamed up to offer the iPhone 5S and iPhone 5C in Japan. Subsequently, the company introduced the iOS 7, featuring a redesigned new user interface.This was made available to iPhone, iPad and iPod touch users as a free software update.

In October 2013, the company launched the iPad Air, featuring 9.7-inch Retina display in a thinner and lighter design.This new version of iPad was another step ahead for Apple in its strategy to enhance the computing power of its tablet PC products. In the same month, Apple introduced the iPhone 5S and iPhone 5C in Italy, Russia, Spain and more than 25 additional countries. In the following month, Apple launched the iPad mini with Retina display.

In January 2014, Apple's iBooks Textbooks and iTunes U Course Manager expanded into new markets across Asia, Latin America and Europe, among others.With this, the company expanded worldwide access to educational content. In February 2014, Apple launched the iTunes Radio in Australia.

iPad Air and iPad mini with long term evolution (LTE) performance were made available in China, in April 2014. In the same month, the company launched updates for MacBook Air featuring faster processors at the same time lowering prices.The company's updates and pricing are expected to further drive the penetration of its notebook PCs.

In May 2014, Apple agreed to acquire Beats Music and Beats Electronics.This acquisition is expected to enhance the company's music lineup. In the same month, NTT Docomo and Apple announced the availability of iPad Air and iPad mini with Retina display on Docomo network.

Apple announced OS X Yosemite, an enhanced version of OS X with enhanced features and new apps, in June 2014. In the same month, Apple released iOS 8 software development kit (SDK), with 4,000 application programming interfaces (APIs) for the developers. Subsequently, Apple launched iOS 8 with new features such as iCloud Photo Library, a new messages app, the QuickType keyboard and a new Health app. In the same month, Apple introduced a 21.5-inch iMac, enhancing its product lineup of entry-level Mac desktop.

In July 2014, Apple and IBM entered into a strategic partnership to transform enterprise mobility through new class of business apps, by introducing IBM's big data and analytics capabilities to iPhone and iPad. In the same month, the company updated MacBook Pro with Retina display, faster processors and double memory in both entry-level configurations.The company also launched a new, lower starting price for the 15-inch notebook. Subsequently, the company completed its previously announced acquisition of Beat Music and Beat Electronics.

In September 2014, Apple announced iOS 8 for the iPhone, iPad, and iPod touch users as a free software update. iOS 8 delivers a simpler, faster, and more intuitive user experience with new messages and photos features, predictive typing for Apple's QuickType keyboard, and Family Sharing. iOS 8 also includes the new Health app, a health and fitness data app and iCloud Drive, a cloud storage solution. Also in the month, Apple announced Apple Pay, a new mobile payment service that will allow users to pay with mobiles.The Apple Pay works with iPhone 6 and iPhone 6

Plus through a near field communication (NFC) antenna design, a dedicated chip called the Secure Element, and the security and convenience of Touch ID. During the same month, the company launched iPhone 6 and iPhone 6 Plus models with 4.7-inch and 5.5-inch Retina HD displays, respectively.The company also unveiled Apple Watch, a new wearable device which enables users to communicate from the wrist and will include comprehensive health and fitness apps.

In October 2014, Apple released iPhone 6 and iPhone 6 Plus in 36 additional countries and territories across Europe, Asia, the Middle East, Latin America and Africa. In the same month, Apple launched 27-inch iMac with Retina 5K display, running on OS X Yosemite. Subsequently, Apple launched iPad Air2, powered by the new Apple-designed A8X chip, and with improved Retina display.

In April 2015, Apple released Final Cut Pro 10.2, an updated version of Final Cut Pro X, Motion and Compressor with enhancements to accelerate video editing, packaging and delivery. In the same month, the company launched ResearchKit, a software framework for medical and health research, available to researchers and developers. Subsequently, IBM and Apple partnered to deliver iPads with IBM-developed apps and analytics to connect millions of seniors with services, healthcare, community and their families.

Apple Inc.

History

Apple Inc.

History

Apple Inc.

History

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Key Employees

Timothy Cook

Board: Executive Board

Job Title: Chief Executive Officer

Since: 2011

Age: 53

Mr. Cook has been the Chief Executive Officer at Apple since 2011. Prior to his current position, he was the Chief Operating Officer at the company. Mr. Cook joined the company in 1998 and served as the Executive Vice President, Worldwide Sales and Operations from 2002 to 2005. In 2004, his responsibilities were expanded to include the company's Macintosh hardware engineering. From 2000 to 2002, Mr. Cook served as the Senior Vice President, Worldwide Operations, Sales, Service and Support. From 1998 to 2000, he served as the Senior Vice President, Worldwide Operations.

Prior to joining the company, Mr. Cook was the Vice President, Corporate Materials at Compaq.

Prior to his work at Compaq, he was the Chief Operating Officer of the Reseller Division at Intelligent Electronics. Mr. Cook also spent 12 years at IBM, most recently as the Director of North American Fulfillment.

Arthur D. Levinson

Board: Non Executive Board

Job Title: Chairman

Since: 2011

Age: 63

Mr. Levinson has been the Chairman of the Board at Apple since 2011. He has been the Chairman at Genentech since 1999. Previously, Dr. Levinson served as the Chief Executive Officer at Genentech from 1995 to 2009. He also served as an Advisor to Genentech's Research and Early Development center and as a Member of the Scientific Resource Board. Dr. Levinson currently serves as the Chief Executive Officer at Calico, a company focused on health, aging and well-being. He previously served as a Director at Google from 2004 to 2009.

Albert A. Gore Jr.

Board: Non Executive Board

Job Title: Director

Since: 2003

Age: 65

Mr. Gore has been a Director at Apple since 2003. He is the former Vice President of the US. Mr.

Gore is the co-Founder and Chairman at Generation Investment Management, and serves as a Senior Partner at Kleiner Perkins Caufield & Byers. He is also the Chairman at the Climate Reality Project, a non-profit organization devoted to solving the climate crisis.

Robert A. Iger

Board: Non Executive Board

Job Title: Director

Since: 2011

Age: 63

Mr. Iger has been a Director at Apple since 2011. He serves as the Chairman and Chief Executive Officer at Walt Disney. Prior to that, Mr. Iger served as the President and Chief Executive Officer from 2005 and the President and Chief Operating Officer from 2000 to 2005. He also served as the President at Walt Disney International and the Chairman at ABC from 1999 to 2000. From 1974 until 1998, Mr. Iger held a series of increasingly responsible positions at ABC and its predecessor, Capital Cities/ABC culminating in service as the President at ABC Network Television during 1993-94. He was the President and Chief Operating Officer at ABC from 1994 to 1999.

Andrea Jung

Board: Non Executive Board

Job Title: Director

Since: 2008

Age: 55

Ms. Jung has been a Director at Apple since 2008. She was the Chairman of the Board and Chief Executive Officer at Avon Products from 2001 to 2012. Ms. Jung has been a Director at General Electric since 1998 and a Member of the Supervisory Board at Daimler since 2013.

Ronald D. Sugar

Board: Non Executive Board

Job Title: Director

Since: 2010

Age: 65

Mr. Sugar has been a Director at Apple since 2010. He is the retired Chairman of the Board and Chief Executive Officer at Northrop Grumman. Dr. Sugar was the President and Chief Operating Officer at Litton Industries from 2000 until the company was acquired by Northrop Grumman in 2001. He also served as the Chief Financial Officer at TRW. Dr. Sugar also serves as a Director at Air Lease, Amgen and Chevron.

Susan L.Wagner

Board: Non Executive Board

Job Title: Director

Since: 2014

Ms.Wagner has been a Director at Apple since July 2014. She co-Founded BlackRock in 1988 and held a range of leadership positions including as the Vice Chairman until 2012. Ms.Wagner currently serves on the Boards at BlackRock and DSP BlackRock (India), as well as Swiss Re, Wellesley College and Hackley School.

Luca Maestri

Board: Senior Management

Job Title: Senior Vice President and Chief Financial Officer

Since: 2014

Age: 50

Mr. Maestri has been the Senior Vice President and Chief Financial Officer at Apple since May 2014. He joined the company in 2013 as the Vice President of Finance and Corporate Controller. Prior to joining Apple, Mr. Maestri served as the Chief Financial Officer at Xerox and Nokia Networks. He began his career at General Motors and served for 20 years in finance and operating roles in the Americas, Asia Pacific and Europe. Mr. Maestri also served as the Chief Financial Officer for Operations in Europe at GM.

Jeffrey Williams

Board: Senior Management

Job Title: Senior Vice President, Operations

Since: 2010

Age: 50

Mr.Williams has been the Senior Vice President of Operations at Apple since 2010. He joined the company in 1998 as the Head of Worldwide Procurement and in 2004 became the Vice President of Operations. Prior to joining Apple, Mr.Williams worked at IBM from 1985 to 1998 in several operations and engineering roles.

Bruce Sewell

Board: Senior Management

Job Title: Senior Vice President and General Counsel

Since: 2009

Age: 55

Mr. Sewell has been the Senior Vice President and General Counsel at Apple since 2009. Prior to joining the company in 2009, he served as the Senior Vice President and General Counsel at Intel. Mr. Sewell also served as Intel's Vice President and General Counsel from 2004 to 2005 and as the Vice President of Legal and Government Affairs, Deputy General Counsel from 2001 to 2004. Prior to joining Intel, he was a Partner in the litigation firm at Brown & Bain. Mr. Sewell has been a Director at Vail Resorts Management since 2013.

Eduardo Cue

Board: Senior Management

Job Title: Senior Vice President, Internet Software and Services

Since: 2011

Age: 49

Mr. Cue has been the Senior Vice President of Internet Software and Services at Apple since 2011. He joined the company in 1989. Mr. Cue held various positions at Apple, including the Vice President of Internet Services and the Senior Director of iTunes Operations.

Craig Federighi

Board: Senior Management

Job Title: Senior Vice President, Software Engineering

Since: 2012

Age: 44

Mr. Federighi has been the Senior Vice President of Software Engineering at Apple since 2012.

Prior to rejoining the company in 2009, he held several positions at Ariba, including the Chief Technology Officer and the Vice President of Internet Services. Before Ariba, Mr. Federighi worked at NeXT and at Apple upon the acquisition of NeXT. He also served as the Vice President of Mac OS Engineering and as the Director of Engineering at Apple.

Jonathan Ive

Board: Senior Management

Job Title: Senior Vice President, Design

Mr. Ive currently serves as the Senior Vice President of Design at Apple. He also leads the Human Interface (HI) software teams across the company. Mr. Ive holds a Bachelor of Arts and an Honorary Doctorate from Newcastle Polytechnic.

Daniel Riccio

Board: Senior Management

Job Title: Senior Vice President, Hardware Engineering

Since: 2012

Age: 51

Mr. Riccio has been the Senior Vice President of Hardware Engineering at Apple since 2012. He joined the company in 1998 as the Vice President of Product Design and in 2010 became the Vice President of iPad Hardware Engineering. Prior to Apple, Mr. Riccio worked at Compaq Computer as the Senior Manager of Mechanical Engineering. He holds a Bachelor's degree in Mechanical Engineering from the University of Massachusetts Amherst.

Philip W. Schiller

Board: Senior Management

Job Title: Senior Vice President, Worldwide Marketing

Since: 2002

Age: 53

Mr. Schiller has been the Senior Vice President of Worldwide Marketing at Apple since 2002. Prior to rejoining the company in 1997, he was the Vice President of Product Marketing at Macromedia from 1995 to 1997 and the Director of Product Marketing at FirePower Systems from 1993 to 1995. Prior to that, Mr. Schiller spent six years at Apple in various marketing positions.

Angela Ahrendts

Board: Senior Management

Job Title: Senior Vice President, Retail and Online Stores Since: 2013

Ms. Ahrendts has been the Senior Vice President of Retail and Online Stores at Apple since 2013.

She joined Apple from Burberry, where she served as the Chief Executive Officer. Prior to Burberry, Ms. Ahrendts was an Executive Vice President at Liz Claiborne and earlier in her career she served as the President at Donna Karan International. She holds Marketing and Merchandising degree from Ball State University in Indiana, where she was awarded an honorary doctorate in 2010.

Paul Deneve

Board: Senior Management

Job Title:Vice President, Special Projects Since: 2013

Mr. Deneve has been the Vice President of Special Projects at Apple since 2013. Prior to this, he served as the Chief Executive Officer at Saint Laurent Paris. Before Saint Laurent, Mr. Deneve held top positions in the fashion industry including the President at Lanvin and Nina Ricci, as well as the Managing Director at Courreges. From 1990 to 1997, Mr. Deneve held sales and marketing roles at Apple in Europe.

Apple Inc.

Apple Inc.

Key Employee Biographies

Apple Inc.

Key Employee Biographies

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Major Products and Services

Apple Inc. (Apple or the company) designs, manufactures, and markets mobile communication and media devices, personal computers (PCs), and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications.The company's key products and services include the following:

Mobile communication and media devices

Personal computing products

Portable digital music players

Televisions

Peripheral products

Networking solutions

Third-party hardware and software products

Mobile operating systems

Desktop operating systems Server and application software Brands:

iPhone iPad

Mac

iMac iPod iTunes Mac App Store iCloud iOS OS X

iLife

iWork Apple TV

Apple Watch

Apple Pay

Beats

Revenue Analysis

Overview

The company recorded revenues of $182,795 million during the financial year ended September 2014 (FY2014), an increase of 7% over FY2013. In FY2014, Americas, the company's largest geographic market, accounted for 40.4% of the total revenues.

Apple generates revenues through six product lines: iPhone (55.8% of the total revenues in FY2014), iPad (16.6%), Mac (13.2%), iTunes, software and services (9.9%), accessories (3.3%) and iPod (1.3%)*.

*Percentages rounded off

Revenues by product line

In FY2014, the iPhone product line recorded revenues of $101,991 million, an increase of 11.7% over FY2013.

The iPad product line recorded revenues of $30,283 million in FY2014, a decrease of 5.3% compared to FY2013.

The Mac product line recorded revenues of $24,079 million in FY2014, an increase of 12.1% over FY2013.

The iTunes, software and services product line recorded revenues of $18,063 million in FY2014, an increase of 12.5% over FY2013.

The accessories product line recorded revenues of $6,093 million in FY2014, an increase of 6.8% over FY2013.

The iPod product line recorded revenues of $2,286 million in FY2014, a decrease of 48.2% compared to FY2013.

Revenues by geography**

Americas, Apple's largest geographical market, accounted for 40.4% of the total revenues in FY2014. Revenues from Americas reached $65,232 million in FY2014, an increase of 4% over FY2013.

Europe accounted for 25.4% of the total revenues in FY2014. Revenues from Europe reached $40,929 million in FY2014, an increase of 8% over FY2013.

Revenue Analysis

Greater China accounted for 18.5% of the total revenues in FY2014. Revenues from Greater China reached $29,846 million in FY2014, an increase of 17.4% over FY2013.

Japan accounted for 9.3% of the total revenues in FY2014. Revenues from Japan reached $14,982 million in FY2014, an increase of 11.3% over FY2013.

Rest of Asia Pacific accounted for 6.4% of the total revenues in FY2014. Revenues from rest of Asia Pacific reached $10,344 million in FY2014, a decrease of 7.5% compared to FY2013.

** Revenues by geography exclude revenues from retail operations.

Apple Inc.

Apple Inc.

Apple Inc.

Apple Inc. Page 2

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Apple Inc. Page 2

© MarketLine

Apple Inc. Page 2

© MarketLine

Apple Inc. (Apple or “the company”) designs, manufactures, and markets mobile communication and media devices, personal computers (PCs), and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications.Through the integration model, both horizontally and vertically, the company was able to build non replicable and sustainable competitive advantages. However, operating in complex and challenging environment could have a negative impact on the market shares and growth rates of Apple.

Strengths

Formidable competitive advantages through horizontal and vertical integration

Apple has over the years followed integration both horizontally and vertically and as a result emerged as a formidable competitor.The company's multiple devices provide horizontal integration. Apple has presence across main digital media devices of computing and mobile communications.Through PCs, tablets, smartphones and other devices, Apple aimed at offering a whole range of associate products and devices. Apple through vertical integration connected the user experience across the devices.The company offers hardware, software, content, services and also retails its products creating vertical integration. In addition, the company also built strong software and content business which is equipping Apple with several competitive advantages.The company's operating system spans across multiple devices and includes content and application. Consequently, switching to a competitor becomes difficult due to the dependence on iOS. Another key integration aspect that has enabled Apple to gain competitive advantage is the content offering.The company's content base is large and is shared across all devices through iTunes. iTunes is a storefront offering all kinds of media. In addition to the above, the company also engages in retailing.This helps Apple to have control over successfully positioning its products to the end user.

Apple has followed a vertical integration strategy to build a formidable competitive advantage.The company's business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software, and services.The vertical integration provides control over the entire user experience or process from hardware to software which facilitates higher customer loyalty and provides lock-in.The vertical integration that Apple achieved is very difficult to replicate as evidenced in recent times. None of the company's competitors were able to replicate this model with resonating success as Apple. Google's sale of Motorola's mobile division indicates that this strategy and business model is difficult to replicate although the competitors have tried.This provides Apple with significant competitive advantages. Apple's customized in-house chip design, well integrated hardware, software, applications and service equips the company with an ability to create high quality products that are unmatched in the industry. According to the industry estimates, Google’s Android OS accounted for 83.6% of smartphone shipments in third quarter of 2014 while Apple's iOS accounted for only 12.3% of the shipments. However, Apple's smartphone is much more lucrative as it attracted high value customer base and its smartphones accounted for 60% of mobile web usage in 2014.This data indicates that Apple's vertical integration strategy enabled it to create products which are providing the customers with what it calls a good product experience.

Apple enjoys a favorable competitive environment provided by the user dependence on iOS which enables it to earn incremental earnings by offering all associated devices. In the era of convergence this is a sustainable competitive advantage. Apple's sustainability of market share stems from the fact that it was able to successfully connect its devices with each other and one generation of devices with the next.Through these integration models, Apple built sustainable competitive advantages that are hard to replicate.

High average selling prices (ASPs) in an industry characterized by declining ASPs

Apple has launched several successful products and follows a strategy of catering to high value customer base. Apple's products ASPs continued to remain stable while rest of the industry witnessed declining ASPs.The Apple iPhone which was initially launched at $600 remained immune to the decline in ASPs in the smartphone category.The estimates indicate that Apple's iPhones sell at an ASP of about $649 while Android's phones ASP has dropped since launch and sell at about $247 while the ASP of Windows phones is $265 and that of BlackBerry phones is $339. According to industry estimates, Apple's iPhones are expected to continue to command ASPs more than $600 by 2018. By 2018, the Android smartphones are expected to be sold at ASPs hovering around $200. In addition to the smartphones, the company was also able to defend its ASPs in the Macs. According to industry estimates, Macs are sold at a premium ASP of $1,300 in a PC market where the company's competitor, Microsoft sells PCs at an average price point of $311.

Apple's ability to command high ASPs and defend the same highlights the superiority of the company's products. Moreover, Apple's products were able to maintain high ASPs despite entry in to the developing economies where ASPs of consumer goods are usually pressurized.This once again highlights that Apple was able to gain from its product strategy which enabled it to defy many industry downtrends.

Significant growth rates and cash flows

Apple enjoys robust growth rates and strong cash resources.The revenue growth rates achieved by the company are a play of both increased unit sales and pricing power.While the unit growth has been derived from the appeal of its products gained in the market place, the offshoot of successful product lines has resulted in Apple gaining a dominant position, which has helped it command high pricing power.

The combination of these factors enabled Apple to attain industry leading growth rates. For instance, Apple's revenues grew at a compounded annual growth rate (CAGR) of 29.4% during FY2010-14. The company's net income grew by 29.6% annually over the same period. Moreover, despite the company's growth approaching maturity, Apple registered a 7% growth in revenues on year-over-year basis in FY2014. Furthermore, the company's cash position grew strongly in the recent times. Apple's cash from operations grew at a CAGR of 8.4% during FY2012-14 to reach $59,713 million by the end of FY2014.The company also sits on a cash pile of over $155 billion, which gives it more financial flexibility.The company's revenue growth and cash position provide a strong platform for it to invest in growth and expansion.The resource base is critical for remaining competitive in the technology space which is rapidly and ever changing.The company's cash base and strong growth history therefore provide competitive advantages.

Weaknesses

High dependence on iPhone and iPad product lines

The company's revenues and growth rates are largely dependent on iPhone and iPad product lines. The iPhone and iPad product lines together accounted for 72.4% of the total revenues in FY2014. Although, these product lines have been the growth drivers for the company, any future decline in the growth rates could impact the company's performance. Dependence on few product lines increases the business risk, especially in an industry characterized by fast paced technological changes.The risk is aggravated as the company has been losing market share in tablets market. According to industry estimates, in the third quarter of 2014, iPad market share stood at 22.8% compared to 29.2% in the third quarter of 2013. In addition, in the smartphone market, the company’s market share declined from 12.9% in the third quarter of 2013 to 12% in the third quarter of 2014. The market share losses of a key product could have a material adverse impact on the company's growth prospects

Opportunities

Apple Pay provides robust growth opportunity

The launch of Apply Pay is expected to provide incremental growth opportunities for the company. In September 2014, the company launched Apple Pay, a new mobile payment service. Apple Pay works with iPhone 6 and iPhone 6 Plus through a Near Field Communications (NFC) antenna design, a dedicated chip called the secure element, and the Touch ID. Apple Pay allows users to add their credit or debit card on file from their iTunes Store account. Apple Pay also works with the Apple Watch. Moreover, Apple Pay supports credit and debit cards from the three major payment networks, American Express, MasterCard and Visa, issued by most banks, including Bank of America, Capital One Bank, Chase, Citi and Wells Fargo, representing 83% of credit card purchase volume in the US. Furthermore, Apple Pay is supported by 258 Apple retail stores in the US as well as other leading retailers, including Bloomingdale’s, Disney Store and Walt Disney World Resort, Duane Reade, Macy’s, McDonald’s, Sephora, Staples, Subway, Walgreens and Whole Foods Market. Apple Watch will also work at over 220,000 merchant locations across the US that have contactless payment enabled. Apple Pay can also be used to make purchases through apps in the App Store.

The launch of Apple Pay is expected to provide new growth opportunities for the company in the medium to long term. According to industry estimates, the global mobile payment transaction value reached approximately $235 billion in 2013 with approximately 245 million mobile payment users. The global mobile transaction volume is expected to grow at a CAGR of 32.3% during 2013-17 to reach a value of $721 billion in 2017. Moreover, the number of mobile payment users is expected to grow at a CAGR of 16.4% during the same period to reach 450 million users by 2017. Apple Pay is an extension of the company’s iOS ecosystem, which makes it a disruptive player in the fast growing mobile payments industry.The strong outlook for the end market coupled with Apple’s robust smartphone market share and iTunes accounts provides incremental growth opportunities to enhance revenues and market share.

Positive outlook for smartphone and tablet markets

The smartphones and tablets market is expected to grow at a robust pace in the medium term.

According to industry estimates, the global shipments for smartphones are expected to reach 1,250 million units in 2014 as compared to 1,004 million units in 2013. Furthermore, smartphone shipments are expected to grow at a CAGR of 13% between 2013 and 2018. Moreover, emerging markets are expected to lead smartphone shipments with a CAGR of 16% for the 2013-18 periods as compared to a CAGR of 3.6% for the mature markets during the same period. Furthermore, the demand for tablets is also increasing.The shipment of tablet PCs is estimated to grow from 233 million units in 2014 to more than 304 million units by 2018, growing at a CAGR of 6.9% for the 2014-18 periods.

The company is one of the leading smartphone players with a market share of approximately 12% in the third quarter of 2014.The company’s iPhone is one of the leading smartphone products globally. In FY2014, Apple sold approximately 169.2 million iPhones. Its tablet product line includes iPad and iPad mini. Apple sold approximately 67.9 million iPads in FY2014. Robust outlook for the smartphone market and tablet market will increase the company's sales in the coming years.

Rising adoption of Apple products in the enterprise market

The company has been focusing on the enterprise markets over the past few years as part of its strategy to enhance its revenues in the wake of the growing adoption of bring your own device (BYOD) across enterprises. Adoption of BYOD has been robust in the recent times. Firms are using smartphones, laptops, and wireless to save on building a dedicated network. According to industry estimates, the global market for BYOD and enterprise mobility market generated total revenues of $72 billion in 2013. Moreover, the market is expected to grow at a CAGR of 26% during 2013–19 to reach a value of $284 billion by 2019.

As BYOD trends starts making inroads in the enterprise sector, Apple will be able to effectively sell into this space.The popularity of the iPhone and iPad with consumers is spilling over into the business world, as mobile users increasingly use their personal devices for business purposes. In recent times, companies are opening up their mobility strategies to allow for more choice, which has benefitted Apple. In addition, to further enhance its enterprise adoption, the company announced an exclusive partnership with IBM to launch business apps, to bring IBM’s big data and analytics capabilities to iPhone and iPad.The partnership aims to launch more than 100 industry-specific enterprise solutions including native apps, developed exclusively from the ground up, for iPhone and iPad. As part of the partnership, IBM will also offer cloud services optimized for iOS, including device management, security, analytics and mobile integration. IBM will offer new AppleCare for Enterprise service and support offering tailored to the needs of the enterprise. Furthermore, IBM will also sell iPhones and iPads with the industry-specific solutions to business clients worldwide.The partnership will also see IBM offering Device Supply, Activate and Manage, a suite of value-added reselling services for iPhone, iPad and Mac.

The positive outlook for the BYOD and enterprise mobility market provides a robust growth opportunity for the company to increase its revenues and market share in the coming years.

Smart wearable devices market offers robust growth opportunities

The market for wearable devices has been growing strongly over the past few years. According to industry estimates, the global wearable devices market recorded shipment volume of 19 million units in 2014.The shipment volume is expected to grow at a CAGR of 78.4% for the 2014-18 periods to reach a volume of 112 million units by 2018. Furthermore, sale of smart wearable devices is expected to generate $22.9 billion in revenue by 2020.

Apple is keen to benefit from the growth opportunities offered by these end markets. In September 2014, the company announced Apple Watch, which is expected to be available in early calendar year 2015. Apple Watch is a personal electronic device that combines a watch technology with an iOS-based user interface created specifically for a smaller device. Apple Watch features Digital Crown, a navigation tool that allows users to scroll, zoom and navigate. Apple Watch enables customers to communicate in new ways from their wrist and features. It also includes Force Touch, a technology that senses the difference between a tap and a press and allows users to access controls within apps.

The company is well positioned to tap the growing markets and enable revenue growth in the future.

Threats

Operating in complex and challenging environment could impact market position

The markets for the company's products and services are highly competitive and complex, and the company is confronted by aggressive competition and challenges in all areas of its business.These markets are characterized by frequent product introductions and rapid technological advances that have substantially increased the capabilities and use of mobile communication and media devices, PCs, and other digital electronic devices. Apple faces intense competition from well-funded and experienced peers such as Microsoft, Google and Samsung, among others. Google's Android platform is one of the largest mobile operating systems and the Windows is also estimated to capture increased market shares.

In addition to Microsoft and Google, the company competes intensively with Samsung, which has approximately twice the market share of Apple.The company's other competitor includes Lenovo that offers a strong line of ThinkPad tablets and IdeaPad Yoga. Lenovo is well positioned to dent the market share of Apple in China. In addition, freely available music and videos and easier-to-use subscription service such as Spotify or Netflix could also dent the company's market share, as Apple sells this content through iTunes.

Also, Apple is facing challenges in its overseas markets. In China, the government has announced plans to build its own Linux-based processor to reduce reliance on Apple's computers. In India, which is one of the largest addressable consumer markets in the world, Apple has been facing trouble to establish its stores because of stringent local market laws. Further, the company is shrouded by legal battles across the world. Operating in such complex and challenging environment could have a negative impact on the market shares and growth rates at Apple.

Premium pricing could limit growth in emerging markets

Price can be one of the key competitive disadvantages of Apple that the competitors can effectively use to gain market share.This will prove to be a challenge while addressing the emerging markets, which become important as the advanced economies' smartphone markets attain maturity.The emerging markets lack carrier subsidies and the customer base in these markets is highly price sensitive and therefore competing with lower priced Android products could be a challenge.The revenues from emerging market for Apple products will come from a higher mix of older models. This indicates that as the smartphone markets move towards emerging countries, the average prices will start to fall, impacting the margins.The company has been facing marginal declines in average price per product. Apple has not been able to effectively gain market share in emerging markets where historically, lower priced phones are popular. Apple's premium pricing strategy will prove to be challenging and could have a negative impact on the company's gross margins.

Smartphone subsidy cuts could impact shipments

The company’s shipments could be threatened as carriers move to cut smartphone subsidies affecting profitability. Carrier subsidies have been significantly responsible for Apple's strong position in the US smartphone market. In the US Market, players such as AT&T and T-Mobile are changing the dynamics of the market by doing away with the subsidies, thus, posing a threat to Apple's business. For instance, in December 2013, AT&T introduced a new pricing plan, which enables consumers to save $15 on service charges per bill if they keep their old phones.This plan may impact the consumer’s handset refresh cycle, thus affecting the demand for new launches. Similarly, the Chinese government has asked its leading carriers, including China Unicom, China Telecom, and China Mobile to reduce their subsidy costs. According to industry estimates, these three carriers spend approximately $3.2 billion per year on subsidizing gadgets, primarily made by Apple and Samsung. Carrier subsidies allow companies such as Apple to target the majority income groups in China. If the subsidy is withdrawn then price conscious consumers may opt for other models, thus impacting on its sales.This evolving business model where the telecom carriers will do away with subsidies has the potential to harm Apple's market share.

Apple Inc.

SWOT Analysis

Apple Inc.

SWOT Analysis

Apple Inc.

SWOT Analysis

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Top Competitors

The following companies are the major competitors of Apple Inc.

Dell Inc.

Fujitsu Limited

Hewlett-Packard Company

International Business Machines Corporation Samsung Electronics Co., Ltd.

Sony Corporation

Toshiba Corporation

Research In Motion Limited

Microsoft Corporation Acer Inc LG Electronics, Inc.

Google Inc.

Merchant Customer Exchange LLC Huawei Technologies Co., Ltd. Xiaomi Inc.

Company View

An excerpt from the 'Management's Discussion and Analysis of Financial Condition and Results of Operations' section is given below.The statement has been taken from the company's 10-K filing for FY2014.

Overview and Highlights

The Company designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications.The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and value-added resellers. In addition, the Company sells a variety of third-party iPhone, iPad, Mac and iPod compatible products, including application software, and various accessories through its online and retail stores. The Company sells to consumers; small and mid-sized businesses; and education, enterprise and government customers.

Fiscal 2014 Highlights

Net sales rose 7% or $11.9 billion during 2014 compared to 2013.This was driven by increases in net sales of iPhone; Mac; iTunes, Software and Services; and Accessories. Net sales and unit sales increased for iPhone primarily due to the successful introduction of iPhone 5s and 5c in the latter half of calendar year 2013, the successful launch of iPhone 6 and 6 Plus beginning in the fourth quarter of 2014, and expanded distribution. Mac net sales and unit sales increased primarily due to strong demand for MacBook Air and MacBook Pro which were updated in 2014 with faster processors and offered at lower prices. Net sales of iTunes, Software and Services grew primarily due to increased revenue from sales through the App Store, AppleCare and licensing. Net sales and unit sales for iPad declined in 2014 compared to 2013 due to lower unit sales in many markets. Growth in total net sales during 2014 was also negatively impacted by the continuing decline of iPod sales. All of the Company’s operating segments other than the Rest of Asia Pacific segment experienced increased net sales in 2014, with growth being strongest in the Greater China and Japan operating segments.

During the first quarter of 2014, the Company introduced iPad Air, its fifth generation iPad and iPad mini with Retina display. At its Worldwide Developer Conference in June 2014, the Company announced iOS 8 and OS X Yosemite. In September 2014, the Company introduced iPhone 6 and 6 Plus, released iOS 8, announced Apple Pay, which became available in the U.S. in October 2014, and previewed Apple Watch, which is expected to be available in early calendar 2015. In October 2014, the Company introduced iPad Air 2, iPad mini 3, iMac with Retina 5K Display and an updated Mac mini; and released OS X Yosemite.

Company View

During 2014, the Company completed various business acquisitions, including the acquisitions of Beats Music, LLC, which offers a subscription streaming music service, and Beats Electronics, LLC, which makes Beats headphones, speakers and audio software.

In April 2014, the Company increased its share repurchase authorization to $90 billion and the quarterly dividend was raised to $0.47 per common share, resulting in an overall increase in its capital return program from $100 billion to over $130 billion. During 2014, the Company utilized $45 billion to repurchase its common stock and paid dividends and dividend equivalents of $11.1 billion. The current share repurchase program is expected to be completed by the end of December 2015. The Company also issued $12.0 billion of long-term debt during 2014 with varying maturities through 2044 and launched a commercial paper program, with $6.3 billion outstanding as of September 27, 2014.

Locations and Subsidiaries

Head Office

Apple Inc.

1 Infinite Loop

Cupertino

California 95014

USA

P:1 408 996 1010 http://www.apple.com/

Other Locations and Subsidiaries

Apple Inc.

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