Originally created 03/27/06

A bright, shiny Apple turns 30



SAN JOSE, Calif. - Silicon Valley's historic orchards have virtually disappeared but one notable fruit still stands: Apple.

As the storied company celebrates its 30th birthday in a week, Apple Computer Inc. will have brushed off its bruises from product failures and arguably misguided decisions to emerge with a shine that's more than skin-deep.

Its brand name and products - from the Mac to the iPod - resonate as both hip and innovative.

For all of its recent successes, however, Apple also has its share of challenges ahead as it matures into a digital media provider.

In the digital music arena, where Apple dominates, French lawmakers are angling to force the company to change its successful way of chaining its popular iPod player to its online iTunes Music Store.

Recording labels are also chafing at Apple's insistence that its song downloads remain 99 cents apiece. Apple's CEO Steve Jobs rebutted by calling the record industry "greedy."

In the computer space, where Apple is seeing its best sales in years, information-security firms have discovered a few new vulnerabilities in its Macintosh operating system.

Though the security breaches have been innocuous, security experts say they signal that Apple is a higher-profile target now for hackers, who in the past have focused heavily on Microsoft Corp.'s predominant Windows system.

"Apple is on more people's radar now that the company is a major force," said Tim Bajarin, president of Creative Strategies, a technology consultancy. "And these are all growing pains."

Apple's journey began in 1976 when two college dropouts - Jobs, a marketing whiz, and his friend Steve Wozniak, an engineering genius - filed partnership papers on April Fools' Day, their eyes set on building and selling personal computers. Another friend, Ron Wayne, opted out of the risky venture within two weeks.

Their first product was a build-it-yourself computer kit. A year later, in 1977, the Apple II microcomputer was born. It was not the first personal computer but it was the most successful - a hit not just among engineers, but home users, too. Many credit the Apple II as the genesis of the personal computer revolution.

Apple's cultural and technological influences only grew from there. Some of the Cupertino, Calif.-based company's creations have been duds that failed to make it any money, but became a source of inspiration and income for others.

The Apple Lisa, introduced in 1983, used an innovative icon- and mouse-based graphical user interface that laid the foundation of today's computers and replaced the previous arcane text-based systems. But the Lisa was a commercial flop: Its high price- $9,995 - sent business users to PCs from rival IBM Corp.

The hugely successful - and more affordable - Apple Macintosh followed in 1984, giving birth to desktop publishing by allowing users to create their own newsletters or printed material.

Microsoft eventually copied the user-friendly graphical interface and licensed its Windows software to manufacturers who copied the IBM PC. The clones proliferated while Macintosh sales were hobbled by Apple's decision not to license its software to other hardware makers.

The next decade was punctuated by an internal power struggle that forced then-chairman Jobs to leave the company, a series of execution missteps, and botched projects - most notably the Newton, a handheld computer dubbed a personal digital assistant.

In 1996, when Apple was struggling for a foothold in the personal computing market and its efforts to upgrade its operating system were going nowhere, the company bought Jobs' second computer company, NeXT, returning the prodigal son to the fold, and later to the helm.

Jobs, whose charismatic persona is the face of Apple, led the company's resurrection with one breakthrough after another - first with the iMac, then the slick new OS X operating system, then the iPod music player, then the market-leading online iTunes store.

A side venture Jobs founded during his absence from Apple, Pixar Animation Studios Inc., had also put the already celebrated high-tech executive in the middle of Hollywood. The connection to Pixar, which is now being acquired by The Walt Disney Co., has since bolstered Apple's rising star in the world of digital entertainment and consumer electronics.

Apple's iPod and iTunes franchises have popularized the notion of music - and more recently, video - on-the-go. They also spawned the modern explosion in podcasts, or self-made broadcasts of audio programming over the Internet to portable gadgets.

Today, Apple's well-honed, self-propelled reputation as David fighting the Goliath of Microsoft and the rest of the PC industry belies reality.

Apple may still hold roughly only a 4 percent share of the worldwide PC market, but analysts say its current operating system set the bar for rival Microsoft with innovative features, including 3D-like imaging and a side pane for "widget" applications.

Many analysts expect that Apple's market-dominating iPod - which works with both Windows and Macintosh machines - and its new computers based on Intel Corp. chips - the same used by Windows - will help grow Apple's slice of the PC market.

Meanwhile, Apple's financial health is better than ever. It posted record revenue of nearly $14 billion for its fiscal 2005 and is armed with more than $8 billion in cash.

"Apple will continue to be a force in portable music and video, and desktop innovation," Bajarin said. "Its key challenge now is how it will extend the Mac more into the digital lifestyle, into the living room and the rest of the house, as well as to other portable devices."

No matter how well the company does with its future endeavors, many things people do today - from desktop publishing to music downloads - will long be regarded as the fruits of Apple.