The Year in Review: Apple

There can be no doubt that 2005 was a stellar year for Apple. From record-breaking quarterly financial reports and the release of Mac OS X Tiger to the announced transition of the Macintosh to the Intel platform and new iPods, Apple fired on all cylinders throughout much of the year, creating unprecedented demand for many of its products.

Record breaking profits

Apple started off 2005 by announcing a $295 million profit and the highest quarterly revenue and net income in the company’s history. Apple sold 1,046,000 Macintosh computers and 4,580,000 iPods for the quarter, which represented a staggering 525 percent year-over-year increase in iPod sales alone.

Apple continued its upward climb in the second quarter shipping 1,070,000 Macs and 5,311,000 iPods and registering a $290 million profit. While the quarter is the only one of the year that the company didn’t report record profits, they did see an increase of 43 percent in CPU and a 558 percent increase in iPod shipments.

The third and fourth quarters of the year saw Apple return to its record-breaking ways posting profits of $320 million and $430 respectively. By the end of the year Mac shipments topped 1.2 million units and iPod almost reached 6.5 million shipments for the quarter.

iPod

Perhaps the single most influential product in Apple’s arsenal is its diminutive MP3 and video iPod line. From the Shuffle and iPod video to the new iPod nano, analysts raved about the iPod even saying that it had reached iconic status.

Apple also turned its attention to the mobile phone market in 2005. In a joint event with Motorola, Apple introduced the Rokr cell phone, the first such phone that included Apple’s iTunes music software.

More information on Apple’s music efforts, including the iPod and iTunes Music Store is available in our special report, 2005: The Year in Music.

Apple Software

At Macworld Expo in January Apple CEO Steve Jobs declared 2005 the “year of HD video editing.” Backing up this declaration, Jobs introduced new versions of the company’s intermediate video editing software, Final Cut Express, and its consumer-level iMovie, which was released as part of iLife ‘05.

While the year of HD seemed to fizzle quickly, the year of Tiger did not. On April 29, Apple released its most advanced operating system to date, Mac OS X Tiger.

With its many marquee features that included Spotlight, Automator and an updated version of Safari, Tiger proved to be a winner with users. Apple also used Tiger to help its initiatives in other markets like sciences and enterprise.

In addition to its hardware offerings, Apple credited Mac OS X with the renewed interest from scientists. New applications aimed at the scientific community made Mac OS X an attractive buy because of its easy to use interface on the surface and its powerful UNIX backend.

One of the more interesting software announcements from Apple in 2005 was saved for the end of the year when the company introduced Aperture. Billed as the first professional all in one postproduction tool for photographers, Apple was quick to denounce speculation that the application was a competitor for Adobe’s Photoshop.

Analysts agreed that Aperture served a different purpose than Photoshop, but said the release was a clear shot across Adobe’s bow.

Hardware

Very few announcements in recent years have rocked the Apple world like the move to Intel processors. Announced at Apple’s Worldwide Developer Conference, Steve Jobs said the first Intel-based Macintosh would be available within a year.

Jobs said that Apple’s goal was to provide users with the best personal computers they could and that Intel had a very strong roadmap. Two of Apple’s biggest developers, Adobe and Microsoft, both pledged support for the new processors during Jobs’ keynote.

To help with the transition, Apple introduced Rosetta, a technology that will translate PowerPC-based applications to the new platform — a process that is immediate and transparent to the user, according to Apple.

While a lot of work lie ahead for developers to build code that would be native for the new processors, most were unfazed by the news. Apple issued an update to its development tools and offered developers an Intel kit that would see each one get an Intel-based Macintosh for testing.

Apple issued speed bumps to its laptop line throughout the year, but the introduction that caught most people’s attention was the Mac mini. The low-cost mini was an immediate hit with users that wanted a small Macintosh computer, without the typical high Macintosh price.

The Mac mini also became the focus of many groups looking for an Apple product in the Home Theater market. Some developers have even started putting out builds of products that allow users to play movies, music and view photos on a television, all from a Mac mini.

Apple added to this later in the year when it introduced Front Row, an application that gave users an interface to control their media. For now, that application is only available on the iMac.

Apple ended its hardware year by introducing a new Power Mac G5 featuring dual-core PowerPC CPUs and a PCI Express expansion architecture. The release of the new processors led some to speculate that Apple’s high-end systems would not be the first to incorporate an Intel chip.

Lawsuits

No year would be complete without a slew of lawsuits and 2005 was no different. Apple sued and got sued, appeals were won and lost and as with most legal battles, many are ongoing.

The year started early for Apple’s corporate attorneys as a user of its iTunes Music Store sued the company for its use of FairPlay, the company’s preferred Digital Rights Management software.

The suit accused Apple of violating federal antitrust laws and California’s unfair competition law by requiring users who buy music from the iTunes Music Store to use an iPod if they plan to take their music on the road with them.

Apple was also sued by two former employees. In one case, Tim Bucher, Apple’s former senior vice president of Macintosh Hardware Engineering, sued the company for termination without cause. The other case involved discrimination when an employee sued Apple after being terminated from her position when she complained that her white counterparts, who were junior to her, were making higher salaries than she was.

A pair of lawsuits were settled between Apple and its developers after Apple sued them for posting pre-release versions of Mac OS X Tiger on file-sharing Web sites.

Apple’s ongoing battle with rumor Web sites hit highs and lows, as the company won a ruling, but the decision was quickly appealed by the Electronic Frontier Foundation.

Apple agreed to settle a class action suit filed against it by owners of iPods who say the company misrepresented the capabilities of the iPod’s built-in rechargeable battery. Apple offered a US$50 coupon and extended warranties to consumers who can produce a receipt. The company denied the plaintiffs’ claims, but agreed to the settlement.

The lawsuit that attracted the most attention towards the end of the year involved the iPod nano. A class action lawsuit launched against Apple claimed the iPod nano scratches too easily. The lawsuit seeks to represent up to 125,000 iPod owners the law firm that launched the case said.

The suit claimed that the iPod Nano is defectively designed, allowing the screen to quickly become scratched with normal use. The suit also claims that the excessive, rapid wear renders the device unusable.

Market share

As Apple begins to make its mark in Life Sciences and businesses with Mac OS X, the company’s education desktop market is beginning to rise. According to market research firm IDC, Apple is seeing growth for education shipments both in the United States and worldwide.

Comparing the fourth quarter of 2004 to the fourth quarter of 2005, Apple saw its education computer shipments rise 15.08 percent worldwide and 13.79 percent in the United States. By comparison, education leader Dell saw its worldwide shipments rise 6.51 percent, while its U.S. shipments rose by 3.84 percent.

More to come

With Macworld Expo right around the corner there is little doubt that Apple will have more treats for the Mac faithful. With its focus on faster Macs with an Intel processor, a new operating system in the works and its move into the iPod video market, 2006 should start off with a bang.

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