History of Apple Inc.(1969-2011)

History of Apple Inc.(1969-2011)

Apple Inc., formerly Apple Computer, Inc., is a multinational corporation that creates consumer electronics, computer software, and commercial servers. Apple's core product lines are the iPad, iPhone, iPod music player, and Macintosh computer line-up. Founders Steve Jobs and Steve Wozniak effectively created Apple Computer on April 1, 1976, with the release of the Apple I, and incorporated the company on January 3, 1977, in Cupertino, California. For more than two decades, Apple Computer was predominantly a manufacturer of personal computers, including the Apple II, Macintosh, and Power Mac lines, but it faced rocky sales and low market share during the 1990s. Jobs, who had been ousted from the company in 1985, returned to become Apple's CEO in 1996 after his company NeXT was bought by Apple Inc., and he brought with him a new corporate philosophy of recognizable products and simple design. With the introduction of the successful iPod music player in 2001, Apple established itself as a leader in the consumer electronics industry, dropping "Computer" from its name. The latest era of phenomenal success for the company has been in the iOS range of products that began with the iPhone, iPod Touch and now iPad. As of 2011, Apple is the largest technology firm in the world, with annual revenues of more than $60 billion

1969-1984: Jobs and Wozniak

Steve Jobs and Steve Wozniak had withdrawn from Reed College and UC Berkeley, respectively by 1975. Wozniak designed a video terminal that he could use to log on to the minicomputers at Call Computer. Alex Kamradt commissioned the design and sold a small number of them through his firm. Aside from their interest in up-to-date technology, the impetus for "the two Steves" seems to have had another source. In his essay From Satori to Silicon Valley (published 1986), cultural historian Theodore Roszak made the point that the Apple Computer emerged from within the West Coast counterculture and the need to produce print-outs, letter labels, and databases. Roszak offers a bit of background on the development of the two Steves’ prototype models.

In 1975, Wozniak started attending meetings of the Homebrew Computer Club. New microcomputers such as the Altair 8800 and the IMSAI inspired him to build a microprocessor into his video terminal and have a complete computer.

At the time the only microcomputer CPUs generally available were the $179 Intel 8080, and the $170 Motorola 6800. Wozniak preferred the 6800, but both were out of his price range. So he watched, and learned, and designed computers on paper, waiting for the day he could afford a CPU.

When MOS Technology released its $20 6502 chip in 1976, Wozniak wrote a version of BASIC for it, then began to design a computer for it to run on. The 6502 was designed by the same people who designed the 6800, as many in Silicon Valley left employers to form their own companies. Wozniak's earlier 6800 paper-computer needed only minor changes to run on the new chip.

Wozniak completed the machine and took it to Homebrew Computer Club meetings to show it off. At the meeting, Wozniak met his old friend Jobs, who was interested in the commercial potential of the small hobby machines.

1985: Jobs leaves Apple

After an internal power struggle, the board of directors sided with Sculley and Jobs was asked to resign. In a show of defiance at being booted from Apple Computer, Jobs sold his 6.5 million shares in the company for $70 million. Jobs then acquired the visual effects house, Pixar for $5M. He also went on to found NeXT Inc., a computer company that built machines with futuristic designs and ran the UNIX-derived NeXTstep operating system. NeXTSTEP would eventually be developed into Mac OS X. While not a commercial success, due in part to its high price, the NeXT computer would introduce important concepts to the history of the personal computer (including serving as the initial platform for Tim Berners-Lee as he was developing the World Wide Web).

1985-1997: Sculley, Spindler, Amelio

Corporate performance

Under leadership of John Sculley, Apple issued its first corporate stock dividend on May 11, 1987. A month later on June 16, Apple stock split for the first time in a 2:1 split. Apple kept a quarterly dividend with about 0.3% yield until November 21, 1995.Between March 1988 and January 1989, Apple undertook five acquisitions, including software companies Network Innovations,Styleware, Nashoba Systems, and Coral Software,as well as satellite communications company Orion Network Systems.

Apple II family of the 1980s

See also: Timeline of Apple II Family

Apple now had two separate, incompatible platforms: the Apple II, an affordable, expandable home computer, and the Apple Macintosh, the closed platform for professionals. John Gruber, among others, has speculated that this platform incompatibility was the main reason the Macintosh did not share the initial commercial success which was experienced by the Apple II in the late 1970s.However, by the mid - 1980s, the Apple II was now competing with the IBM PC and its clones, and a new energy was focused upon marketing the Macintosh.

Thus, Apple continued to sell both lines promoting them to different market segments: the Macintosh to colleges, college students, and knowledge workers, and the Apple II to home users and public schools. A few months after introducing the Mac, Apple released a compact version of the Apple II called the Apple IIc. And in 1986 Apple introduced the Apple IIgs, an Apple II positioned as something of a hybrid product with a mouse-driven, Mac-like operating environment. Apple II computers remained an important part of Apple's business until they were discontinued in the early 1990s.

Mac family

At the same time, the Mac was becoming a product family of its own. The original model evolved into the Mac Plus in 1986 and spawned the Mac SE and the Mac II in 1987 and the Mac Classic and Mac LC in 1990. Meanwhile, Apple attempted its first portable Macs: the failed Macintosh Portable in 1989 and then the more popular PowerBook in 1991, a landmark product that established the modern form and ergonomic layout of the laptop. Popular products and increasing revenues made this a good time for Apple. MacAddict magazine has called 1989 to 1991 the "first golden age" of the Macintosh.

On February 19, 1987, Apple registered the "Apple.com" domain name, making it one of the first hundred companies to register a .com address on the nascent Internet.

Early-mid 1990s

In the late 1980s, Apple's fiercest technological rivals were the Amiga and Atari ST platforms. But by the 1990s, computers based on the IBM PC had become more popular than all three; they finally had a comparable GUI thanks to Windows 3.0, and were out-competing Apple.

Apple's response to the PC threat was a profusion of new Macintosh lines including Quadra, Centris, and Performa. Unfortunately, these new lines were marketed poorly by what was now "arguably one of the worst-managed companies in the industry".For one, there were too many models, differentiated by very minor graduations in their tech specs. The excess of arbitrary model numbers confused many consumers and hurt Apple's reputation for simplicity. Apple's retail resellers like Sears and CompUSA often failed to sell or even competently display these Macs. Compounding matters was the fact that, although the machines were cheaper than a comparable PC (when taken into account all the components built-in which had to be added to the 'bare bones PC'), the poor marketing gave the impression that the machines were more expensive.Inventory grew as Apple consistently underestimated demand for popular models and overestimated demand for others.

In 1991, Apple partnered with long-time competitor IBM to form the AIM alliance. The ultimate goal was to create a revolutionary new computing platform, known as PReP, which would use IBM and Motorola hardware and Apple software. As the first step toward the PReP platform, Apple started the Power Macintosh line in 1994, using IBM's PowerPC processor. These processors used a RISC architecture, which differed substantially from the Motorola 680X0 series that were used by all previous Macs. Parts of Apple's operating system software were rewritten so that most software written for older Macs could run in emulation on the PowerPC series. Apple also refused IBM's offer to purchase the company, but later unsuccessfully sought another offer from IBM, and at one point was "hours away" from an acquisition by Sun Microsystems.

In addition to computers, Apple has also produced consumer devices. In 1993, Apple released the Newton, an early personal digital assistant (PDA). It defined and launched the PDA category and was a forerunner and inspiration of devices such as Palm Pilot and Pocket PC. 

Microsystems.

In addition to computers, Apple has also produced consumer devices. In 1993, Apple released the Newton, an early personal digital assistant (PDA). It defined and launched the PDA category and was a forerunner and inspiration of devices such as Palm Pilot and Pocket PC.

During 1995, a decision was made to (officially) start licensing the Mac OS and Macintosh ROMs to 3rd party manufacturers who started producing Macintosh “clones”. This was done in order to achieve deeper market penetration and extra revenue for the company. This decision lead to Apple having over a 10% market share until 1997 when Steve Jobs was re-hired as interim CEO to replace John Scully. Jobs promptly found a loophole in the licensing contracts Apple had with the clone manufacturers and terminated the Macintosh OS licensing program ending the Macintosh clone era. The result of this action was that Macintosh computer market share quickly fell from 10% to around 3%

1996: Return of Steve Jobs

In 1996, the struggling NeXT company beat out Be Inc.'s BeOS in its bid to sell its operating system to Apple. Apple purchased Steve Jobs' company, NeXT on December 10, 1996, and its NeXTstep operating system. This would not only bring Steve Jobs back to Apple's management, but NeXT technology would become the foundation of the Mac OS X operating system.

On November 10, 1997, Apple introduced the Apple Store, an online retail store based upon the WebObjects application server the company had acquired in its purchase of NeXT. The new direct sales outlet was also tied to a new build-to-order manufacturing strategy.

CEO

On July 9, 1997, Gil Amelio was ousted as CEO of Apple by the board of directors after turning the company around from a multibillion loss to a $25 million dollar profit.[citation needed] Jobs stepped in as the interim CEO to begin a critical restructuring of the company's product line. He would eventually become CEO and served in that position until August 2011. On August 24, 2011 Steve Jobs resigned his position as Chief Executive Officer of Apple before his long battle with pancreatic cancer took his life on October 5th 2011.

Microsoft deal

At the 1997 Macworld Expo, Steve Jobs announced that Apple would be entering into partnership with Microsoft. Included in this was a five-year commitment from Microsoft to release Microsoft Office for Macintosh as well a US$150 million investment in Apple. It was also announced that Internet Explorer would be shipped as the default browser on the Macintosh. Microsoft chairman Bill Gates appeared at the expo on-screen, further explaining Microsoft's plans for the software they were developing for Mac, and stating that he was very excited to be helping Apple return to success. After this, Steve Jobs said this to the audience at the expo:

If we want to move forward and see Apple healthy and prospering again, we have to let go of a few things here. We have to let go of this notion that for Apple to win, Microsoft has to lose. We have to embrace a notion that for Apple to win, Apple has to do a really good job. And if others are going to help us that's great, because we need all the help we can get, and if we screw up and we don't do a good job, it's not somebody else's fault, it's our fault. So I think that is a very important perspective. If we want Microsoft Office on the Mac, we better treat the company that puts it out with a little bit of gratitude; we like their software. So, the era of setting this up as a competition between Apple and Microsoft is over as far as I'm concerned. This is about getting Apple healthy, this is about Apple being able to make incredibly great contributions to the industry and to get healthy and prosper again.

1998-2001: Apple's renaissance

iMac, iBook, and Power Mac G4

While discontinuing Apple's licensing of its operating system to third-party computer manufacturers, one of Jobs's first moves as new acting CEO was to develop the iMac, which bought Apple time to restructure. The original iMac integrated a CRT display and CPU into a streamlined, translucent plastic body. The line became a sales smash, moving about one million units each year. It also helped re-introduce Apple to the media and public, and announced the company's new emphasis on the design and aesthetics of its products.

More recent products include the iBook, the Power Mac G4, and the AirPort product series, which helped popularize the use of Wireless LAN technology to connect computers to networks.

In 1999, Apple introduced the Power Mac G4, which utilized the Motorola-made PowerPC 7400 containing a 128-bit instruction unit known as AltiVec, its flagship processor line. Also that year, Apple unveiled the iBook, its first consumer-oriented laptop that was also the first Macintosh to support the use of Wireless LAN via the optional AirPort card that was based on the 802.11b standard.

Mac OS X

Company headquarters on Infinite Loop in Cupertino

In 2001, Apple introduced Mac OS X, an operating system based on NeXT's NeXTstep and incorporating parts of the FreeBSD kernel.[36] Aimed at consumers and professionals alike, Mac OS X married the stability, reliability and security of Unix with the ease of a completely overhauled user interface. To aid users in transitioning their applications from Mac OS 9, the new operating system allowed the use of Mac OS 9 applications through the Classic environment. Apple's Carbon API also allowed developers to adapt their Mac OS 9 software to use Mac OS X's features.

Retail stores

In May 2001, after much speculation, Apple announced the opening of a line of Apple retail stores, to be located throughout the major U.S. computer buying markets. The stores were designed for two primary purposes: to stem the tide of Apple's declining share of the computer market, as well as a response to poor marketing of Apple products at third-party retail outlets.

iPod

In October 2001, Apple introduced its first iPod portable digital audio player. The iPod started as a 5 gigabyte player capable of storing around 1000 songs. Since then it has evolved into an array of products including the Mini (now discontinued), the iPod Touch, the Shuffle, the iPod Classic, the Nano, and the iPhone. As of March 2011, the largest storage capacity for an iPod was 160 gigabytes.

2002-Present: iTunes, iOS

In early 2002, Apple unveiled a redesigned iMac, using the G4 processor. The new design had a hemispherical base and a flat panel all-digital display supported by a swiveling neck. This model was discontinued in the summer of 2004.

In 2002, Apple also released the Xserve 1U rack mounted server. Originally featuring two G4 chips, the Xserve was unusual for Apple in two ways. It represented an earnest effort to enter the enterprise computer market and it was also relatively cheaper than similar machines released by its competitors. This was due, in no small part, to Apple's use of Fast ATA drives as opposed to the SCSI hard drives used in traditional rack-mounted servers. Apple later released the Xserve RAID, a 14 drive RAID which was, again, cheaper than competing systems.

In mid-2003, Steve Jobs launched the Power Mac G5, based on IBM's G5 processor. Apple claims this was the first 64-bit computer sold to the general public, but in fact that title actually goes to the AMD Opteron line (Opteron processors were however marketed more directly to the enterprise for use in rackmount servers and in workstations). Both 64-bit CPUs were pre-dated by the 64-bit Alpha architecture, although the Alpha was aimed more at servers and workstations and not at the "general public." The Power Mac G5 was also used by Virginia Tech to build its prototype System X supercomputing cluster, which at the time garnered the prestigious recognition of the third fastest supercomputer in the world. It cost only US$5.2 million to build, far less than the previous #3 and other ranking supercomputers. Apple's Xserves were soon updated to use the G5 as well. They replaced the Power Mac G5 machines as the main building block of Virginia Tech's System X, which was ranked in November 2004 as the world's seventh fastest supercomputer.

A new iMac based on the G5 processor was unveiled August 31, 2004 and was made available in mid-September. This model dispensed with the base altogether, placing the CPU and the rest of the computing hardware behind the flat-panel screen, which is suspended from a streamlined aluminium foot. This new iMac, dubbed the iMac G5, was the world's thinnest desktop computer, measuring in at around two inches (around 5 centimeters).

2004, however, was a turning point for Apple. After creating a sizable financial base to work with, the company began experimenting with new parts from new suppliers. As a result Apple was able to produce new designs so quickly over a short amount of time, with the release of the iPod Video, then the iPod Classic, and eventually the iPod touch and iPhone. Each Apple product thus far has been under equally high demand.

Through the 1990s, personal computers based on Microsoft's Windows operating system began to gain a much larger percentage of new computer users than Apple. As a result, Apple fell from controlling 20% of the total personal computer market to 5% by the end of the decade. The company was struggling financially under then-CEO Gil Amelio when on August 6, 1997 Microsoft bought a US$150 million non-voting share of the company as a result of a court settlement with Apple. Perhaps more significantly, Microsoft simultaneously announced its continued support for Mac versions of its office suite, Microsoft Office, and soon created a Macintosh Business Unit. This reversed the earlier trend within Microsoft that resulted in poor Mac versions of their software and has resulted in several award-winning releases. However, Apple's market share continued to decline, reaching 3% by 2004.

Initially, the Apple Stores were only opened in the United States, but in late 2003, Apple opened its first Apple Store abroad, in Tokyo's Ginza district. Ginza was followed by a store in Osaka, Japan in August 2004. In 2005, Apple opened stores in Nagoya, the Shibuya district of Tokyo, Fukuoka, and Sendai. Another store was opened in Sapporo in 2006. Apple's first European store opened in London in November 2004, and is currently the largest store. A store in the Bullring shopping centre in Birmingham opened in April 2005, and the Bluewater shopping centre in Dartford, Kent opened in July 2005. Apple opened its first store in Canada in the middle of 2005 at the Yorkdale Shopping Centre in North York, Toronto. Later on in 2005 Apple opened the Meadowhall Store in Sheffield and the Trafford Centre Store in Manchester (UK). Recent additions in the London area include the Brent Cross Apple Store (January 2006) and the Apple Store in Westfield in Shepherd's Bush (September 2008).

Also, in an effort to court a broader market, Apple opened several "mini" stores in October 2004 in attempt to capture markets where demand does not necessarily dictate a full scale store. The first of these stores was opened at Stanford Shopping Center in Palo Alto, California. These stores follow in the footsteps of the successful Apple products: iPod mini and Mac mini. These stores are only one half the square footage of the smallest "normal" store and thus can be placed in several smaller markets.

On April 29, 2005, Apple released Mac OS X v10.4 "Tiger" to the general public.

Apple's wildly successful PowerBook and iBook products relied on Apple's previous generation G4 architecture which were produced by Freescale Semiconductor, a spin off from Motorola. Engineers at IBM had minimal success in making their PowerPC G5 processor consume less power and run cooler but not enough to run in iBook or PowerBook formats. As of the week of October 24, 2005. Apple released the Power Mac G5 Dual that features a Dual-Core processor. This processor contains two cores in one rather than have two separate processors. Apple has also developed the Power Mac G5 Quad that uses two of the Dual-Core processors for enhanced workstation power and performance. The new Power Mac G5 Dual cores run individually at 2.0 GHz or 2.3 GHz. The Power Mac G5 Quad cores run individually at 2.5 GHz and all variations have a graphics processor that has 256-bit memory bandwidth.

iPod and iTunes store

A 2nd generation iPod

iPod mini with the user interface set to German

On October 23, 2001, Apple introduced the iPod, a portable digital music player. Its signature features included an LED, easy to use interface, and a large capacity drive (initially 5 GB) which was enough to hold approximately 1,000 songs. It was quite large when compared to the 20-30 songs of Flash-based players of the time. Apple has since revised its iPod line several times, introducing a slimmer, more compact design, Windows compatibility (previous iPods only interacted with Macintosh computers), AAC compatibility, storage sizes of up to 160 GB, and easier connectivity with car or home stereo systems. On October 26, 2004, Apple released a color version of their award winning iPod which can not only play music but also show photos. In early 2005, Apple unveiled a smaller iPod : the iPod Shuffle, which is about the size of a pack of gum. Speaking to software developers on June 6, 2005, Steve Jobs said the company's share of the entire portable music device market stood at 76%.

Apple has revolutionized the computer and music industry by signing the five major record companies to join its new music download service, the successful iTunes Music Store, now known as iTunes Store. Unlike other fee-based music services, the iTunes Store charges a flat US$0.99 per song (or US$9.99 per album). Users have more flexibility than on previous on-line music services. For example, they can burn CDs including the purchased songs (although a particular playlist containing purchased music may only be burned seven times), share and play the songs on up to five computers, and, of course, download songs onto an iPod.

The iTunes Music Store commercial model is one-time purchase, which contrasts with other commercial subscription music services where users are required to pay a regular fee to be able to access musical content (but are able to access a larger volume of music during the subscription).

The iTunes Music Store was launched in 2003 with 2 million downloads in only 16 days; all of which were purchased only on Macintosh computers. Apple has since released a version of iTunes for Windows, allowing Windows users the ability to access the store as well. Initially, the music store was only available in the United States due to licensing restrictions, but there were plans to release the store to many other countries in the future.

In January 2004 Apple released a more compact version of their iPod player, the 4 GB iPod Mini. Although the Mini held fewer songs than the other iPod models at that time, its smaller size and multiple colours made it popular with consumers on debut with many stores having "sold out" their initial inventories of the devices.

In June 2004 Apple opened their iTunes Music Store in the United Kingdom, France, and Germany. A European Union version opened October 2004 (actually, a Eurozone version; not initially available in the Republic of Ireland due to the intransigence of the Irish Recorded Music Association (IRMA) but eventually opened Thursday January 6, 2005.) A version for Canada opened in December 2004. On May 10, 2005, the iTunes Music Store was expanded to Denmark, Norway, Sweden, and Switzerland.

On December 16, 2004, Apple sold its 200 millionth song on the iTunes Music Store to Ryan Alekman from Belchertown, Massachusetts. The download was The Complete U2, by U2.[47] Just under three months later Apple sold its 300 millionth song on March 2, 2005.On July 17, 2005, the iTunes Music Store sold its 500 millionth song.At that point, songs were selling at an accelerating annualized rate of more than 500 million.

On January 11, 2005, an even smaller version of the iPod was announced, this one based on flash memory instead of using a miniaturized hard drive. The iPod Shuffle, like its predecessors, proved so popular that it sold out almost immediately, causing delays of up to four weeks in obtaining one within a single week of its debut.[citation needed] This is despite the fact that critics had gawked at the lack of LCD screen in the Shuffle, a norm in almost all current flash memory based mp3 players.

The iPod is giving an enormous lift to Apple's financial results. In the quarter ending March 26, 2005, Apple earned US$290 million, or 34¢ a share, on sales of US$3.24 billion. The year before in the same quarter, Apple earned just US$46 million, or 6¢ a share, on revenue of US$1.91 billion.

In July 2005, the iPod was given a color screen, merging the iPod and iPod Photo.

On September 7, 2005, Apple replaced the iPod Mini line with the new iPod Nano. While some consumers were put off by the high price tag (US$199 for 2 GB), and easily scratchable surface, the Nano had sold 1 million units in the first 17 days.

A month later, on October 12, 2005 Apple introduced the new 5th generation iPod with video playback abilities. The device is also 40% thinner than a 4th generation iPod and has a larger screen.

On October 25, 2005, the iTunes Store went live in Australia, with songs selling for A$1.69 each, albums at (generally) A$16.99 and music videos and Pixar short films at A$3.39. Briefly, people in New Zealand were able to buy music off the Australian store. However, that loophole was quickly closed.

On February 23, 2006, the iTunes Music Store sold its 1 billionth song.

The iTunes Music Store changed its name to iTunes Store on September 12, 2006 when it began offering video content (TV shows and movies) for sale. Since iTunes inception it has sold over 2 billion songs, 1.2 billion of which were sold in 2006. Since downloadable TV and movie content was added 50 million TV episodes and 1.3 million movies have been downloaded.

In early 2010, Apple celebrated the 10 billionth song downloaded from the iTunes Music Store.

[edit]iOS evolution: iPhone and iPad

Main articles: iOS, iPhone, and iPad

First announced on January 9, 2007, Apple introduced the first version of the iPhone being publicly available on June 29 that same year in selected countries/markets. It was another 12 months before the iPhone 3G became available on July 11, 2008. Apple announced the iPhone 3GS on June 8, 2009, along with plans to release it later in June, July, and August, starting with the U.S., Canada and major European countries on June 19. This 12-month iteration cycle has continued with the iPhone 4 model arriving in similar fashion in 2010, A Verizon model was released in February 2011, and a Sprint model in October 2011, shortly after Job's death.

The Macs that are available as of February 2011 are the iMac, Mac Pro, MacBook, MacBook Pro, MacBook Air, and Mac mini. The latest version of Mac OS X is Lion (10.7). On February 10, 2011, the iPhone 4 was made available on both Verizon Wireless and AT&T. Now two iPod types are multi-touch: the iPod nano and the iPod touch, a big advance in technology. Apple TV currently has a 2nd generation model, which is 4 times smaller than the original Apple TV. Apple has also gone wireless, selling a wireless trackpad, keyboard, mouse, and external hard drive. Wired accessories are, however, still available.

The Apple iPad was announced on January 27, 2010 with retail availability commencing in April and systematically growing in markets throughout 2010. The iPad fits into Apple iOS product line, being twice the screen size of an iPhone without the phone abilities. While there were initial fears of product cannibalisation the FY2010 financial results released in Jan 2011 included commentary of a reverse 'halo' effect, where iPad sales were leading to increased sales of iMacs and MacBooks.On March 2, 2011, Apple unveiled the iPad's second generation model, the iPad 2. Like the 4th generation iPod Touch and iPhone, the iPad 2 comes with a front-facing camera as well as a rear-facing camera, along with three new apps that utilize these new features: Camera, FaceTime, and Photobooth (only on iPad2).

Resurgence compared to Microsoft

Since 2005, Apple's revenues, profits, and stock price have grown significantly. On May 26, 2010 Apple's stock market value overtook Microsoft's,and Apple's revenues surpassed those of Microsoft in the third quarter of 2010.After giving their results for the first quarter of 2011 Microsoft's net profits of $5.2 billion were lower for the quarter than those of Apple Inc., which earned $6 billion in net profit for the quarter. The late April announcement of profits by the two companies marks the first time in twenty years that Microsoft's profits have been lower than Apple's.,and according to Arstechnica "this would have been 'unimaginable' 10 years before."

The Guardian reported that one of the reasons for the change is because PC software, where Microsoft dominates, has become less important compared to the tablet PC and smartphone markets, where Apple has a strong presence.One reason for this was a surprise drop in PC sales in the quarter.Another issue for Microsoft is that their online search business has lost a lot of money, with a loss of $700 million in the first quarter of 2010. Although Microsoft's online division losses were high, even if they had made no loss Apple's profits would have been slightly higher.

Source wikipedia