TechWeb

Apple's Year In Review, 2011

Dec 14, 2011 (03:12 AM EST)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=232300346


Apple had a great year, if you don't count the loss of co-founder and former CEO Steve Jobs.

Of course, that counts more than anything. Jobs saved Apple from bankruptcy in 1997 and left it as one of the most valuable and admired companies in the world. He left Apple too soon.

But apart from Jobs's passing and a few missteps, Apple thrived and innovated in 2011. The value of its stock increase almost 22% so far this year. Its leading competitor in the mobile arena, Google, saw the value of its stock rise 5%. And Apple's longtime rival in the computer market, Microsoft, saw its stock slip more than 5% during the same period.

The company also continued to foment a schism in the computing device market, luring consumers and business users away from desktop computers to the more managed and manageable environment of iOS devices, like the iPad. It is laying the groundwork for a time not far from now when general purpose computers have become specialty tools for software engineers and tech enthusiasts.

Apple delivered two significant updates for iOS and one for Mac OS X. It refreshed its popular iPhone and iPad, and introduced a new data transfer technology from Intel. It waged war with patents, frustrating Samsung and flanking Google. And it began a long march toward a future as a cloud service provider, launching iCloud and iTunes Match.

Apple's problems have been difficult, but not insurmountable. CEO Tim Cook and a talented team of managers have kept Apple in course. The iPhone location tracking revelations have been dealt with adequately and the battery problems tied to iOS 5 don't appear to have hindered iPhone sales. The problems surrounding the launch of Final Cut Pro X may take a bit longer to undo, and Apple developers won't rest easy until Lodsys has been defeated soundly in court.

More worrisome is the investigation into Apple's pricing of ebooks, a matter of concern among both EU and U.S. regulators. Apple may not have such a good year in 2012.




Apple's exclusive partnership with AT&T finally ended in January when Apple announced that its iPhone 4 would be available through Verizon. Apple's effort to broaden the iPhone market beyond a single carrier, however, may have come too late: Google's Android operating system has been spreading like a wildfire.

January also saw the launch of the Mac App Store, Apple's effort to remake its Mac OS ecosystem in the image of iOS and collect a 30% cut of Mac app revenue in the process.

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Apple in February became the first computer maker to introduce Intel's Light Peak data transfer technology, under the name Thunderbolt. Computer makers Acer and Asus said in September that they'd introduce Thunderbolt connectors in 2012, which means that others will probably follow.

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The iPad 2 was introduced in March, just as competitors were struggling to deliver an answer to the original iPad. Version 2 was a bit thinner and included a more powerful A5 chip, as well as front- and rear-facing cameras. During its fourth fiscal quarter, which ended in September, Apple sold 11.12 million iPad 2 units, over one-and-a-half times as many as it sold during the same period a year earlier.

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When two security researchers announced that they'd found a database on the iPhone filled with location data, it looked as if Apple would join Google and Facebook in the privacy penalty box. A week after the disclosure, following a letter of inquiry from members of Congress and a lawsuit in Florida, Apple explained that it was merely trying to build a database of Wi-Fi hotspots to help with location services when GPS data isn't available or is impractical. With the release of subsequent iOS updates, Apple remedied the situation, but not without marring its obsessively cultivated image.

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Apple's developer community came under attack in May when a patent-holding company, Lodsys, sued several developers of iOS apps, claiming that their use of Apple's in-app purchase technology violated its patents. Left unanswered, Lodsys's litigation could have driven developers away from iOS, for fear of being named in a ruinously expensive patent claim. But Apple responded to calls for help from its developer community by asking judge in the case for permission to intervene. The case continues to creep along, but it looks like less of an existential threat to third-party development than it did initially.

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Apple's release of Final Cut Pro X in June turned out to be one of its biggest missteps in years. Despite reducing the price of its professional movie editing application by hundreds of dollars, Apple managed to alienate a vocal group of power users by dropping support for technologies used by professional video editors and by neglecting to implement support for such features at launch. Apple didn't address some of the complaints until September with its 10.0.1 update, and there are more issues still.

Also in June, Apple introduced iCloud at its annual developer conference, having spent over $1 billion for a data center in North Carolina (pictured here) to support cloud services. And Apple's cloud-oriented construction isn't complete: The company is said to be looking at a possible data center site in Oregon, near where Facebook and Google have built data centers.

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Apple and a consortium of other companies including EMC, Ericsson, Microsoft, Research In Motion, and Sony prevailed in a $4.5 billion bid to acquire Nortel's patent portfolio. Google had been expected to buy the patents, after setting the initial price of $900 million with a so-called stalking horse bid earlier in the year. It was a sign that the patent war between companies in the mobile tech industry is only likely to become more intense.

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Apple CEO Steve Jobs steps down as CEO. Jobs recommends Tim Cook as his successor and Apple's board, unsurprisingly, accepts Jobs's recommendation. Jobs's letter of resignation doesn't adequately convey the importance of the transition.

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What's notable about September is what didn't happen: There was no iPhone 5, despite the fact that just about every tech news outlet on the planet ran stories about the imminent release of the iPhone 5 that month.

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Steve Jobs dies at the age of 56, the day after Apple introduced the iPhone 4S. The latest iPhone sells well and Apple shortly thereafter reports another in a long string of record quarters. But problems emerge: Users of the iPhone 4S, and other devices running iOS 5, report poor battery life. iOS 5.0.1, released in November doesn't entirely resolve the issue.

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Apple's long-awaited cloud music service for those with music not acquired through iTunes finally launched in November. iTunes Match creates copies of local music files on Apple's iCloud servers, allowing them to be accessed on other devices connected to the user's iCloud account. But this service isn't free--it costs $25 per year.

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Apple's gift from EU and U.S. regulators is a pair of investigations into its ebook pricing practices. Apple may have to revise its plan for world domination, or at least accept that it can't set prices in the publishing industry as it might like.

But such worries can wait until next year. As for 2011, Apple can be proud of what it accomplished. (The blue line represents Apple's share price growth in 2011, while the red line represents Google, and the yellow line represents Microsoft.)

Recommended Reading

Apple Grand Central Store: Quick Tour

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iPhone Through The Years: Visual Tour

10 Key Steve Jobs Moments and Innovations

11 iPad Apps For Better Collaboration

Apple iPad 2 3G Teardown