Remember When Apple Was Going to Change the World?

Apple recently announced quarterly earnings that have not only eclipsed those of the company in prior quarters, but have exceeded the highest quarterly earnings of any company, ever, anywhere.

This is great for Apple, and is very good for Apple users. Some of us have been using Apple computers for decades, and remember when the company was on the ropes. “Beleaguered Apple” used to be a common expression; now we’re seeing “beleaguered Microsoft” instead. Apple has made a brilliant turnaround.

In Apple’s press release, CEO Tim Cook is quoted as saying:

“We’d like to thank our customers for an incredible quarter, which saw demand for Apple products soar to an all-time high,” said Tim Cook, Apple’s CEO. “Our revenue grew 30 percent over last year to $74.6 billion, and the execution by our teams to achieve these results was simply phenomenal.”

At the same time, Apple is sitting on $178 billion, much of it sequestered in offshore tax-shielded trusts.

With all this money, Apple could do something better than develop a new iPhone. I’m reminded of the famous question that Steve Jobs asked Pepsi CEO John Sculley in the 1980s, in order to convince Sculley to join the company:

“Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?”

What happened to Apple’s desire to change the world? What has turned Apple into a company that seems to share Walter White’s goals:

“Jesse, you asked me if I was in the meth business or the money business. Neither. I’m in the empire business.”

There was a time when people cringed and complained about the obscene profits of oil companies; after all, they sell a product that we need, unlike Apple, which sells products that we want. So large profits for oil companies are seen as money that they don’t deserve, that is extorted from drivers and home-owners.

Apple is still seen as this bright, shiny brand, with useful products; which it is. Yet, who can look at these numbers and not think that the company could do fine, perhaps even better, with lower prices, allowing users to have more money to spend; that they’ve become the Microsoft of hardware with nearly abusive profit margins.

Apple could change the world with the money they have. Instead of pushing out yet another buggy operating system with features that don’t work reliably, they could commit some of their heaps of money to something useful.

They could start by ensuring that the people who build their products earn more and work in better conditions. Yes, Apple is not the only company who uses Chinese sub-contractors to build their stuff, but they’re the only company making such huge profits off the backs of these employees.

Or how about paying taxes? Apple has hoards of money stashed overseas, where it is out of reach to the IRS. If the company repatriated that money, they would pay corporate income tax on it, which would be a big help to the US Government, the same government whose policies, laws and infrastructures have enabled Apple to make all this money.

Maybe they could devote their resources and talent to trying to find a solution to global warming, eradicating communicable diseases, fostering equality in the world, bringing people out of poverty. This is all wishful thinking; there’s no reason for publicly owned corporation to do any of these things; even Bill Gates waited until he left Microsoft to give away most of his fortune through a foundation.

Whatever Apple does, I think it’s time they do something. If they don’t need this money, and have no plans for it, they should give it back to their shareholders, and not with the tiny $.47 per share dividend that the company is distributing next month.

Apple once wanted to change the world. The company now has enough money to effectuate real change; will they remember what Steve Jobs said some thirty years ago? Or will they just keep selling phones?

102 thoughts on “Remember When Apple Was Going to Change the World?

  1. Looking back, the Apple we used to be excited about began to disappear when Steve handed over the reigns to Tim (and I mean when he was still alive). Lots of run-of-the-mill releases and buggy software since. Tim’s happy with making cash and sadly it appears he really doesn’t have it in him to make bold, risky decisions. Where’s the risk with all that cash anyway?

    Who’d have thought a while ago in 2015 all we’re looking forward to from Apple, so far, is a watch.

    • You use an important word: risk. Here’s what I think. Tim Cook is beholden to “shareholder value,” and, given the intense scrutiny of everything Apple does, won’t dare risk launching products that aren’t successful. Not because of the money, but because of what “the street” will think, which will tarnish the value of the stock. Yet, as you say, with all that money, that’s the time to try really bold new products.

      • I think we need to give them more time to see what happens. Cook is more proactively interested in charitable causes (their most recent Product RED campaign was a lot more prominent than in previous times), and we also know of his comebacks at shareholder meetings (“bloody ROI” and “get out of the stock”), so I don’t think he is all that beholden to shareholder value, unless all those comments were just spin.

        I guess the problem is that Tim Cook isn’t nearly as much of a product guy as Jobs was. But he is more interested in charitable ventures I believe.

      • Maybe that’s a little unfair. Google has built prototypes of a balloon Internet, a self-driving car, and Google Glass, and where have all of these bold new products gotten them? Their revenues aren’t going up, they’ve got pressure on Search, and it seems that Android, Chrome, and Gmail aren’t getting them the advertising boost they had hoped.

        But Apple is producing products that people want, and it sure looks like some people will want the Apple Watch. Can we say that about the Pebble? Can we say that about the Moto 360?

        Apple isn’t first to market with bold new products. They look at existing products and services and try to make them better with their version. That’s Apple’s strength.

        And what Apple does is really very difficult. Lot of companies try bold new products. Have you tried any of the Windows phones? They’ve got great interfaces, but they’re five years too late to market to be successful.

        I’ve seen several people suggest that Apple should become a wireless carrier, or provide nationwide WiFi, or become a bank. Those are all great ideas, but what could Apple bring to those services that others don’t bring already?

        Tim and the executive team have the world’s best construction set. They’re not bound by money, but then neither are Google or Microsoft. Yet Apple keeps coming up with products people want. Let’s trust that virtually anything we can dream of, they’ve tried to prototype, and if that hasn’t lead to a product, there’s a good reason.

  2. Looking back, the Apple we used to be excited about began to disappear when Steve handed over the reigns to Tim (and I mean when he was still alive). Lots of run-of-the-mill releases and buggy software since. Tim’s happy with making cash and sadly it appears he really doesn’t have it in him to make bold, risky decisions. Where’s the risk with all that cash anyway?

    Who’d have thought a while ago in 2015 all we’re looking forward to from Apple, so far, is a watch.

    • You use an important word: risk. Here’s what I think. Tim Cook is beholden to “shareholder value,” and, given the intense scrutiny of everything Apple does, won’t dare risk launching products that aren’t successful. Not because of the money, but because of what “the street” will think, which will tarnish the value of the stock. Yet, as you say, with all that money, that’s the time to try really bold new products.

      • I think we need to give them more time to see what happens. Cook is more proactively interested in charitable causes (their most recent Product RED campaign was a lot more prominent than in previous times), and we also know of his comebacks at shareholder meetings (“bloody ROI” and “get out of the stock”), so I don’t think he is all that beholden to shareholder value, unless all those comments were just spin.

        I guess the problem is that Tim Cook isn’t nearly as much of a product guy as Jobs was. But he is more interested in charitable ventures I believe.

      • Maybe that’s a little unfair. Google has built prototypes of a balloon Internet, a self-driving car, and Google Glass, and where have all of these bold new products gotten them? Their revenues aren’t going up, they’ve got pressure on Search, and it seems that Android, Chrome, and Gmail aren’t getting them the advertising boost they had hoped.

        But Apple is producing products that people want, and it sure looks like some people will want the Apple Watch. Can we say that about the Pebble? Can we say that about the Moto 360?

        Apple isn’t first to market with bold new products. They look at existing products and services and try to make them better with their version. That’s Apple’s strength.

        And what Apple does is really very difficult. Lot of companies try bold new products. Have you tried any of the Windows phones? They’ve got great interfaces, but they’re five years too late to market to be successful.

        I’ve seen several people suggest that Apple should become a wireless carrier, or provide nationwide WiFi, or become a bank. Those are all great ideas, but what could Apple bring to those services that others don’t bring already?

        Tim and the executive team have the world’s best construction set. They’re not bound by money, but then neither are Google or Microsoft. Yet Apple keeps coming up with products people want. Let’s trust that virtually anything we can dream of, they’ve tried to prototype, and if that hasn’t lead to a product, there’s a good reason.

  3. Hi Kirk, I had a suspicion that someone would write a column like this, after the latest massive profit. I checked a source and got the figures that Apple made 6 billion here in Australia and paid just a couple of million in taxes last financial year. I’m not going to go to the gallows to justify these figures as, frankly, they sound inflated to me, but the point corroborates what your saying. Big sales, big net profits and little taxation return to the nation of sale. I know Apple employs many people who have jobs, pay tax and buy stuff, keeping the economic wheels ticking over. Nevertheless, corporate tax avoidance is the latest global game and Apple, as the BIG boy on the block presently, should help take a lead in the redistribution of wealth. It needs a world wide response and Apple has the ‘muscles’ to help bring corporations to the table. It’s a question of ethics and of will. I recall that when the USA had its debt issue a couple of years ago, Apple at one point had more cash than the USA a government. I know that profits must be made for investors and Super funds that many of us have a hand in, still I hope Aplle and similar cashed up corporations will respond to the community and its needs willingly. Otherwise I think we aren’t too far off a struggle between Governments and corporations over tax avoidance and off shore havens, and that won’t be pretty to see.

    Thanks again for your columns and advice which always is given openly, freely and with integrity.

    Mark .

    • Not sure where you’re getting your figures, but this is from Apple’s official (10-Q) report. Sales to Asia Pacific (exclusive of China and Japan – ie everyone else, incluidng Australia) were $5.2B (US dollars) in the quarter, with a net profit of $1.8B. I don’t see where they break out taxes specifically, but they’ve set aside 26.2% for corporate income taxes, or around $6.8B total.

      Of course, being a US company much of that profit is taxed at US rates, while overseas there are considerably different corporate tax rates. I think ~7% of sales were Asia Pacific (ex China/Japan), so one could estimate something like ~$500M tax paid on those profits.

      Not sure, but I think Apple pays way more taxes than any other US tech company (as they should).

  4. Hi Kirk, I had a suspicion that someone would write a column like this, after the latest massive profit. I checked a source and got the figures that Apple made 6 billion here in Australia and paid just a couple of million in taxes last financial year. I’m not going to go to the gallows to justify these figures as, frankly, they sound inflated to me, but the point corroborates what your saying. Big sales, big net profits and little taxation return to the nation of sale. I know Apple employs many people who have jobs, pay tax and buy stuff, keeping the economic wheels ticking over. Nevertheless, corporate tax avoidance is the latest global game and Apple, as the BIG boy on the block presently, should help take a lead in the redistribution of wealth. It needs a world wide response and Apple has the ‘muscles’ to help bring corporations to the table. It’s a question of ethics and of will. I recall that when the USA had its debt issue a couple of years ago, Apple at one point had more cash than the USA a government. I know that profits must be made for investors and Super funds that many of us have a hand in, still I hope Aplle and similar cashed up corporations will respond to the community and its needs willingly. Otherwise I think we aren’t too far off a struggle between Governments and corporations over tax avoidance and off shore havens, and that won’t be pretty to see.

    Thanks again for your columns and advice which always is given openly, freely and with integrity.

    Mark .

    • Not sure where you’re getting your figures, but this is from Apple’s official (10-Q) report. Sales to Asia Pacific (exclusive of China and Japan – ie everyone else, incluidng Australia) were $5.2B (US dollars) in the quarter, with a net profit of $1.8B. I don’t see where they break out taxes specifically, but they’ve set aside 26.2% for corporate income taxes, or around $6.8B total.

      Of course, being a US company much of that profit is taxed at US rates, while overseas there are considerably different corporate tax rates. I think ~7% of sales were Asia Pacific (ex China/Japan), so one could estimate something like ~$500M tax paid on those profits.

      Not sure, but I think Apple pays way more taxes than any other US tech company (as they should).

  5. How do you know they are NOT doing something? As you know, Apple has traditionally held their new developments very close to the vest. Apple and companies like it change the world by developing great products and solutions. Often solutions to problems their future customers never knew they had! We regard to the tax thing, the US corporate tax structure is the biggest mess in the world! Corporations don’t pay taxes anyhow, they just pass them through to their customers. If the US Congress would fix the tax code, much of the off-shore money held by Apple and other corporations would likely come home. Apple doesn’t need to bail out the US government simply because Apple makes money and the government just pisses it away.

    • Apple has billions of USTB’s…..once they bring back foreign capital it’s hard to take back outside USA: capital control.

      • I don’t know what USTBs are, but I’ve never heard of any regulations prohibiting US companies from expatriating money. In any case, Apple has little need for cash outside the US. It gets enough from sales.

  6. How do you know they are NOT doing something? As you know, Apple has traditionally held their new developments very close to the vest. Apple and companies like it change the world by developing great products and solutions. Often solutions to problems their future customers never knew they had! We regard to the tax thing, the US corporate tax structure is the biggest mess in the world! Corporations don’t pay taxes anyhow, they just pass them through to their customers. If the US Congress would fix the tax code, much of the off-shore money held by Apple and other corporations would likely come home. Apple doesn’t need to bail out the US government simply because Apple makes money and the government just pisses it away.

    • Apple has billions of USTB’s…..once they bring back foreign capital it’s hard to take back outside USA: capital control.

      • I don’t know what USTBs are, but I’ve never heard of any regulations prohibiting US companies from expatriating money. In any case, Apple has little need for cash outside the US. It gets enough from sales.

  7. “What happened to Apple’s desire to change the world?”

    Nothing has changed. Except people’s expectations.

    If one thinks of Apple as a toolmaker, and it is, then it is very easy to see past Apple’s success (read: simply a pile of cash) and focus on the fact that the fruit of Apple’s employees’s hard ass work are – and have been – changing the world. Every day.

    Climate change? Apple’s tools are being used to compile research, to draw conclusions, to create presentations and materials necessary to convey the impact on our future and to theorize solutions.

    Cancer. The same. You name the disease, and Apple’s tools can be found – right now – hard at work in the hands of professionals with a similar goal: to make the world a better place.

    Does Apple have a lot of cash? Of course. Apple’s leadership is doing something about it, clearly. But never enough to satisfy everyone.

  8. “What happened to Apple’s desire to change the world?”

    Nothing has changed. Except people’s expectations.

    If one thinks of Apple as a toolmaker, and it is, then it is very easy to see past Apple’s success (read: simply a pile of cash) and focus on the fact that the fruit of Apple’s employees’s hard ass work are – and have been – changing the world. Every day.

    Climate change? Apple’s tools are being used to compile research, to draw conclusions, to create presentations and materials necessary to convey the impact on our future and to theorize solutions.

    Cancer. The same. You name the disease, and Apple’s tools can be found – right now – hard at work in the hands of professionals with a similar goal: to make the world a better place.

    Does Apple have a lot of cash? Of course. Apple’s leadership is doing something about it, clearly. But never enough to satisfy everyone.

  9. Kirk, Apple *did* change the world. It brought computing to millions of people who’d otherwise have been left behind, or had years of their lives wasted by OS engineers who ignored the needs of users. For me, Apple made it possible to pursue graphic design without having to further subject myself to carcinogenic production-art supplies.

    Comparing the entire company to the activities of a semi-retired billionaire might be academically interesting, but I don’t think it’s very helpful. Yes, I hope Apple has some kind of long-term plan to put its cash hoard to some sort of measurable positive purpose. But I’m mostly thankful for the example it sets as a better-behaved corporate citizen.

    • I’d argue that they changed the world, somewhat, in the past by improving personal computing. They have even helped spur changes by shaking up the smartphone market. But given their aggressive tax avoidance, I’d hesitate to call them a “better-behaved corporate citizen.”

  10. Kirk, Apple *did* change the world. It brought computing to millions of people who’d otherwise have been left behind, or had years of their lives wasted by OS engineers who ignored the needs of users. For me, Apple made it possible to pursue graphic design without having to further subject myself to carcinogenic production-art supplies.

    Comparing the entire company to the activities of a semi-retired billionaire might be academically interesting, but I don’t think it’s very helpful. Yes, I hope Apple has some kind of long-term plan to put its cash hoard to some sort of measurable positive purpose. But I’m mostly thankful for the example it sets as a better-behaved corporate citizen.

    • I’d argue that they changed the world, somewhat, in the past by improving personal computing. They have even helped spur changes by shaking up the smartphone market. But given their aggressive tax avoidance, I’d hesitate to call them a “better-behaved corporate citizen.”

  11. A little off topic, but Apple’s latest quarter is still dwarfed by Saudi Aramco. You just never hear about them since they aren’t public.

  12. A little off topic, but Apple’s latest quarter is still dwarfed by Saudi Aramco. You just never hear about them since they aren’t public.

  13. Right now they are handcuffed by being a public company. They should use their money to buy back their stock and take the company private. Without having to answer to shareholders that are only concerned about making money they can focus on more important goals.

    • Exactly! As a public company Apple MUST maximize profits and, by extension, return on investment to shareholders. Take Apple private (or buy back enough stock to effectively nullify investor angst over the God of profit) and Apple could do whatever it wants with the money it has.

    • Not to rain on your parade, but Apple’s market capitalization is $682.43B. They have $178B in cash, or just over a quarter of the amount they would need to take the company private.

      It could take decades for them to amass enough to cash to take Apple private, but it’s more likely that they’ll never have enough cash to do that.

      Now, if we have another market problem like we did in 2008, and Apple’s stock gets cut in half, it might be more likely.

  14. Right now they are handcuffed by being a public company. They should use their money to buy back their stock and take the company private. Without having to answer to shareholders that are only concerned about making money they can focus on more important goals.

    • Exactly! As a public company Apple MUST maximize profits and, by extension, return on investment to shareholders. Take Apple private (or buy back enough stock to effectively nullify investor angst over the God of profit) and Apple could do whatever it wants with the money it has.

    • Not to rain on your parade, but Apple’s market capitalization is $682.43B. They have $178B in cash, or just over a quarter of the amount they would need to take the company private.

      It could take decades for them to amass enough to cash to take Apple private, but it’s more likely that they’ll never have enough cash to do that.

      Now, if we have another market problem like we did in 2008, and Apple’s stock gets cut in half, it might be more likely.

  15. First of all, profits aren’t a bad thing. Nobody is forcing people to buy Apple products. And while I get what you’re saying about oil being something we need vs something we want, I think you overstate the difference. Humans lived without oil. Yes, living without it would be an incredible downturn in quality of life. But so would living without computers at this point.

    Second, given that a publicly held company is required to maximize value for shareholders, this idea that Apple somehow owes the US government something makes no sense to me. Yes, there is debate about whether companies are living up to the spirit of the law — but that’s different from breaking it. Corporations minimize their tax exposure just like people do. I have yet to meet someone who purposely avoids taking a tax deduction available to them for the sake of the common good.

    Furthermore, whatever tax the government would collect from Apple’s repatriation of profits would be a drop in the bucket of our trillion dollar economy, not to mention most certainly disappearing into the pool of government waste.

    Finally, companies that lose their sense of mission will soon be unable to help anybody in any way. Apple makes computers. They have changed the world already, several times over. For them to try to suddenly devote their resources to curing cancer would be noble — but probably doom the company. Sure, Apple products almost universally are addressed to first world problems. But compared to hunger and disease, everything is a first world problem. Including the arts and music. I no more blame Apple for not becoming a charity than I blame Itzhak Perlman for dedicating himself to playing the violin rather than working in a soup kitchen.

    • Many economists question the “maximize value for shareholders” dogma, which is relatively recent in economic history.

      As for Apple’s (and other companies’) tax avoidance, it is at a scale that individuals could never attain. It’s not just tax deductions, it’s aggressively exploiting every loophole in the tax code to avoid paying taxes. The EU has just closed one such loophole, allowing companies to sell from a country with low VAT to avoid paying a) higher VAT (which the customer pays anyway), and b) VAT to a country to where the products are not sold.

      And, yes, Apple owes the US government, just as every other business does that benefits from the institutions and infrastructure that the US government has paid for.

      • Well, sure — of course they can pull off accounting tricks that the rest of us couldn’t even dream of. They probably have a whole cadre of people doing it for them. I mean, frankly, your question about changing the world kind of sounds like the kind of thing a young, idealistic Steve Jobs would be asking about Apple, too. Except surely he answered it to his own satisfaction.

        If it boils down to “Boy, Apple’s no different from any other company when it comes to social responsibility,” I wouldn’t argue with that. But as long as they are obeying the law with regard to taxes, no, I don’t think they owe anybody anything more. This idea that anybody “owes” the government anything is a way of looking at things that many of us don’t share. The government works for us. Our leaders govern at our pleasure. They take our money and they owe us service in response. If we as a society decide that companies like Apple somehow need to pay more, then we should make that decision democratically. But as Timothy Bandy says below, when you make tax law insanely complex, you get those who can to perform incredibly complex maneuvers to minimize the tax they pay.

        There isn’t a company or an individual in the world that isn’t minimizing the tax they have to pay. (Well, maybe an idealistic few, but they certainly don’t exist among our tax-evading leaders.) And I certainly don’t think there’s a government in the world that would spend Apple’s money more wisely than Apple will.

        In short: if you really want Apple to change the world, surely having them pay more taxes isn’t going to have any real effect. I think the impulse to demand it stems simply from the idea that “at a certain point, you’ve made enough money” — a principle that nobody ever applies to himself.

  16. First of all, profits aren’t a bad thing. Nobody is forcing people to buy Apple products. And while I get what you’re saying about oil being something we need vs something we want, I think you overstate the difference. Humans lived without oil. Yes, living without it would be an incredible downturn in quality of life. But so would living without computers at this point.

    Second, given that a publicly held company is required to maximize value for shareholders, this idea that Apple somehow owes the US government something makes no sense to me. Yes, there is debate about whether companies are living up to the spirit of the law — but that’s different from breaking it. Corporations minimize their tax exposure just like people do. I have yet to meet someone who purposely avoids taking a tax deduction available to them for the sake of the common good.

    Furthermore, whatever tax the government would collect from Apple’s repatriation of profits would be a drop in the bucket of our trillion dollar economy, not to mention most certainly disappearing into the pool of government waste.

    Finally, companies that lose their sense of mission will soon be unable to help anybody in any way. Apple makes computers. They have changed the world already, several times over. For them to try to suddenly devote their resources to curing cancer would be noble — but probably doom the company. Sure, Apple products almost universally are addressed to first world problems. But compared to hunger and disease, everything is a first world problem. Including the arts and music. I no more blame Apple for not becoming a charity than I blame Itzhak Perlman for dedicating himself to playing the violin rather than working in a soup kitchen.

    • Many economists question the “maximize value for shareholders” dogma, which is relatively recent in economic history.

      As for Apple’s (and other companies’) tax avoidance, it is at a scale that individuals could never attain. It’s not just tax deductions, it’s aggressively exploiting every loophole in the tax code to avoid paying taxes. The EU has just closed one such loophole, allowing companies to sell from a country with low VAT to avoid paying a) higher VAT (which the customer pays anyway), and b) VAT to a country to where the products are not sold.

      And, yes, Apple owes the US government, just as every other business does that benefits from the institutions and infrastructure that the US government has paid for.

      • Well, sure — of course they can pull off accounting tricks that the rest of us couldn’t even dream of. They probably have a whole cadre of people doing it for them. I mean, frankly, your question about changing the world kind of sounds like the kind of thing a young, idealistic Steve Jobs would be asking about Apple, too. Except surely he answered it to his own satisfaction.

        If it boils down to “Boy, Apple’s no different from any other company when it comes to social responsibility,” I wouldn’t argue with that. But as long as they are obeying the law with regard to taxes, no, I don’t think they owe anybody anything more. This idea that anybody “owes” the government anything is a way of looking at things that many of us don’t share. The government works for us. Our leaders govern at our pleasure. They take our money and they owe us service in response. If we as a society decide that companies like Apple somehow need to pay more, then we should make that decision democratically. But as Timothy Bandy says below, when you make tax law insanely complex, you get those who can to perform incredibly complex maneuvers to minimize the tax they pay.

        There isn’t a company or an individual in the world that isn’t minimizing the tax they have to pay. (Well, maybe an idealistic few, but they certainly don’t exist among our tax-evading leaders.) And I certainly don’t think there’s a government in the world that would spend Apple’s money more wisely than Apple will.

        In short: if you really want Apple to change the world, surely having them pay more taxes isn’t going to have any real effect. I think the impulse to demand it stems simply from the idea that “at a certain point, you’ve made enough money” — a principle that nobody ever applies to himself.

  17. Apple payed an effective tax rate of 26.3%. They do not owe the government anything. I’m sorry, the government is not entitled to more than a quarter of your profit.
    The government owes Apple and the rest of citizens of the U.S. an efficient and sensible tax code that is competitive with other developed countries.
    The US and EU have both made a byzantine set of tax laws, yet when a company uses byzantine methods to comply with those same laws, suddenly they are “aggressively avoiding” taxes.

    The government needs to provide a level playing field, fair laws, and a decent tax code.

    Apple needs to keep doing what it does best—providing great tools for people to get stuff done and have fun while they are doing it.

    That changes the world a lot faster than giving more money to the government.

    • I would like to see more information about that 26.3% tax rate. My guess is that is only what they paid on income they brought back into the US, not on gross income. Otherwise, they wouldn’t need to keep so much money in offshore tax shelters.

        • So what? They are the largest corporation on the United States. That doesn’t mean they’re paying taxes on all their income (which is no secret). So when you pay a certain amount, you don’t have to pay any more, even though you have more money?

          • Stop discussing US corporate tax code unless you know what you’re talking about. You are looking like someone who wants social justice instead of speaking about the facts.

            • Read the article I linked to in your comment below. I think you don’t know what you’re talking about.

            • If you read the financial statement, Apple explains that they paid 26%, and not the 35% U.S. corporate tax rate, specifically due to so much of their money being held offshore and not subject to U.S. taxation.

              I think it’s pretty unlikely that this Congress will pass legislation to force companies like Apple to bring home those offshore profits at a 35% tax rate. Even if they did, I doubt President Obama would sign it.

              Personally, I’d like to see U.S. corporations pay U.S. taxes on any money earned anywhere in the world, but that sure would anger every other country on Earth, as they wouldn’t get that tax revenue.

  18. Apple payed an effective tax rate of 26.3%. They do not owe the government anything. I’m sorry, the government is not entitled to more than a quarter of your profit.
    The government owes Apple and the rest of citizens of the U.S. an efficient and sensible tax code that is competitive with other developed countries.
    The US and EU have both made a byzantine set of tax laws, yet when a company uses byzantine methods to comply with those same laws, suddenly they are “aggressively avoiding” taxes.

    The government needs to provide a level playing field, fair laws, and a decent tax code.

    Apple needs to keep doing what it does best—providing great tools for people to get stuff done and have fun while they are doing it.

    That changes the world a lot faster than giving more money to the government.

    • I would like to see more information about that 26.3% tax rate. My guess is that is only what they paid on income they brought back into the US, not on gross income. Otherwise, they wouldn’t need to keep so much money in offshore tax shelters.

        • So what? They are the largest corporation on the United States. That doesn’t mean they’re paying taxes on all their income (which is no secret). So when you pay a certain amount, you don’t have to pay any more, even though you have more money?

          • Stop discussing US corporate tax code unless you know what you’re talking about. You are looking like someone who wants social justice instead of speaking about the facts.

            • Read the article I linked to in your comment below. I think you don’t know what you’re talking about.

            • If you read the financial statement, Apple explains that they paid 26%, and not the 35% U.S. corporate tax rate, specifically due to so much of their money being held offshore and not subject to U.S. taxation.

              I think it’s pretty unlikely that this Congress will pass legislation to force companies like Apple to bring home those offshore profits at a 35% tax rate. Even if they did, I doubt President Obama would sign it.

              Personally, I’d like to see U.S. corporations pay U.S. taxes on any money earned anywhere in the world, but that sure would anger every other country on Earth, as they wouldn’t get that tax revenue.

  19. So Apple should voluntarily give their profits to the U.S. government, based on the laws it created, so the Feds can waste it within the stranglehold of its bureaucracy? Apple is a super-efficient company. The Federal government is not. Maybe they should be better at managing our tax dollars rather than blaming Apple for adhering to a tax code they never wrote.

  20. So Apple should voluntarily give their profits to the U.S. government, based on the laws it created, so the Feds can waste it within the stranglehold of its bureaucracy? Apple is a super-efficient company. The Federal government is not. Maybe they should be better at managing our tax dollars rather than blaming Apple for adhering to a tax code they never wrote.

  21. Apple is both a hardware and software company, inseparable.

    Apple Pay is going to disrupt payments and forever change how we make purchases.
    Homekit will forever change how we interact with our home environment.
    Healthkit will change how we self monitor our health and wellness.

    All quite like the disruption of computing with the first successful GUI interface.

    Apple pays more than their fair share of US corporate taxes, do not fault Apple for arcane tax codes.

    The workers in China are paid well above the standards in China and Apple is at the forefront of raising working conditions and worker safety.

    • Apple definitely changed the world with the personal computer. But you cited three areas where Apple hasn’t invented anything, but rather has perfected existing technologies. I don’t call that changing the world. As for taxes, if Apple paid their fair share, they wouldn’t be sequestering so much money abroad. Nothing to do with the tax codes; they’re avoiding taxes.

      • Please cite where Apple is avoiding paying taxes illegally. Apple did not create the tax codes. If they are adhering to them, it’s making you sound like someone who can’t get over a company making profits.

          • I don’t see anything illegal that Apple is doing in that article. Try again. Apple is only working the system that the federal and state governments created. Change the laws if you aren’t happy. In the mean time, they are doing nothing wrong. Apple is a business, not some social justice corporate entity.

          • Quotations from the article:

            “Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year.”

            and

            “Almost every major corporation tries to minimize its taxes, of course. For Apple, the savings are especially alluring because the company’s profits are so high.”

            and

            “Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill suited to today’s digital economy.”

            and

            “However, Apple’s accountants have found legal ways…”

            It still seems to me your quarrel is with the law, not with Apple. They’re doing the same thing credit card companies do when they incorporate in Delaware — going where the grass is greenest. If they were to voluntarily pay more in taxes than they legally have to, you can bet that activist shareholders would be calling for Tim Cook’s head in a way that he wouldn’t be able to shut down like he famously did to the anti-green guy.

            • Thank you, Darren, for your input. It’s all fair, yet some people are on a crusade to force money out of legit companies and into the hands of greedy bureaucrats who spend it on themselves and their corporate sponsors in back room deals. It we are in debt $17T, and I doubt any money from Apple is going to change or help that situation.

      • Kirk, Apple worked out a sweet deal with the Irish government, and that government never should have made that deal, but it’s still legal.

        You want Apple to pay its “fair share” but what about Google or Cisco? They use the same strategies. If we want corporations to go back to shouldering over 20% of that tax burden in this country (as they did decades ago), instead of the current 7% of the tax burden, Congress has to change the tax code.

        • I’m not saying Apple is the only one, by far.

          As for the “sweet deal” with this Irish government, according to the EU’s current investigation, it seems that Apple may have to pay hefty fines, even if the Irish government allowed the deal.

  22. Apple is both a hardware and software company, inseparable.

    Apple Pay is going to disrupt payments and forever change how we make purchases.
    Homekit will forever change how we interact with our home environment.
    Healthkit will change how we self monitor our health and wellness.

    All quite like the disruption of computing with the first successful GUI interface.

    Apple pays more than their fair share of US corporate taxes, do not fault Apple for arcane tax codes.

    The workers in China are paid well above the standards in China and Apple is at the forefront of raising working conditions and worker safety.

    • Apple definitely changed the world with the personal computer. But you cited three areas where Apple hasn’t invented anything, but rather has perfected existing technologies. I don’t call that changing the world. As for taxes, if Apple paid their fair share, they wouldn’t be sequestering so much money abroad. Nothing to do with the tax codes; they’re avoiding taxes.

      • Please cite where Apple is avoiding paying taxes illegally. Apple did not create the tax codes. If they are adhering to them, it’s making you sound like someone who can’t get over a company making profits.

          • I don’t see anything illegal that Apple is doing in that article. Try again. Apple is only working the system that the federal and state governments created. Change the laws if you aren’t happy. In the mean time, they are doing nothing wrong. Apple is a business, not some social justice corporate entity.

          • Quotations from the article:

            “Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year.”

            and

            “Almost every major corporation tries to minimize its taxes, of course. For Apple, the savings are especially alluring because the company’s profits are so high.”

            and

            “Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill suited to today’s digital economy.”

            and

            “However, Apple’s accountants have found legal ways…”

            It still seems to me your quarrel is with the law, not with Apple. They’re doing the same thing credit card companies do when they incorporate in Delaware — going where the grass is greenest. If they were to voluntarily pay more in taxes than they legally have to, you can bet that activist shareholders would be calling for Tim Cook’s head in a way that he wouldn’t be able to shut down like he famously did to the anti-green guy.

            • Thank you, Darren, for your input. It’s all fair, yet some people are on a crusade to force money out of legit companies and into the hands of greedy bureaucrats who spend it on themselves and their corporate sponsors in back room deals. It we are in debt $17T, and I doubt any money from Apple is going to change or help that situation.

      • Kirk, Apple worked out a sweet deal with the Irish government, and that government never should have made that deal, but it’s still legal.

        You want Apple to pay its “fair share” but what about Google or Cisco? They use the same strategies. If we want corporations to go back to shouldering over 20% of that tax burden in this country (as they did decades ago), instead of the current 7% of the tax burden, Congress has to change the tax code.

        • I’m not saying Apple is the only one, by far.

          As for the “sweet deal” with this Irish government, according to the EU’s current investigation, it seems that Apple may have to pay hefty fines, even if the Irish government allowed the deal.

  23. Well said Kirk. You’re 100% spot on. Apple not only is not doing anything worthwhile with their tons of cash, but they’ve never actually made a dent in the universe.

    The Mac did start the personal pc market, but thanks to its massively high price was out of reach for most people.

    If anyone actually made a dent in the universe it was Microsoft who made a computer a reality for the vast majority of the world, and continues to do so. Not only that, but the worlds technology infrastructure runs on Windows. As does the healthcare and government systems of most countries.

    Now THAT’S what I call making a dent!

    Sadly Apple is all about expensive, exclusive, limiting, walled in products and systems. And profits.

    I’d even argue that as nice an upgrade as the iPhone was, it has not made any significant difference to the world. My old Windows Phone could do everything the iPhone can, except it didn’t have a glass screen and the software wasn’t quite as polished.

    So all it did was foster better UI design in the industry. Admirable yes, but not a dent.

    Microsoft’s HoloLens will make a dent in the universe – that’s for sure. They basically invented the Holodeck from Star Trek.

    But sadly Apple is too busy deciding what colour straps to offer on their watch to even think about making anything as innovative and ground breaking as the HoloLens. I’m sure there must be a chamfered edge somewhere on that watch which requires their full attention. Lol!

    Will Apple ever make a dent in the universe? Not as long as they make expensive, proprietary products. That’s for sure. And it’s a crying shame.

    PS thanks for having the balls to write this article. You can be sure the Apple apologists like Rene Ritchie, John Gruber and Jim Dalrymple would never dare.

    • Despite my comments here, I don’t toe the Apple line — I agree completely with Marco Arment’s recent post that caused a furor. They need to get their QA together. There are plenty of things to complain about. And I don’t find them particularly admirable as a company, either. My whole point is that they’re just like everyone else (and I suppose in a way that’s Kirk’s original point too — he wants them to be better).

      That said, the only thing sadder than an Apple apologist is a Microsoft one. If you want to point to a phone that people used before the iPhone, look to Blackberry (RIP). Significant numbers of people have never used Windows phones, and it doesn’t look like they ever will. That battle’s as lost as one Zune that ever sold and got misplaced in some couch cushions.

      Never mind the incredibly improved user experience of the iPhone (and thank Apple even if you use an Android phone, since they’ve publicly admitted they went back to the drawing board after seeing iPhone) — we all should thank Apple for using its clout to break the stranglehold the crappy cellular providers had on devices. They took what was a completely lame and inadequate “smart phone” experience and made it usable for everyone.

      I mean, if you want to hang your hat on adware and malware-riddled machines that run soulless government software, well… more power to you. Oh, the holodeck. I forgot about that one. Kudos for that, I guess. We’ll see if it actually makes a difference to anyone. Microsoft had a cool-looking product called the Surface that showed a lot of promise, long before the iPad came out. They couldn’t turn it into a viable product. They kind of have a record of that sort of failure.

      Proprietary products… the infinitesimal fraction of people in the world who care about open standards have been complaining about that for years. And people keep on buying what Apple makes. It’s almost like customers don’t care whether a system is “open” or not, as long as it works. True, Apple has a long way to go to get back to “it just works.” But Microsoft has a *lot* longer.

      Apple has done way more for computer users than the me-too wannabes Microsoft and Samsung ever will.

      • An aside. I got a close look at a Windows phone over the holidays, and I have actually just ordered one to write an article about what it is like for an iPhone user to use a Windows phone. From my brief experience, it is much better than Android, and it has a number of interesting design features. However, I don’t see much future for the Windows phone because Microsoft got into the market too late, and there aren’t enough apps available for it.

        • I’ll be interested to read that piece. I do give Microsoft credit for trying these days — at least their stuff doesn’t look like they’re just doing a bad imitation of Apple design (anymore). Heck, Bill Gates was talking about tablets for years before the iPad was even a glimmer in Jobs’s eye. They just can’t seem to figure out how to make desirable consumer products.

          • Yes, and that’s where Apple shines: in taking existing ideas and improving them and making them work. Much of this is because they control both hardware and software.

            The article will be on Macworld. I’ll link to it from here, as always.

            You might want to read my article about trying Android from last year.

  24. Well said Kirk. You’re 100% spot on. Apple not only is not doing anything worthwhile with their tons of cash, but they’ve never actually made a dent in the universe.

    The Mac did start the personal pc market, but thanks to its massively high price was out of reach for most people.

    If anyone actually made a dent in the universe it was Microsoft who made a computer a reality for the vast majority of the world, and continues to do so. Not only that, but the worlds technology infrastructure runs on Windows. As does the healthcare and government systems of most countries.

    Now THAT’S what I call making a dent!

    Sadly Apple is all about expensive, exclusive, limiting, walled in products and systems. And profits.

    I’d even argue that as nice an upgrade as the iPhone was, it has not made any significant difference to the world. My old Windows Phone could do everything the iPhone can, except it didn’t have a glass screen and the software wasn’t quite as polished.

    So all it did was foster better UI design in the industry. Admirable yes, but not a dent.

    Microsoft’s HoloLens will make a dent in the universe – that’s for sure. They basically invented the Holodeck from Star Trek.

    But sadly Apple is too busy deciding what colour straps to offer on their watch to even think about making anything as innovative and ground breaking as the HoloLens. I’m sure there must be a chamfered edge somewhere on that watch which requires their full attention. Lol!

    Will Apple ever make a dent in the universe? Not as long as they make expensive, proprietary products. That’s for sure. And it’s a crying shame.

    PS thanks for having the balls to write this article. You can be sure the Apple apologists like Rene Ritchie, John Gruber and Jim Dalrymple would never dare.

    • Despite my comments here, I don’t toe the Apple line — I agree completely with Marco Arment’s recent post that caused a furor. They need to get their QA together. There are plenty of things to complain about. And I don’t find them particularly admirable as a company, either. My whole point is that they’re just like everyone else (and I suppose in a way that’s Kirk’s original point too — he wants them to be better).

      That said, the only thing sadder than an Apple apologist is a Microsoft one. If you want to point to a phone that people used before the iPhone, look to Blackberry (RIP). Significant numbers of people have never used Windows phones, and it doesn’t look like they ever will. That battle’s as lost as one Zune that ever sold and got misplaced in some couch cushions.

      Never mind the incredibly improved user experience of the iPhone (and thank Apple even if you use an Android phone, since they’ve publicly admitted they went back to the drawing board after seeing iPhone) — we all should thank Apple for using its clout to break the stranglehold the crappy cellular providers had on devices. They took what was a completely lame and inadequate “smart phone” experience and made it usable for everyone.

      I mean, if you want to hang your hat on adware and malware-riddled machines that run soulless government software, well… more power to you. Oh, the holodeck. I forgot about that one. Kudos for that, I guess. We’ll see if it actually makes a difference to anyone. Microsoft had a cool-looking product called the Surface that showed a lot of promise, long before the iPad came out. They couldn’t turn it into a viable product. They kind of have a record of that sort of failure.

      Proprietary products… the infinitesimal fraction of people in the world who care about open standards have been complaining about that for years. And people keep on buying what Apple makes. It’s almost like customers don’t care whether a system is “open” or not, as long as it works. True, Apple has a long way to go to get back to “it just works.” But Microsoft has a *lot* longer.

      Apple has done way more for computer users than the me-too wannabes Microsoft and Samsung ever will.

      • An aside. I got a close look at a Windows phone over the holidays, and I have actually just ordered one to write an article about what it is like for an iPhone user to use a Windows phone. From my brief experience, it is much better than Android, and it has a number of interesting design features. However, I don’t see much future for the Windows phone because Microsoft got into the market too late, and there aren’t enough apps available for it.

        • I’ll be interested to read that piece. I do give Microsoft credit for trying these days — at least their stuff doesn’t look like they’re just doing a bad imitation of Apple design (anymore). Heck, Bill Gates was talking about tablets for years before the iPad was even a glimmer in Jobs’s eye. They just can’t seem to figure out how to make desirable consumer products.

          • Yes, and that’s where Apple shines: in taking existing ideas and improving them and making them work. Much of this is because they control both hardware and software.

            The article will be on Macworld. I’ll link to it from here, as always.

            You might want to read my article about trying Android from last year.

  25. If Apple was a B Corp (public benefit corporation), we would expect them to do all sorts of socially responsible things (triple bottom line and all that), but their current duty (and all their competitors’) is simply to crank out money for shareholders. (:-(

  26. If Apple was a B Corp (public benefit corporation), we would expect them to do all sorts of socially responsible things (triple bottom line and all that), but their current duty (and all their competitors’) is simply to crank out money for shareholders. (:-(

  27. “If you read the financial statement, Apple explains that they paid 26%, and not the 35% U.S. corporate tax rate, specifically due to so much of their money being held offshore and not subject to U.S. taxation.

    I think it’s pretty unlikely that this Congress will pass legislation to force companies like Apple to bring home those offshore profits at a 35% tax rate. Even if they did, I doubt President Obama would sign it.

    Personally, I’d like to see U.S. corporations pay U.S. taxes on any money earned anywhere in the world, but that sure would anger every other country on Earth, as they wouldn’t get that tax revenue.”

    I’m pretty sure that the 26% is only on US income. I’d like more information, but the financial statements available to the public don’t provide anything more than basic numbers.

  28. “If you read the financial statement, Apple explains that they paid 26%, and not the 35% U.S. corporate tax rate, specifically due to so much of their money being held offshore and not subject to U.S. taxation.

    I think it’s pretty unlikely that this Congress will pass legislation to force companies like Apple to bring home those offshore profits at a 35% tax rate. Even if they did, I doubt President Obama would sign it.

    Personally, I’d like to see U.S. corporations pay U.S. taxes on any money earned anywhere in the world, but that sure would anger every other country on Earth, as they wouldn’t get that tax revenue.”

    I’m pretty sure that the 26% is only on US income. I’d like more information, but the financial statements available to the public don’t provide anything more than basic numbers.

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