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PART I
Item 1. Business
General
Apple Computer, Inc. ("Apple" or the "Company") was incorporated under the laws of the State of California on January 3, 1977. The
Company's principal executive offices are located at 1 Infinite Loop, Cupertino, California, 95014 and its telephone number is (408) 996-1010.
The Company designs, manufactures and markets microprocessor-based personal computers and related personal computing products for sale
primarily to business, education, home, and government customers. Substantially all of the Company's net sales to date have been derived from
the sale of personal computers from its Apple Macintosh line of computers and related software and peripherals. The Company operates in one
principal industry segment across geographically diverse marketplaces.
Apple delivers a full range of information solutions to people in a wide variety of growing markets. The Company's strategy is to maintain and
expand its market share in the personal computer industry while developing and expanding new related businesses, such as its businesses in on-
line services, licensing of the Macintosh operating system, client/server systems and personal interactive electronics.
Historically, the Company's principal products were built using the Motorola 68000 series of Complex Instruction Set Computing (CISC)
microprocessors. However, computer manufacturers are beginning to move from a CISC architecture to a Reduced Instruction Set Computing
(RISC) architecture. Accordingly, during 1994, the Company began a major product transition and introduced a new line of Macintosh
computers based on the PowerPC (registered trademark) architecture, a new RISC microprocessor jointly developed by Apple, International
Business Machines Corporation (IBM) and Motorola, Inc. The Company believes that these PowerPC based products will yield significant
improvements in price/performance and functionality compared with its CISC-based products. Further information regarding this product
transition may be found in Part II, Item 7 of this Annual Report on Form 10-K (the "Form 10-K") under the subheading "Product Introductions
and Transitions" included under the heading "Factors That May Affect Future Results and Financial Condition", which information is hereby
incorporated by reference.
Principal products
The Company offers a wide range of personal computing products, including personal computers, related peripherals, software, and networking
and connectivity products.
Personal Computing Products
Apple Macintosh (registered trademark) personal computers were first introduced in 1984, and are characterized by their intuitive ease of use,
innovative applications base, and built-in networking, graphics and multimedia capabilities.
Currently, the Company uses two types of microprocessors in its line of personal computing products. Products based on the new RISC-based
microprocessors includes the Power Macintosh(TM) family and the Macintosh Performa (registered trademark) 6100 series of personal
computers. Products based on the Motorola series of microprocessors include the Macintosh LC, Macintosh Performa, Macintosh Quadra
(registered trademark), and the PowerBook (registered trademark) families of computers. Generally, products based on the Motorola series of
microprocessors can also be upgraded to take advantage of the PowerPC processor.
Power Macintosh
The Power Macintosh family of personal computers is the first Apple computer to use PowerPC, a new RISC-based microprocessor developed
by Apple, IBM, and Motorola, Inc. This new high-performance family of personal computers is targeted at business and professional users and
is designed to meet the speed, expansion
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