What changed in this filing

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Item 1. Business

2020-10-30 compared with 2019-10-31 · 37 added, 38 removed, 58 unchanged (56% of the section changed)

4 unchanged sentences

iPhone ® is the Company’s line of smartphones based on its iOS operating system.

In September 2019, the Company introduced three new iPhones:

iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max.

During 2020, the Company released a new iPhone SE.

In October 2020, the Company announced four new iPhone models with 5G technology:

iPhone 12 and iPhone 12 Pro were available starting in October 2020, and iPhone 12 Pro Max and iPhone 12 mini are both expected to be available in November 2020.

Mac ® is the Company’s line of personal computers based on its macOS ® operating system.

During 2019, the Company released a new version of MacBook Air ® and a new Mac mini ® , and introduced an updated Mac Pro ® , which is expected to be available in the fall of 2019.

iPad ® is the Company’s line of multi-purpose tablets.

iPad is based on the Company’s iPadOS™ operating system, which was introduced during 2019.

Also during 2019, the Company released two new versions of iPad Pro ® , an iPad Air ® , an updated iPad mini ® and a new 10.2-inch iPad.

During 2020, the Company released a new 16-inch MacBook Pro ® , a fully redesigned Mac Pro ® , and updated versions of its MacBook Air ® , 13-inch MacBook Pro and 27-inch iMac ® .

iPad ® is the Company’s line of multi-purpose tablets based on its iPadOS ® operating system.

During 2020, the Company released an updated iPad Pro ® .

In September 2020, the Company released an eighth-generation iPad and introduced an all-new iPad Air ® , which was available starting in October 2020.

Wearables, Home and Accessories

1 unchanged sentence

AirPods are the Company’s wireless headphones that interact with Siri ® .

In October 2019, the Company introduced AirPods Pro™.

Apple Watch is a personal electronic device that combines the watchOS ® user interface and other technologies created specifically for a smaller device.

In September 2019, the Company introduced Apple Watch Series 5.

Digital Content Stores and Streaming Services

The Company operates various platforms that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts.

These platforms include the App Store ® , available for iPhone and iPad, the Mac App Store, the TV App Store and the Watch App Store.

The Company also offers subscription-based digital content streaming services, including Apple Music ® , which offers users a curated listening experience with on-demand radio stations, and Apple TV+, which offers exclusive original content, and is expected to be available in November 2019.

During 2020, the Company released AirPods Pro ® .

Apple Watch is the Company’s line of smart watches based on its watchOS ® operating system.

In September 2020, the Company released Apple Watch Series 6 and a new Apple Watch SE.

In October 2020, the Company announced HomePod mini™, which is expected to be available in November 2020.

The Company’s advertising services include various third-party licensing arrangements and the Company’s own advertising platforms.

| 2020 Form 10-K | 1

AppleCare ® includes AppleCare + (“AC+”) and the AppleCare Protection Plan, which are fee-based services that extend the coverage of phone support eligibility and hardware repairs.

AC+ offers additional coverage for instances of accidental damage and is available in certain countries for certain products.

Additionally, AC+ with theft and loss protection is available for iPhone in the U.S.

iCloud ® is the Company’s cloud service, which stores music, photos, contacts, calendars, mail, documents and more, keeping them up-to-date and available across multiple Apple devices and Windows personal computers.

The Company licenses the use of certain of its intellectual property, and provides other related services.

Other Services

The Company delivers a variety of other services available in certain countries, including Apple Arcade™, a game subscription service;

Apple Card™, a co-branded credit card;

Apple News+, a subscription news and magazine service;

and Apple Pay, a cashless payment service.

The Company offers a portfolio of fee-based service and support products under the AppleCare ® brand.

The offerings provide priority access to Apple technical support, access to the global Apple authorized service network for repair and replacement services, and in many cases additional coverage for instances of accidental damage and/or theft and loss, depending on the country and type of product.

Cloud Services

The Company’s cloud services store and keep customers’ content up-to-date and available across multiple Apple devices and Windows personal computers.

Digital Content

The Company operates various platforms, including the App Store ® , that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts.

The Company also offers digital content through subscription-based services, including Apple Arcade SM , a game subscription service;

Apple Music ® , which offers users a curated listening experience with on-demand radio stations;

Apple News+ SM , a subscription news and magazine service;

and Apple TV+ SM , which offers exclusive original content.

In September 2020, the Company announced Apple Fitness+ SM , a personalized fitness service built for Apple Watch, which is expected to be available before the end of calendar 2020.

Payment Services

The Company offers payment services, including Apple Card™, a co-branded credit card, and Apple Pay ® , a cashless payment service.

Markets and Distribution

4 unchanged sentences

No single customer accounted for more than 10% of net sales in 2020, 2019 and 2018.

The markets for the Company’s products and services are highly competitive and the Company is confronted by aggressive competition in all areas of its business.

These markets are characterized by frequent product introductions and rapid technological advances that have substantially increased the capabilities and use of smartphones, personal computers, tablets and other electronic devices.

Many of the Company’s competitors that sell mobile devices and personal computers based on other operating systems seek to compete primarily through aggressive pricing and very low cost structures.

The markets for the Company’s products and services are highly competitive, and are characterized by aggressive price competition and resulting downward pressure on gross margins, frequent introduction of new products and services, short product life cycles, evolving industry standards, continual improvement in product price and performance characteristics, rapid adoption of technological advancements by competitors, and price sensitivity on the part of consumers and businesses.

Many of the Company’s competitors seek to compete primarily through aggressive pricing and very low cost structures, and by emulating the Company’s products and infringing on its intellectual property.

The Company’s ability to compete successfully depends heavily on ensuring the continuing and timely introduction of innovative new products, services and technologies to the marketplace.

The Company believes it is unique in that it designs and develops nearly the entire solution for its products, including the hardware, operating system, numerous software applications and related services.

Principal competitive factors important to the Company include price, product and service features (including security features), relative price and performance, product and service quality and reliability, design innovation, a strong third-party software and accessories ecosystem, marketing and distribution capability, service and support, and corporate reputation.

The Company is focused on expanding its market opportunities related to smartphones, personal computers, tablets and other electronic devices.

These markets are highly competitive and include many large, well-funded and experienced participants.

The Company expects competition in these markets to intensify significantly as competitors imitate features of the Company’s products and applications within their products, or collaborate to offer solutions that are more competitive than those they currently offer.

These markets are characterized by aggressive price competition, frequent product introductions, evolving design approaches and technologies, rapid adoption of technological advancements by competitors, and price sensitivity on the part of consumers and businesses.

The Company’s services also face substantial competition, including from companies that have significant resources and experience and have established service offerings with large customer bases.

The Company competes with business models that provide content to users for free.

The Company also competes with illegitimate means to obtain third-party digital content and applications.

The Company believes it offers superior innovation and integration of the entire solution, including hardware, software and services.

Some of the Company’s current and potential competitors have substantial resources and may be able to provide such products and services at little or no profit, or even at a loss, to compete with the Company’s offerings.

| 2020 Form 10-K | 2

The Company is focused on expanding its market opportunities related to smartphones, personal computers, tablets and other electronic devices and services.

The Company faces substantial competition in these markets from companies that have significant technical, marketing, distribution and other resources, as well as established hardware, software, and service offerings with large customer bases.

In addition, some of the Company’s competitors have broader product lines, lower-priced products and a larger installed base of active devices.

Competition has been particularly intense as competitors have aggressively cut prices and lowered product margins.

Certain competitors may have the resources, experience or cost structures to provide products at little or no profit or even at a loss.

The Company’s services compete with business models that provide content to users for free and use illegitimate means to obtain third-party digital content and applications.

The Company expects competition in these markets to intensify significantly as competitors imitate the Company’s product features and applications within their products, or collaborate to offer integrated solutions that are more competitive than those they currently offer.

Supply of Components

24 unchanged sentences

While the Company has generally been able to obtain such licenses on commercially reasonable terms in the past, there is no guarantee that such licenses could be obtained in the future on reasonable terms or at all.

| 2020 Form 10-K | 3

Business Seasonality and Product Introductions

4 unchanged sentences

As of September 26, 2020, the Company had approximately 147,000 full-time equivalent employees.

| 2019 Form 10-K | 3

Available Information

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the Securities and Exchange Commission (the “SEC”).

The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC.

Such reports and other information filed by the Company with the SEC are available free of charge at investor.apple.com/investor-relations/sec-filings/default.aspx when such reports are available on the SEC’s website.

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

The Company periodically provides other information for investors on its corporate website, www.apple.com, and its investor relations website, investor.apple.com.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business