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Apple’s Changing Business Model: What Should the World’s Richest Company Do with All Those Profits?


  • William Lazonick

    () (University of Massachusetts, Lowell, USA)

  • Mariana Mazzucato

    () (SPRU, University of Sussex, UK)

  • Öner Tulum

    () (University of Massachusetts, Lowell, USA)


Apple Inc. stands out as the world’s most famous, and currently richest, company. To the general public, Apple is known for three things: its intriguing CEO Steve Jobs, who has achieved iconic status in death as in life; its amazing iOS products, especially the iPhone and the iPad, and their predecessor the iPod, which have literally placed sophisticated technology in the hands of the masses; and its stratospheric stock price, which even when in March 2013 it had dropped to 63 percent of its September 2012 peak, gave Apple the highest market capitalization of any company in the world. As a result of its phenomenal success, at the end of fiscal 2012 Apple had $121 billion in liquid assets. In April 2013 the company committed to distributing as much as $100 billion to shareholders in stock buybacks and cash dividends by the end of calendar 2015. By employing the theory of innovative enterprise to analyze how over the course of its 37-year history Apple became so profitable, we argue that there is no economic justification from a risk-reward perspective for this distribution to Apple’s shareholders. Taxpayers and workers have superior claims on these profits. In analyzing by whom value is created as a basis for considering for whom value should be extracted, we raise the implications of Apple’s changing business model for the future of innovation at this heretofore exceptional American company and even in the U.S. economy as a whole.

Suggested Citation

  • William Lazonick & Mariana Mazzucato & Öner Tulum, 2013. "Apple’s Changing Business Model: What Should the World’s Richest Company Do with All Those Profits?," SPRU Working Paper Series 2013-07, SPRU - Science and Technology Policy Research, University of Sussex.
  • Handle: RePEc:sru:ssewps:2013-07

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    References listed on IDEAS

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    1. Ronald B. Davies & Rodolphe Desbordes & Anna Ray, 2015. "Greenfield versus Merger \& Acquisition FDI: Same Wine, Different Bottles?," The Institute for International Integration Studies Discussion Paper Series iiisdp469, IIIS.
    2. Skiba, Marta & Mrówczyńska, Maria & Bazan-Krzywoszańska, Anna, 2017. "Modeling the economic dependence between town development policy and increasing energy effectiveness with neural networks. Case study: The town of Zielona Góra," Applied Energy, Elsevier, vol. 188(C), pages 356-366.
    3. Mariana Mazzucato & L. Randall Wray, 2015. "Financing the Capital Development of the Economy: A Keynes-Schumpeter-Minsky Synthesis," LEM Papers Series 2015/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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