`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`
`FORM 10-K
`
`(Mark One)
`☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the fiscal year ended September 26, 2020
`or
`☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the transition period from to
`.
`Commission File Number: 001-36743
`
`Apple Inc.
`
`(Exact name of Registrant as specified in its charter)
`
`California
`(State or other jurisdiction
`of incorporation or organization)
`
`One Apple Park Way
`Cupertino, California
`(Address of principal executive offices)
`
`94-2404110
`(I.R.S. Employer Identification No.)
`
`95014
`(Zip Code)
`
`(408) 996-1010
`(Registrant’s telephone number, including area code)
`
`Securities registered pursuant to Section 12(b) of the Act:
`
`Title of each class
`Common Stock, $0.00001 par value per share
`1.000% Notes due 2022
`1.375% Notes due 2024
`0.000% Notes due 2025
`0.875% Notes due 2025
`1.625% Notes due 2026
`2.000% Notes due 2027
`1.375% Notes due 2029
`3.050% Notes due 2029
`0.500% Notes due 2031
`3.600% Notes due 2042
`
`Trading
`symbol(s)
`AAPL
`—
`—
`—
`—
`—
`—
`—
`—
`—
`—
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`Name of each exchange on which registered
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`The Nasdaq Stock Market LLC
`
`Securities registered pursuant to Section 12(g) of the Act: None
`
`Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
`Yes ☒ No ☐
`
`Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
`Yes ☐ No ☒
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`Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
`of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been
`subject to such filing requirements for the past 90 days.
`
`Yes ☒ No ☐
`
`Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
`405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to
`submit such files).
`
`Yes ☒ No ☐
`
`Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
`company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
`“emerging growth company” in Rule 12b-2 of the Exchange Act.
`☒
`☐
`
`Large accelerated filer
`
`Non-accelerated filer
`
`Accelerated filer
`
`Smaller reporting company
`
`Emerging growth company
`
`☐
`☐
`☐
`
`If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with
`any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
`
`Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
`internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
`firm that prepared or issued its audit report. ☒
`
`Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).
`Yes ☐ No ☒
`
`The aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant, as of March 27, 2020, the last business
`day of the Registrant’s most recently completed second fiscal quarter, was approximately $1,070,633,000,000. Solely for purposes of this
`disclosure, shares of common stock held by executive officers and directors of the Registrant as of such date have been excluded because such
`persons may be deemed to be affiliates. This determination of executive officers and directors as affiliates is not necessarily a conclusive
`determination for any other purposes.
`
`17,001,802,000 shares of common stock were issued and outstanding as of October 16, 2020.
`
`DOCUMENTS INCORPORATED BY REFERENCE
`Portions of the Registrant’s definitive proxy statement relating to its 2021 annual meeting of shareholders (the “2021 Proxy Statement”) are
`incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2021 Proxy Statement will be filed with the U.S.
`Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
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`Apple Inc.
`
`Form 10-K
`
`For the Fiscal Year Ended September 26, 2020
`
`TABLE OF CONTENTS
`
`Part I
`
`Business
`Risk Factors
`Unresolved Staff Comments
`Properties
`Legal Proceedings
`Mine Safety Disclosures
`
`Part II
`Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
`Securities
`Selected Financial Data
`Management’s Discussion and Analysis of Financial Condition and Results of Operations
`Quantitative and Qualitative Disclosures About Market Risk
`Financial Statements and Supplementary Data
`Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
`Controls and Procedures
`Other Information
`
`Part III
`Directors, Executive Officers and Corporate Governance
`Executive Compensation
`Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
`Certain Relationships and Related Transactions, and Director Independence
`Principal Accountant Fees and Services
`
`Exhibit and Financial Statement Schedules
`Form 10-K Summary
`
`Part IV
`
`Page
`
`1
`5
`15
`15
`16
`16
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`17
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`19
`20
`28
`30
`62
`62
`62
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`63
`63
`63
`63
`63
`
`64
`66
`
`Item 1.
`Item 1A.
`Item 1B.
`Item 2.
`Item 3.
`Item 4.
`
`Item 5.
`
`Item 6.
`Item 7.
`Item 7A.
`Item 8.
`Item 9.
`Item 9A.
`Item 9B.
`
`Item 10.
`Item 11.
`Item 12.
`Item 13.
`Item 14.
`
`Item 15.
`Item 16.
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`This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements, within the meaning of the Private
`Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are
`located in Part II, Item 7 of this Form 10-K under the heading “Management’s Discussion and Analysis of Financial Condition
`and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain
`assumptions and include any statement that does not directly relate to any historical or current fact. For example, statements in
`this Form 10-K regarding the potential future impact of the COVID-19 pandemic on the Company’s business and results of
`operations are forward-looking statements. Forward-looking statements can also be identified by words such as “future,”
`“anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and
`similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may
`differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences
`include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors.” The
`Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
`
`Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to
`particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated
`quarters, months and periods of those fiscal years. Each of the terms the “Company” and “Apple” as used herein refers
`collectively to Apple Inc. and its wholly owned subsidiaries, unless otherwise stated.
`
`PART I
`
`Item 1.
`
`Business
`
`Company Background
`
`The Company designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and
`sells a variety of related services. The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of
`September. The Company is a California corporation established in 1977.
`
`Products
`
`iPhone
`iPhone® is the Company’s line of smartphones based on its iOS operating system. 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
`Mac® is the Company’s line of personal computers based on its macOS® operating system. 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
`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
`Wearables, Home and Accessories includes AirPods®, Apple TV®, Apple Watch®, Beats® products, HomePod®, iPod touch® and
`other Apple-branded and third-party accessories. AirPods are the Company’s wireless headphones that interact with Siri®.
`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.
`
`Services
`
`Advertising
`
`The Company’s advertising services include various third-party licensing arrangements and the Company’s own advertising
`platforms.
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`AppleCare
`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 ArcadeSM, 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
`
`The Company’s customers are primarily in the consumer, small and mid-sized business, education, enterprise and government
`markets. The Company sells its products and resells third-party products in most of its major markets directly to consumers,
`small and mid-sized businesses, and education, enterprise and government customers through its retail and online stores and its
`direct sales force. The Company also employs a variety of indirect distribution channels, such as third-party cellular network
`carriers, wholesalers, retailers and resellers. During 2020, the Company’s net sales through its direct and indirect distribution
`channels accounted for 34% and 66%, respectively, of total net sales.
`
`No single customer accounted for more than 10% of net sales in 2020, 2019 and 2018.
`
`Competition
`
`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.
`
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`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
`
`Although most components essential to the Company’s business are generally available from multiple sources, certain
`components are currently obtained from single or limited sources. The Company also competes for various components with
`other participants in the markets for smartphones, personal computers, tablets and other electronic devices. Therefore, many
`components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide
`shortage and significant commodity pricing fluctuations.
`
`The Company uses some custom components that are not commonly used by its competitors, and new products introduced by
`the Company often utilize custom components available from only one source. When a component or product uses new
`technologies, initial capacity constraints may exist until the suppliers’ yields have matured or their manufacturing capacities have
`increased. The continued availability of these components at acceptable prices, or at all, may be affected if suppliers decide to
`concentrate on the production of common components instead of components customized to meet the Company’s requirements.
`
`The Company has entered into agreements for the supply of many components; however, there can be no guarantee that the
`Company will be able to extend or renew these agreements on similar terms, or at all.
`
`Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in
`Asia, with some Mac computers manufactured in the U.S. and Ireland.
`
`Research and Development
`
`Because the industries in which the Company competes are characterized by rapid technological advances, the Company’s
`ability to compete successfully depends heavily upon its ability to ensure a continual and timely flow of competitive products,
`services and technologies to the marketplace. The Company continues to develop new technologies to enhance existing
`products and services, and to expand the range of its offerings through research and development (“R&D”), licensing of
`intellectual property and acquisition of third-party businesses and technology.
`
`Intellectual Property
`
`The Company currently holds a broad collection of intellectual property rights relating to certain aspects of its hardware devices,
`accessories, software and services. This includes patents, copyrights, trademarks, service marks, trade dress and other forms of
`intellectual property rights in the U.S. and various foreign countries. Although the Company believes the ownership of such
`intellectual property rights is an important factor in its business and that its success does depend in part on such ownership, the
`Company relies primarily on the innovative skills, technical competence and marketing abilities of its personnel.
`
`The Company regularly files patent applications to protect innovations arising from its research, development and design, and is
`currently pursuing thousands of patent applications around the world. Over time, the Company has accumulated a large portfolio
`of issued patents, including utility patents, design patents and others. The Company also holds copyrights relating to certain
`aspects of its products and services. No single intellectual property right is solely responsible for protecting the Company’s
`products. The Company believes the duration of its intellectual property rights is adequate relative to the expected lives of its
`products.
`
`In addition to Company-owned intellectual property, many of the Company’s products and services are designed to include
`intellectual property owned by third parties. It may be necessary in the future to seek or renew licenses relating to various
`aspects of the Company’s products, processes and services. 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.
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`Business Seasonality and Product Introductions
`
`The Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in
`part to seasonal holiday demand. Additionally, new product and service introductions can significantly impact net sales, cost of
`sales and operating expenses. The timing of product introductions can also impact the Company’s net sales to its indirect
`distribution channels as these channels are filled with new inventory following a product launch, and channel inventory of an
`older product often declines as the launch of a newer product approaches. Net sales can also be affected when consumers and
`distributors anticipate a product introduction.
`
`Employees
`
`As of September 26, 2020, the Company had approximately 147,000 full-time equivalent employees.
`
`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”). 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 Company periodically provides other information for investors on its
`corporate website, www.apple.com, and its investor relations website, investor.apple.com. This includes press releases and
`other information about financial performance, information on corporate governance and details related to the Company’s annual
`meeting of shareholders. The information contained on the websites referenced in this Form 10-K is not incorporated by
`reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
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`Item 1A. Risk Factors
`
`The following discussion of risk factors contains forward-looking statements. These risk factors may be important to
`understanding other statements in this Form 10-K. The following information should be read in conjunction with Part II, Item 7,
`“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial
`statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.
`
`The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently
`known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly,
`cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future,
`financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the
`Company’s business, financial condition, operating results and stock price.
`
`Because of the following factors, as well as other factors affecting the Company’s financial condition and operating results, past
`financial performance should not be considered to be a reliable indicator of future performance, and investors should not use
`historical trends to anticipate results or trends in future periods.
`
`The Company’s business, results of operations, financial condition and stock price have been adversely affected and
`could in the future be materially adversely affected by the COVID-19 pandemic.
`
`COVID-19 has spread rapidly throughout the world, prompting governments and businesses to take unprecedented measures in
`response. Such measures have included restrictions on travel and business operations, temporary closures of businesses, and
`quarantines and shelter-in-place orders. The COVID-19 pandemic has significantly curtailed global economic activity and caused
`significant volatility and disruption in global financial markets.
`
`The COVID-19 pandemic and the measures taken by many countries in response have adversely affected and could in the
`future materially adversely impact the Company’s business, results of operations, financial condition and stock price. Following
`the initial outbreak of the virus, the Company experienced disruptions to its manufacturing, supply chain and logistical services
`provided by outsourcing partners, resulting in temporary iPhone supply shortages that affected sales worldwide. During the
`course of the pandemic, the Company’s retail stores, as well as channel partner points of sale, have been temporarily closed at
`various times. In many cases, where stores and points of sale have reopened they are subject to operating restrictions to protect
`public health and the health and safety of employees and customers. The Company has at times required substantially all of its
`employees to work remotely.
`
`The Company is continuing to monitor the situation and take appropriate actions in accordance with the recommendations and
`requirements of relevant authorities. The full extent of the impact of the COVID-19 pandemic on the Company’s operational and
`financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without
`limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and
`vaccines, the imposition of and compliance with protective public safety measures, and the impact of the pandemic on the global
`economy and demand for consumer products. Additional future impacts on the Company may include, but are not limited to,
`material adverse effects on: demand for the Company’s products and services; the Company’s supply chain and sales and
`distribution channels; the Company’s ability to execute its strategic plans; and the Company’s profitability and cost structure.
`
`To the extent the COVID-19 pandemic adversely affects the Company’s business, results of operations, financial condition and
`stock price, it may also have the effect of heightening many of the other risks described in this Part I, Item 1A of this Form 10-K.
`
`Global and regional economic conditions could materially adversely affect the Company’s business, results of
`operations, financial condition and growth.
`
`The Company has international operations with sales outside the U.S. representing a majority of the Company’s total net sales.
`In addition, a majority of the Company’s supply chain, and its manufacturing and assembly activities, are located outside the U.S.
`As a result, the Company’s operations and performance depend significantly on global and regional economic conditions.
`
`Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs and other barriers to
`trade, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment and currency fluctuations
`could materially adversely affect demand for the Company’s products and services. In addition, consumer confidence and
`spending could be adversely affected in response to financial market volatility, negative financial news, conditions in the real
`estate and mortgage markets, declines in income or asset values, changes to fuel and other energy costs, labor and healthcare
`costs and other economic factors.
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`In addition to an adverse impact on demand for the Company’s products, uncertainty about, or a decline in, global or regional
`economic conditions could have a significant impact on the Company’s suppliers, contract manufacturers, logistics providers,
`distributors, cellular network carriers and other channel partners. Potential effects include financial instability; inability to obtain
`credit to finance operations and purchases of the Company’s products; and insolvency.
`
`A downturn in the economic environment could also lead to increased credit and collectibility risk on the Company’s trade
`receivables; the failure of derivative counterparties and other financial institutions; limitations on the Company’s ability to issue
`new debt; reduced liquidity; and declines in the fair value of the Company’s financial instruments. These and other economic
`factors could materially adversely affect the Company’s business, results of operations, financial condition and growth.
`
`Global markets for the Company’s products and services are highly competitive and subject to rapid technological
`change, and the Company may be unable to compete effectively in these markets.
`
`The Company’s products and services are offered in highly competitive global markets 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.
`
`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. As a result, the Company must make significant investments in R&D. There can be no assurance that these
`investments will achieve expected returns, and the Company may not be able to develop and market new products and services
`successfully.
`
`The Company currently holds a significant number of patents, trademarks and copyrights and has registered, and applied to
`register, numerous patents, trademarks and copyrights. In contrast, 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. Effective intellectual property protection may not be consistently available in every country in which the
`Company operates. If the Company is unable to continue to develop and sell innovative new products with attractive margins or if
`competitors infringe on the Company’s intellectual property, the Company’s ability to maintain a competitive advantage could be
`adversely affected.
`
`The Company has a minority market share in the global smartphone, personal computer and tablet markets. 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 digital content supplier relationships. 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.
`Some of the markets in which the Company competes have from time to time experienced little to no growth or contracted
`overall.
`
`Additionally, the Company faces significant competition as competitors imitate the Company’s product features and applications
`within their products or collaborate to offer solutions that are more competitive than those they currently offer. The Company also
`expects competition to intensify as competitors imitate the Company’s approach to providing components seamlessly within their
`offerings or work collaboratively to offer integrated solutions.
`
`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’s financial condition and operating results depend substantially on the Company’s ability to continually improve its
`products and services to maintain their functional and design advantages. There can be no assurance the Company will be able
`to continue to provide products and services that compete effectively.
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`To remain competitive and stimulate customer demand, the Company must successfully manage frequent introductions
`and transitions of products and services.
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`Due to the highly volatile and competitive nature of the industries in which the Company competes, the Company must
`continually introduce new products, services and