The enterprise opportunity Apple doesn’t want you to know about

There probably isn’t a week that goes by without an enterprise IT manager hearing one of their users lament “why can’t I have one of those cool iMacs instead of this boring, grey PC?” It’s enough to make even the strongest IT manager run for the hills.

The power of the Apple Inc. (NASDAQ: AAPL) marketing machine is strong – the machines are just cool – and while Apple is focused squarely on the consumer segment, with products such as the iPhone, Apple products are coming onto the radar of the IT department more and more. It’s called the halo effect; Apple’s consumer success is causing users to agitate to have the same cool tools that they use at home available at the office as well.

While IT had a list of tried and true answers to bar Apple for many years – cost of support, compatibility with Windows networks, cost of acquisition – those barriers have been coming down, one by one. New management tools make managing mixed networks simple. Apple’s move to the Intel chipset makes managing mixed environments easy – you can even run Windows on a Mac device. And the increased reliability of an Apple machine can net-out the marginal difference in acquisition cost.

So, increasingly, there is a stronger and stronger case to be made for bringing Apple into the enterprise market. The question is, is the enterprise a market that the fiercely consumer-focused company even wants to go after?

Apple stays silent

On that question, the jury is out. Apple Canada declined several requests to be interviewed for this feature, and Apple has also declined requests from several U.S. publications on the same topic in recent years. In Asia, however, Apple executives seem more willing to discuss the business case for the Mac.

In an October, 2009 interview with Network World Asia, Angeline Tan, Apple Asia’s marketing manager for portable products, said some of the factors that make the Mac attractive to businesses include simplicity, ease of use, design aesthetics and robustness.

“Macs are designed with user needs and requirements in mind. We develop not just the hardware but the software to cater to the needs of consumers, businesses as well as the education segment,” said Tan. “A lot of thought, attention to detail and R&D goes into the minute details and features of the product – right from a simple application icon, to the insides of the Macs and even the packaging.”

The enterprise is certainly an untapped market for Apple. According to a November, 2009 report from Forrester Research on Enterprise Platform Trends, enterprise Mac OS use was at just four per cent in June 2009, up from one per cent when Forrester first began tracking the statistic in 2006.

“While still a small figure, imagine the success if Apple decided to actually pay attention to enterprises and address their concerns: When IT does the buying, in lieu of end users, it looks for standardization, compatibility, low cost to benefit, and ease of administration and servicing,” wrote Forrester. “But for now Apple’s numbers and growth are not significant enough for any but the most all-encompassing enterprise vendors to devote development time to.”

Of course, Forrester’s figures only look at OS usage: some businesses are opting to use Macs as a more reliable Windows OS machine. And the figures are also looking at enterprise usage, while Macs are more likely to penetrate first in the mid-market and SMB.

Apple needs a partner

Either way, Rob Enderle, principal analyst with The Enderle Group in San Jose, Calif., says there is definitely a big opportunity for Apple in the enterprise market. What’s holding Apple back however is that they don’t really have an enterprise partner that knows how to target the market.

“If Apple partnered with a company like IBM that doesn’t have a PC offering, or even an Oracle or a Cisco Systems, that partnership would allow Apple’s products to come to the enterprise market at a much higher rate,” says Enderle. “There’s substantial unmet demand; the reason it’s unmet is Apple lacks enterprise services.”

A partnership would give Apple the channel capacity and infrastructure to make a major enterprise play without making the investment itself. However, it may be an unlikely scenario. Enderle says Apple has a reputation in Silicon Valley as a problematic partner, and he adds as long as Steve Jobs is running Apple, a major enterprise play is unlikely.

“Jobs has long thought the (enterprise commercial) market is stupid. His biggest failure was the Lisa, and he’s never gotten over the fact his baby was rejected,” said Enderle. “Since then he’s never been a big fan of that market.”

The demand in the business segment is largely for desktops and notebooks, there’s little interest in Apple’s server and storage offerings says James Alexander, senior vice-president with InfoTech Research Group. And as modern IT networks become more about serving up applications and services in a secure manner to a variety of endpoints, it becomes easier for IT to say yes to supporting Macs: the network is becoming almost device agnostic.

The cloud is making the endpoint irrelevant

“More and more the barriers are coming down, and not just for Apple devices,” said Alexander. “The work being done to secure the internal data of the network, the work being done around virtualization, around business continuity, around security means there’s more and more of an impenetrable wall around the network. So people aren’t as worried about what the endpoint is.”

That’s a view that’s echoed by Software House International (SHI), an Apple partner. Adam Belzycki, director of sales with SHI Canada, says Apple has a strong presence in its natural markets, such as education and media, but customers are increasingly asking for options, including Macs, in the wider industry as well.

“I’d also say computing is changing what’s required, because the applications get delivered from the cloud through a browser,” said Belzycki. “There’s a services opportunity. IT departments are trying to figure out how to make it all work with different management tools and messaging platforms, and the devices are becoming (less important).”

Belzycki adds that SHI lets its field staff choose their own laptops, and the majority of them have opted for Mac laptops, particularly the rugged titanium model, running Windows OS. They tell him the Macs are more durable, better constructed, and the best Windows machines they’ve ever used.

Still, with Apple, Info Tech’s Alexander says the enterprise opportunity is tricky. He says Apple does tend to favour its own sales channels or those exclusive to Apple, and has had some direct/indirect conflict in the past. Apple’s higher-prices can mean higher margin, always a reseller plus, but how much margin is available to the partner is unclear.

Alexander sees Apple continuing to target the markets where it sees the opportunity to profitably hold a large market, such as education, media and creative. But he doesn’t see them moving much beyond that.

“The broader commercial market, they’ve taken a run at it many times, and I don’t think it’s as profitable for them as they’d need it to be to invest,” says Alexander. “Apple is in the differentiated product business.”

Giving customers choice

One company that is finding success bringing Apple into the business market is Toronto-based Computer Systems Centre (CSC), a value-added reseller, consultancy and managed service provider that also recently launched a new division, Jump I.T., to help it capture the business market. A long-time Apple partner and retailer, CSC also partners with companies such as HP, Cisco, Toshiba and Lenovo.

James Christopher, COO with CSC, says the company sees trends such as the consumerization of technology, software-as-a-service, cloud computing and Web 2.0 all changing the way businesses buy and consume technology. More and more end users are taking charge of the kinds of tools they want to use, and vendors such as Apple are responding to those trends.

CSC and Jump I.T.’s strategy is to embrace those trends and be able to offer its customers the products they want and that can help them grow their businesses, be it a Mac or a PC. They don’t push either choice on a customer, but Christopher said more and more clients are asking for Macs, and the business case is getting stronger than ever.

Most solutions they implement and configure tend to be multi-platform, and Christopher says with Apple being based on Unix and a completely open environment it’s easy to configure. Thanks to the Intel chipset and various software installations, the time to image and stage a mixed OS environment has gone from hours to as little as 15 minutes.

And while the higher acquisition cost of Macs was once seen as a barrier to entry, Christopher said the lower support costs and increased reliability of Apple platform make for a lower total cost ownership for Macs versus a PC, a good selling-point for the IT department.

From a channel support perspective, Christopher does note that CSC has a unique direct relationship with Apple as one of their long-term partners, and so has a very close working relationship with them when it comes to partner support.

“I think Apple has a good strategy,” says Christopher, when asked if Apple could be doing more to enable channel partners. “Apple’s strategy is driving a lot of returns as we’re seeing the halo effect coming into the business market. It’s hard to criticize Apple’s marketing strategy. It’s been very successful.”

Sidebar: An Apple opportunity lost

One Apple partner who asked not to be named told Computer Dealer News that the vendor is leaving a lot of business and money on the table by declining to offer even minimal support or assistance to potential enterprise customers.

One telling example is when the partner had a large client that wanted to do a refresh of their entire desktop fleet, and was ready to ditch PCs for Intel-based Macs running the Mac OS.

“They weren’t looking for consulting or cost concessions,” says the partner. “Apple is a company that successfully manages tens of thousands of its own desktops within the organization; all this customer wanted from Apple was some help understanding how they do that. Best practices, how they use the platform in an enterprise context.”

Basically, what was being asked of Apple was a series of phone calls. The client was aware they’d be blazing new territory, but they were willing to be a pioneer and bet big on Macs and the Mac OS in their enterprise.

“There was no appetite at all from Apple. I would say ambivalence was probably the best word,” says the partner. “They were very firm about what their core business was. They’re fine with us pursuing the market, but they’re not going to help.”

In the end, the partner sold the client PCs so they kept the customer, but it was a lost enterprise opportunity to Apple, and is an emblematic example of an opportunity the company seems willing to leave untapped.

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Jim Love, Chief Content Officer, IT World Canada

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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