Apple Wants to Invade The Business Market: Will It Succeed?

Dan Frommer | March 6, 2008 12:10 PM

Will Apple's success in the consumer electronics market -- iPods, Macs, phones -- translate into the corporate world?

This morning, Morgan Stanley published takeaways from a fireside chat it held yesterday with Apple (AAPL) CFO Peter Oppenheimer. Most interesting: Apple is looking at corporations to help drive growth, both through its iPhone and its Mac lines. "If successful, they view this as a second 'halo effect' that will boost revenue growth and margins beyond what is currently incorporated in consensus models," SeekingAlpha's "Notable Calls" blog summarizes.

The iPhone is the most obvious entry into the business market, and Apple's already on top of it. At 1 p.m. ET today, Steve Jobs will take the stage at the company's headquarters in California to unveil Apple's new software strategy for the iPhone, including "some exciting new enterprise features." The most obvious improvement is email -- the iPhone's current support for corporate email is lousy -- but rumor sites suggest Jobs will also show off demos of IBM (IBM), Salesforce.com (CRM), and Microsoft (MSFT) business apps running on the phone.

How about Macs in the enterprise? Apple hasn't had much luck selling its computers to companies outside the creative and academic markets. But we think that will change as the Windows hegemony gradually weakens. Morgan Stanley's note highlights that Apple is now willing to discuss industry-vertical wins, like oil, gas, and government.

Why are Apple's Macs more attractive to businesses now than before? First, having a Windows-based PC isn't as important as it used to be. Second, Apple's new Intel (INTC)-based Macs can run Windows. Apple doesn't sell a typical office workstation, but as laptop sales grow faster than desktop sales, Apple can sell companies plenty of MacBooks. Third, product synergy: the iPod helped Apple grow its consumer computer business. If Apple can make the iPhone more business-friendly, this may help Apple grow its corporate computer business.

One big impediment to Mac growth in the enterprise? They're still expensive. And the same goes for the iPhone.

See Also:
What Does A Work-Friendly iPhone Mean For RIM?
Apple's iPhone Enterprise Opportunity: Big, But Not Huge
Apple's Stock: Still 35% Off At A Broker Near You
How Apple's iPhone Could Invade The Enterprise Market
Apple: iPhone Software Kit Coming March 6

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9 Comments

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AdamC said:
Anon,

Replacing RAMs in a Mac is easy and cheap because you can do it yourself and there are plenty of RAM suppliers around.

Installing a second drive is a breeze unless you have all thumbs.

Replacing a power supply, even owners of PCs find it difficult.

Yea, up till today, zero virii and adwares, wouldn't that help you to keep the costs down.
Robert B. said:
Apple's lack of a desktop box is just one of their hurdles for corporate penetration. Their secrecy inhibits corporate business planning; and they don't have sufficient manpower for services either. Add to this the inhibitions of IT management unfamiliar with Macs and it's difficult to see how they can dramatically penetrate the corporate market ... except the iPhone SDK and support for Microsoft's servers could make a big difference.

What corporate programming and IT departments will discover should they develop for the iPhone is the power and ease of Apple's software tools and it's OS X technologies. They can shorten development time by a factor of 4! They can develop for desktop and hand held devices with the same tools and little cost for multiple platforms. Look at what the demos showed with just 2 weeks of use; and some had no experience with OS X or the Objective C language.

Apple can put out a midrange box for corporate customers once the demand is there. It hasn't been in the past and they don't want to cannibalize their current products. For many desktops the iMacs are just fine; but Apple could broaden their headless lineup quite easily in the future. Add to this the ability to run Microsoft OSes simultaneously and you have a security blanket for hesitant employees. It's still a couple of years away; but, after today, a more real potential.
Anon said:
I think Apple's 'proprietary' hardware might also stymie its attempts to sell to businesses. Every place I have worked has had an intenral IT team that upgrades and fixes computers on a regular basis. I have never used a Mac yet, but from what I hear, it would appear that increasing RAM or adding a second hard drive, or replacing a blown out power supply would not be as straightforward or cheap. If that is indeed the case, Total Cost of Ownership would seem to be significantly higher for Macs.
Bill Davenport said:
I think AAPL needs a better desktop replacement unit before it can do too much in the enterprise. I have Apple's at home, so I'm a fan, but in the office I was recently looking to get a new computer. Old computer already had two 19" monitors I was perfectly happy with. Mac Pro too expensive at $2499 (and overkill for what I need). Mac Mini too light. IMac has the embedded monitor which I didn't need since I have dual monitors anyway. So I picked up another Dell with Vista (which has been perfectly fine, no complaints) for $1400 or so.

Like Jobs said about flash, there's a product missing in the middle, at least in the enterprise market, imo.

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