Apple: Next Leg Up Will Be From Enterprise Accounts

Morgan Stanley is out with an interesting call in Apple (NASDAQ:AAPL) this morning, saying it's increasingly clear that Apple is focused on penetrating enterprise accounts with its Mac and iPhone products. 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.

Firm sees the possibility of both software/security solutions as well as new customer wins at today's iPhone announcement (scheduled for 10am PST at Apple's headquarters), that will help validate the company's enterprise strategy.

Firm hosted Peter Oppenheimer, Apple's CFO, at Morgan Stanley's Technology conference yesterday. They view Apple's comments on Enterprise and International investments as the most relevant incremental data points that help support the company's growth story.

Beyond today's enterprise-related iPhone announcements, the firm highlights that Apple is investing in both US and International commercial sales people (170 sales people today); is now willing to discuss industry-vertical wins (Oil and Gas, Government etc); and views boot camp and industry-leading mobile products as drivers of potential success in the commercial PC market.

Reits Overweight and $185 target.

Notablecalls: So, the next leg up in AAPL will be coming from the corporate side. The bottom looks to be in. AAPL looks like a buy today.

Comments

[flatman:]

When??? Cracking the MSFT monopoly at the enterprise is a lot more difficult than just providing access to mail. How many IT careers are embedded in the prevailing technology. If you could overcome that inertia, you still have aa significant price difference between AAPL and Windows based technology. Consumers may be willing to pay the premium but will the business community. BTW I have an Iphone and love it so I'm not bashing and I think AAPL has a rosey future. I just think the timeline for any type of mass enterprise adoption is a lot longer that this article implies.

2008 Mar 06 09:04 AM

[PopTheBubble:]

This will happen, but it will be a long, drawn-out, slugfest. AAPL products are good, but let's not underestimate bureaucratic entrenchment. Haven't we all encountered some IT droid for which this type of change, regardless of improvement experience, is just too hard?? That's why it has to be demanded by influential managers who want to use the best tools possible and will force the IT guys to yield.

2008 Mar 06 09:05 AM

[top_tier:]

Always follow the money, in this case saving it.

Sure, Apple computers are more expensive, but they're less demanding to service and more user friendly. No doubt there will be IT push back because of this, however, even if an entire business doesn't go Mac in one fell swoop, look for the product to encroach on the edges of big business. Once the value proposition is evident the floodgates will open. Small to mid size business will be easier. Look too for Mac business apps to become more robust brought about because of less risk in their development aka bootcamp etc., which provides a sort of crossover safety net making these intellectual assets transient.

2008 Mar 06 09:19 AM

[digivision:]

iPhone is certainly the keys , I am sure Apple can gain a good slice of the corporate market but they need the help of the iphone, once the COE's and workers have support for iPhones it will be very hard to keep other Apple products out of the office and folks who are resilient to the Mac will be more likely to try a Mac if they see Macs and iPhones in the office.
For some reason there are still some folks that think Macs are not good for work , those are probably the same that think Walmart is an upscale store and Target is for snobs ....

2008 Mar 06 09:45 AM

[Tom B:]

"If you could overcome that inertia, you still have aa significant price difference between AAPL and Windows based technology."

1) The price gap is NOT very large. In some categories, it is negative. The MacBook Air is better and CHEAPER than the Sony Ultralight.

2) The quality gap between OS X and Windows started to expand rapidly with the introduction of OS 10 in about 2000. With OS 10.5 and Vista, respectively, it's become the Grand Canyon.

2008 Mar 06 10:15 AM

[David Tsao:]

It'll be interesting to keep an eye out of which companies will get investments from the 100mm iFund, and what products come out of those efforts.

Making inroads into the corporate environment will ride a lot on the products/services coming from 3rd parties who will be developing for the iPhone platform.

RIMM enjoys the corporate adoption success they have today because of their pioneering efforts over 10+ years ago. It takes time.

2008 Mar 06 06:24 PM

[Sleeper Ser...:]

Thomas,

You're missing a point here. Companies don't buy individual units, they have contractual agreements with suppliers. Furthermore no large scale company is going to be interested in the Airbook as an option for its managers - it doesn't have the versatility or the capabilities of the favoured Lenovo or HP brands. Furthermore you have additional license costs for Windows - which you need to run Office 2007 - in particular MS Access.

Your second assertion is just as silly. OSX Leopard is a bit better than Vista but not sufficiently so to justify the expense of switching to a new platform for most businesses who, in any event, stick with XP as it's tried and tested and a very, very good OS. The fact that Apple's US market share remained flat through XP's tenure and has only increased by perhaps a couple of percentage points despite the disappointment of Vista should tell you that there is no real Corporate appetite for Apple products. This situation is even apparent if you look globally where Apple's market share remains about 2-3%.

2008 Mar 07 05:03 AM