Will Apple Be Dragged Kicking and Screaming to the Business Market?

Last week, Business Week published an article on Apple’s (AAPL) potential in the business market - making the point that business staff are frequently requesting Macs rather than PCs. This has moved beyond the marketing departments and graphical design shops, where Macs were always part of the scenery. Business workers are particularly covetous of Mac laptops, because they are both a computing device and a status symbol - especially the new razor thin MacBook Airs.

Playing Hard to Get

In theory, Apple has no interest at all in business computing. Steve Jobs definitively announced as much to Apple staff a few years ago, when he emphasized that “Apple is a consumer electronics company.” He reinforced this message in March of this year saying:

Our DNA is as a consumer company - for that individual customer who’s voting thumbs up or thumbs down. That’s who we think about. And we think that our job is to take responsibility for the complete user experience. And if it’s not up to par, it’s our fault, plain and simply.

It doesn’t matter much though, even if Apple isn’t so hot to trot, it is going to be dragged, kicking and screaming if necessary, into the business computing market. ChangeWave, a research company that regularly surveys both the consumer and business market published some thought-provoking research at the beginning of April. It included the figures shown in the table below, relating to corporate users' satisfaction of with different OSes.

It’s difficult to read these figures without concluding that Apple will have a role to play in the corporation - not particularly because OS X is so good, but because Vista has failed so badly. And note that pretty soon, the Windows XP option will disappear from this table. If you want further statistical confirmation, in the same survey Changewave found that corporate buying intentions for the Mac are currently at 7% of companies (for laptops) and 6% (for desktops). These figures are 3 times higher than they were a year ago.

There’s no mystery to why this is happening. Enthusiasm for the Mac is clearly skyrocketing in consumerland (click here and here if you want more details) so it’s clear where the pressure is coming from. The corporate resistance to the Mac began to dissolve when it became possible to run both Windows XP and OS X on a Mac, using VMware (VMW) or Parallels. The “compatibility objection” was put to bed. So now the door is open for Apple in many organizations.

The First Wink

Taking a broad perspective, perhaps the most important current focus for Apple is to gain firmer control of the home entertainment market. Apple may have stolen the music market with the iPod, but the video market is going to be a much rougher competition. And in harmony with that, Apple is also stalking the telco world, stitching new iPhone deals with wireless carriers. Indeed, according to reports, Apple has tripled the market for the iPhone with the recent deals it has made - making the world’s best known phone available to a subscriber base of over 450 million people. Apple doesn’t need to be distracted.

It sounds very sober, doesn’t it? But actually it’s not a very sober way to look at things.

Over the weekend I went into an Apple Store to buy a cable and came out with both a cable and an Apple Time Capsule in my hands. My fault entirely, I guess. However I was waylaid by one of Apple’s shop assistants (or as Apple calls them, Personal Shopping Specialists), whose name was Anna. In casual conversation I discovered that she had been a coder (in C and C++) - and yet she hadn’t graduated yet to the Apple Genius Bar. She confessed to being a geek.

When she noticed I was looking at a 500 GB Time Capsule, she asked me if I was part of a small business. When I said I was, she let me know that I could get a 5% discount on that specific item. So I signed up as a small business, spent $300 and walked out with a Time Capsule in my hands. When I got home, an email was waiting for me from one of Apple’s (new) Business Consultants offering to help me in my computer purchases.

So what’s Apple doing?

I deduce from my trip to the Apple Store, that Apple is making a play for the SMB market - and being intelligent in how it does it. It’s simply extending the reach of its stores to include actively catering for the small businesses. One of Apple’s differentiators for the Mac business is effective support, much of which it provides directly to customers through its stores. (To my surprise, it turns out to be economic thing to do - mostly, I guess, because of product quality.)

To extend such support to businesses is unlikely to involve extra expense, and may even be more economical, because small businesses will buy Macs by the dozen. If large organizations chose to line up for big numbers of Macs then Apple is likely to be unfazed, because large organizations support themselves anyway. All Apple needs is a discount structure for large numbers.

As regards any special requirements, for given vertical markets, say, Apple can ignore them, because if it continues to grow at the current rate, a commercial ecosystem will naturally develop around it, anyway. The point is that Apple can stroll into the business market with little need to change its focus. For better or worse, Apple is slowly getting drawn into business computing.

It has nothing to fear but rising revenues.

Disclosure: None.

Comments

[PopTheBubble]

Dude, you could have gotten a Dell. But instead, you chose wisely. The most astonishing things about this revolution are that AAPL has somehow managed to successfully reinvent the retail world (where thousands of other so-called retail specialists have miserably failed) and taken the cell phone business by a storm (where everyone said that the cut-throat world of low margins, carrier relationships, etc., made successful entry by a newcomer highly improbable). Unbelievable. Meanwhile, back at the ranch, the Mac numbers are exploding. It's a good time to be long, long AAPL, my friends.

[investorslive]

What do you guys think about RIMMs new phone, do you anticipate any trouble for Apple here with everything set on the launch of their 2nd gen iPhone?
www.investorslive.com/.../

[King Fysel]

Dude, it's 'catering to' not "catering for". And I suppose "actively catering" is better than 'inactively catering', though 'catering' would suffice.

[Tom B]

Didn't Ginger Rogers say that she did everything Fred Astaire did, but backwards, in high heels? Anything you can do in Windows, you can do better, faster, more reliably on a Mac. Yea, I know the IT guys will chime in with some Straw Men consisting of laughable "Windows-only&quo... "Mission Critical" things that prevent them from switching. But the reality is, they like Windows because it pays their bills. A Mac-based IT department is a SMALL IT department, because the things WORK.

This is why Apple spends few $$$ advertising to Enterprise IT; these guys don't listen. But the "Writing is on the Wall"; you can't ignore modernity forever.

[robtomas]

Apple is on a wave. I too bought a time capsule (1TB) and have been very content. I never drop my internet link like i did with linksys router. The storage in a router is genius and all my data is backed up easily. I presently have a PC and run safari and I tunes on my pc. I will soon convert as well and buy a Mac Air this month

[RS]

There is another interesting fact you might have forgot to mention. According to this recent survey: news.com/8301-13579_3-...
...around 80% of the Mac users are very satisfied with Apple's support! I think that this is also very interesting for the business market...

[BMWTwisty]

Very simple "popularity" analogy and forecast: Sony Walkman is to iPod as Blackberry is to iPhone

[Apple Heavy]

Apple's strategy should be to let the corporate market come to it. Apple doesn't have the resources for the lengthy, bureaucratic, and expensive sales cycle inherent in trying to go after enterprise customers.
And, as an IT manager I prefer to do my own research and then invite vendors to discuss requirements instead of having telemarketers and sales reps badger me constantly.
Maybe Apple will lead the way on a new model for partnering with enterprise customers in much the same way it has developed its retail strategy.

[stiphy]

One problem for Apple in the biz world. They have nothing that approaches the simplicity of Visual Basic and even .net for quickly developing custom business applications in house. IMO MSFT's embrace of the developer community is why it has always been number 1. I am a developer and the support I get from MS in that role is light years ahead of what AAPL brings to the table. They have made some strides, but they are SOOO far behind. Carbon/Cocoa is just terrible when compared with Visual Studio. Java/Netbeans is an interesting alternative but VS is still the best IDE around.

There is also a sense that AAPL is just way too greedy when it comes to allowing developers to profit from their work. Not sure if this is totally justified, but it is true that very few devs have gotten rich writing Mac programs compared to PC programs.

Part of it is likely Job's following his decree that they are a consumer electronics company and THEY want to control the entire user experience. That doesn't really leave a lot of room for innovative developers to create new software outside the realm of web based applications (which have significant limitations).

MS Silverlight could, ironically, be a huge boom to AAPL as MS devs will for the first time be able to right relatively rich apps that will run on Macs in VB/.net languages.

Sean

[jmmx]

I did SW Engineering contract work for about 10 years. One of the agencies I worked for became an all Mac office about 12 years ago. They had about 7 or 8 Macs, some original iMacs, printers, scanners. They paid to get a custom FilemakerPro application developed (customer database) and then never had another ounce of technical or IT support for years. A couple of the guys took care of occasional SW updates, and backups. Viruses? Never a problem. Blue Screen of Death? Never a problem. Maintenance? Not much to do - occasional software updates.

The systems just worked and worked. Cost a little more than a knock-off WinTel machine? Maybe. But think of all they saved in IT alone! Plus, their Macs lasted lots longer than PCs typically do, several years.

Did they like them? Happy as clams! Every single person there loved them.

[jmmx]

@ InvestorsLive

Re: RIMM's new phone

Small screen = not really useful for web browsing. Case closed Period. End of story.

(Additionally - they will NEVER have developed apps like iPhone will.)

[DickM]

To "stiphy"
One little item: If you are referring to Visual Basic support on the Mac, a la Microsoft, MS has realized their error and will support VB on the coming round of Office. VB is supported on Office 2004 however.

Also, if what you say about PCs and Windows is true, why the total dissatisfaction with Vista? You don't think this voter dissatisfaction has something to do with the quality of Vista?
You don't think this will, by itself, push people and businesses out of PCs?
I don't know, there is a lot of denial out there.

[PK deC'ville]

Stiphy,

I'm not a programmer, just an investor, but I'm hearing from many tech blogs and mainstream media that developing in XCode is a charm.

Any switcher programmers out there who wish to comment on their experience leaving stiphy's dvlpmnt environment and moving to Apple's?

[Apple Heavy]

And for smaller projects, there is PHP.

[FreeRange]

Sean / Stiphy - why in the world would I want .net apps running on my mac? .net may be easy to develop with, but by and large it is classic MS bloated crapware. The SDK for the iPhone is going to blow open the doors for the migration of good developers to the Mac - maybe not the greedy MS ones that live off of the MS ecosystem where they just throw money at people to get them to NOT develop on other platforms, thus achieving their goal of burying the competition in the applications arena. (Think MapQuest and many others that have suffered...)

As to your comments - "There is also a sense that AAPL is just way too greedy when it comes to allowing developers to profit from their work. Not sure if this is totally justified, but it is true that very few devs have gotten rich writing Mac programs compared to PC programs." - this is a market share/sze issue, not Apple greed, and the tide is changing.

And to your comment - "Part of it is likely Job's following his decree that they are a consumer electronics company and THEY want to control the entire user experience. That doesn't really leave a lot of room for innovative developers to create new software outside the realm of web based applications (which have significant limitations)." - This is just nonsense - there is significant and impressive innovation going on related to the mac platform, both in software and web apps! It is exactly because Apple keeps such tight control over the user experience that their customers are so unbelievably satisfied. It may make it more difficult to develop on the platform, but its all about the user! Its that singular focus that has made Apple so successful.

[jmmx]

RE: Apple in Biz world:

Press Release March 15, 2009 (yes 2009)
Cupertino

Apple today announced its new bMac. Essentially, it is a Mac Mini with 2GB RAM, and 8 GB Flash memory drive. There is no hard drive and no cd/dvd drive. Designed to be networked into the business environment, prices start at $425. Ethernet and USB ports are built in, along with Wifi and support for dual monitors, and of course, the legendary Mac OSX Leopard operating system.

Also new is the Apple bDisplay19, 19" LCD display for $299. The display is in the older 4:3 aspect ratio, providing more vertical real estate for business users.

Apple concurrently announced the ground breaking SOHO INABOX (TM), a single box that contains a MacPro Server and either 5 or 10 bMacs. The single box also includes a Timecapsule and the appropriate number of bBoard keyboards with integrated multi-touch pads. Included on a separate DVD are demos/samples of various Business applications including database, client management. and financial/accounting packages. with SOHO INABOX, and the appropriate number of displays, you have a complete office setup.

If ordered on the online Apple Store, or via new AppleBiz+ service at one of the Apple retail stores, the system can be configured with upgrades to any of the components.

Configurations:

SOHO INABOX-5 (tm)

+Mac Pro
--- single 3GHz quad-core, 4GB, 500GB SATA, CD/DVD Burner
--- 10 user Leopard Server Software
--- iLife Software suite
--- AbiWord Free BSD Word Processor

+ 5 bMacs
+ 5 bBoard keyboards with multi-touch pad

+ Timecapsule 500 GB

Base price: $5500.
================

SOHO INABOX-10 (tm)

+Mac Pro
--- dual 3GHz quad-core, 4GB, 2X 500GB SATA, CD/DVD Burner
--- 10 user Leopard Server Software
--- iLife Software suite
--- AbiWord Free BSD Word Processor

+ 10 bMacs
+ 10 bBoard keyboards with multi-touch pad

+ Timecapsule 500 GB

Base price: $8600.
==============

Jason Pincus of ABC Blink runs a consulting business that helps small business get started and improve their operations. He just participated in a test of the product. Mr Pincus reports:

"I cannot believe how simple it was! I had gone to a one-hour training session at the Apple Store. That was it."

"My partner Penni and I went into our new office that had nothing but booths and desks, and ethernet and phone outlets. We had the server up, running, and configured for all the users, plus seven workstations, and two laptoops added. (We bought the INABOX-5 and added an iMac each for myself and Penni. We also each have MacBook Pros.)"

"We made one 15 minute call to support to help us through a couple of fine-points on the Server setup. That was it."

"The package arrived at 10 am. We were sure we would be working until late at night, but by 3:30 that afternoon, all was done. We were so amazed how easy it was that we went out to celebrate. We even caught Happy Hour. Our friends ask if the install was delayed, they could not believe that we were done!"

Total cost
SOHO INABOX-5 -- $ 5500
extra 1TB drive 200
2 iMacs 4000
5 bDisplays (discounted) 1300
1 CD/DVD Burner (group) 100
Misc. cables etc. 400
----------------------...
11 workstation office with server, total: $ 11,500

"We will move in tomorrow - if the chairs arrive!"

[ArnoldReinhold]

Business may not get what it wants from Apple, but it may just get what it needs.

[Apple Heavy]

Prospective Mac Developers should attend the WWDC for great sessions such as....
(by the way, this years conf is sold out).

Getting Started with the Xcode Development Tools:

From coding to interface design to performance analysis, the Xcode tools have everything you need to create great applications. This introductory session will walk through the complete development process and show you how to use the Xcode tools and other development resources available for Mac and iPhone development. A must for developers new to Mac and iPhone development.

[eb7380]

Apple is not just about iPhones. They also have Music. MACs. And most people may not be aware of this .. but they are making it big in the storage market with their Promise (previously XSAN) platform. MACS and XSAN/Promise are becoming pretty common in the government/federal sector line of business

[bryanz]

@jimmx - What exactly is that? The review of a satisfied customer from 10 months in the future?

@ Tom B
The "straw man" comment is laughable. I worked in IT for 5 years and you obviously don't understand how intertwined the systems are within a business. The network touches every aspect of the modern business. No matter how simple OSX is to use, you can't just get rid of the Windows stuff and replace it with Mac stuff and tell your employees to get back to work. Unless all your employees do is email each other and play solitaire in their downtime...

I think one of the HUGE points that people are missing here is that switching from a PC environment to a Mac environment, a large business would incur big costs upfront that it probably doesn't want to incur. You're replacing software and hardware, no matter how easy to use the OS is there would have to be training for both the end user and the IT staff that supports the end users, legacy software (especially the kind that interfaces with legacy hardware) often has issues in virtual environments so you cannot simply dismiss that...

The VAST majority of businesses will probably never be Apple firms simply because they've invested too much time and money in buying the hardware and software, training support staff and end users, designing and deploying custom solutions, etc on their current environments to just completely overhaul everything and start from scratch.

And before you flame me for being a Windows-lover or something, I'm long AAPL and its made me money. I just consider myself a realist. Sure AAPL could have success in small firms, but I just don't see how they're going to win over the enterprise.

[Apple Heavy]

I think some perspective is being lost here.

No one has suggested that Apple technology will be suitable to replace the preponderance of enterprise systems. Even the PC hasn't done that.

What IS being suggested is that Apple technology will be able to replace PCs in a good portion of the enterprise IT environment.

[Brandon]

The thing I like about Apple is how Best Buy put Mac's into their stores, made this big old hoopla about it, yet every Best Buy I walk into never has anyone withing 50 paces of the Apple display. It looks completely untended in every way.

[KenC]

You know what developers make money off Mac software? Why Microsoft developers of course. Didn't you just see the article that Mac Office 2008 sold 3x faster than Office 2004, and that it was the best selling Office Suite in 19 years?

[Brewer]

@Brandon

Of course. Who would want to buy a Mac from some uninformed, PC using teenager working at Best buy? Who would want to shop at Best buy, and give them a cut of the retail price, when they can go to Apple, where you can get a discount for small business, education, etc... find ALL products, talk to a genius, etc... Best buy is desperate, they don't want to go the way of circuit city or CompUSA, etc...

@KenC
Sure Microsoft makes money off of Apple software. They've been copying it badly forever now. :-) Seriously though, so what? There are thousands of developers for Mac software, and even more now that the SDK for iPhone (which by the way, can be used for Mac development as well!) is the most sought after development opportunity to come along so far this decade.

You can't make money for software you don't write. You snooze, you lose.

[Brewer]

@KenC

Too bad writing Mac software is the only thing Microsoft has going for it lately...

[Jon T]

No, Apple won't be pulled 'kicking and screaming'.

But the way Microsoft is going, business will be going to Apple on it's knees begging, just as its employees are starting to demand Macs and iPhones instead of the usual Windows junk...

[bszlachta]

I enjoyed the article, Robin. One point of contention, though: While journalists love to say that Apple's appeal is that of "status symbol" or "cool", I think very, very few Mac users bought for such reasons. Overwhelmingly, they bought Macs because they are *more efficient, more productive* computers.

It's a realization that's spreading, too. As Tom B noted, the writing is indeed on the wall. (And here's the wall: www.mactivist.com/wall )

[Jon T]

This photo tells you something...

www.boston.com/busines...

[mike sanders]

A true macista knows that Mac is never written MAC.
Good article good comments, I am long AAPL and intend to remain so, have never worked on the dark side, my first Mac 1988. Never had a problem.

[mollytjm]

to jmmx...great blog! and THIS is the reason APPL will replace pcs. yes, it's expensive and complicated to switch a big industry or large business to another system...but APPL will make the pricing attractive enough, eventually, so it will be the logical next step. and their tech support is unmatched.

[rigel]

Pk,

I am a programmer. I've done programming on many platforms, but have the longest run on windows. That said, I use a MacBook (which replaced a powerbook before it) every day now, even though I am doing consulting for a windows business. XCode is easy enough to use for C and C++ work, but not as good as Visual Studio. On the other hand, for Objective C, it's an absolute dream, better than Visual Basic or C# environments. That's my opinion. Remember, Objective C came from the NeXT boxes, and was designed for enterprise applications.

I've also done some Java work, but don't use XCode for that. I use Eclipse, which doesn't seem to run as well on a mac as on windows, but it is the same environment. I've recently done Ruby on Rails work, for which the Mac is the development platform of choice.

Oh, and a friend of mine that works for a network security research company says his shop is all Macs for developer machines (Linux servers, though).

[Partners inGrime]

Even Sony doesn't have customers like these...
www.boston.com/busines.../

[F. J. Taylor]

I am in accord with the majority of the statements re: the emergence and future of Mac in Enterprise, and where it is going. It doubtless will replace Wintel as the tool of choice, as it should and would have done many years ago except for MS's clever cornering of the market by teaming with IBM initially, licensing its OS, and later by strong-arming all competition.

Macs were superior before OS X, but MS, driven by its early gains and monopolistic business practices, gained so much cash and control that they were able to sideline Apple for years, and gain the lion's share of the market share, so to speak. Also, Mr. Jobs' elitism and drive to keep control of the whole thing in-house, while understandable from his POV re: ensuring QC and the user experience (which it does) also helped MS in that it alienated some supporters (even Mac fans).

However, with the utter failure of Vista and many other dismal products (Zune, the vaunted iPod "killer" being one of many), they have now started to disintegrate - and about time.

This disintegration is being hastened by the rapidly spreading dissatisfaction with the many problems associated with Windows, and the spread of the Apple experience through iPod, iTunes, and now, iPhone (which is not just a "smart phone" BTW, but the world's first fully fledged mobile computing platform - which also happens to have phone and camera capabilities).

Perhaps MS, if it survives, will get smart and stop making OSs, which it has always done poorly, and concentrate on making apps, some of which have been pretty good - like the older, pre-bloat version of Word, which was originally designed for Mac.

However, there are real migration issues which revolve around the "legacy" software for the REALLY old systems, such as those run by many major corporations. For example, many insurance companies still have huge proprietary programs written in COBOL, which would be so costly and difficult to migrate that it is actually cheaper for them to train and maintain teams of COBOL programmers than to put the money and effort into migrating the data. This will continue to be a major problem.

However, for the daily tasks of the average worker in businesses large or small, Mac and its many useful apps will be more than adequate.

No doubt Linux will continue to make great strides with GUIs like Ubuntu and all the great Open Source apps it offers, but IMO, if you want the stability and security of Unix, with the best user experience, the Mac GUI is the ultimate.