Apple needs enterprise to pick up iPad volume

Apple needs enterprise to pick up iPad volume

Summary: Apple's iPad is facing more competition, but the moat for the company's iconic tablet franchise could easily be its enterprise traction.

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TOPICS: CXO, Apple, iPad, Mobility, Tablets
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Apple has always trumpeted how the iPad has made its way into corporate America, but if it wants to keep the unit volume going it may just need a more dedicated enterprise strategy.

That argument was made by Barclays analyst Ben Reitzes in a research note earlier this week.

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In its most recent quarter, Apple shipped 14.6 million iPads, down from 19.5 million in the previous quarter. The tablet market saw its growth rate drop off in the second quarter. One major reason for the slowdown is that Apple hasn't outlined a new iPad yet.

Reitzes painted a picture of Apple's iPad challenge:

Unlike the iPhone, the iPad clearly has the Flu – and a bit too soon. Last quarter, Apple reported iPad unit sales of 14.6 million in its F3Q13 (-14% y/y, -25% q/q) – much lower than our estimate of 18 million. Apple ended the quarter with 4.1 million units in channel inventory - within the company’s target range of 4-6 weeks. We estimate that iPad ASPs were down about 3% q/q, reflecting the impact of the lower priced iPad mini and weakness in large iPads. In this business, Apple faced a difficult compare vs. last year when it released the iPad with retina display. While white box and Samsung products played a role in hurting sales, perhaps another reason is that the iPad is being cannibalized by larger screen smartphones that can act as a tablet as well. Even with new products iPad demand could lack upside in future quarters given a lack of new functionality.

What's the fix?

Reitzes argues that Apple needs a strategy to target enterprise sales. If Apple could develop new use cases, focus on business applications for analytics and revenue generation and market well, the company could make the iPad more than a PC replacement. Reitzes added:

We believe Apple could also start to regain share in the enterprise with iPad on a steady basis if it were to focus more on it – like it does with the iPhone. We are not talking only about PC replacements - we mean innovative thinking around new use cases that can drive sales, collect data for analytics, manage inventory better, and lower costs. We believe that the “new applications” market for iPads in business could top 100 million units over time – about the size of the corporate PC market – at least $40 billion in size.

As previously noted, selling new tablets is going to be increasingly tricky unless there's a business model akin to Amazon's where it sells devices at break even and makes up the difference with e-commerce. In developed markets, most folks who want a tablet already have one. These folks may even have two or three tablets.

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The moat for Apple's iPad franchise could easily be its enterprise traction. CIOs like the iPad and have it deployed in many companies. With better use cases and real focus, Apple could get a lot more traction. Perhaps it's time for Apple to rely on the backdoor to the enterprise and focus on the front door and the CXO suite.

Topics: CXO, Apple, iPad, Mobility, Tablets

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213 comments
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  • I have had

    a personal iPad for a couple years and was just issued a corporate one. The biggest problem I have heard mentioned is the inability to connect to the corp VPN and having to use Good is a poor substitute. I assume Win tablets were considered and rejected. The IPad has some limitations but overall it is a solid product that far exceeds Windows hybrid kludges for usability. There was a huge opportunity for both MS and BlackBerry to lock up the enterprise space with a well designed business tablet. They both fumbled the ball.
    krossbow
    • iPad is pointless in the enterprise

      The biggest problems I've had is that iPad does not do most of the things we take for granted with other devices. A laptop does everything iPad does and much more, and it's much cheaper. iPad users in the enterprise are labeling themselves as fashion-victims and trend-chasing fools.
      Tim Acheson
      • This is the real point

        If Apple wants the iPad to succeed in Enterprise, it needs to focus on common Enterprise user stories that are currently not adequately addressed. iWork on iCloud is a good start, but why doesn't it work in Safari on my iPad? Why can't I collaborate on a document with coworkers and customers? There needs to be a project management tool in iWork like MS Project, where resources and timelines can be dragged around on the iPad. Make meeting tools for agendas, notes and action items. Make Agile tools for scrum and burn down. And all of these enterprise products need to allow access to Windows and Android users (again, iWork on iCloud is a fully functional on Windows and it's a great start, they just need to expand it and quickly).

        The other thing Enterprise desperately needs is a secure store for corporate information. Android has so many problems preventing enterprise success (fragmentation and lack of MDM being key issues) but this is one area where Android may pull ahead because manufacturers like Samsung can solve the problem for Google. If Apple had, for example, a "work" mode and a "personal" mode that could be toggled manually, by time and/or location, where everything in the "work" mode was isolated (even through a separate login) it would go a long way towards corporate adoption.
        timothyt@...
        • Why are you trying to replace your desktop with a tablet?

          It sounds to me more like you're simply trying to use it for the wrong purposes.
          Why are you trying to collaborate on a document when you have a desktop machine for that purpose?
          Why are you trying to use it as a Project Management tool (software IS available) when you have a desktop for that? (Rather, the tablet would be there to modify the overall information, not create the PM charts from scratch.)
          The tablet is intended to be a supplemental device, letting you present and modify, not necessarily create all from scratch. A tool is only as good as the user, and how many tools actually state that misuse can cause harm to the user or the product the tool is being used on? Knowing the purpose of the tool is important in using the tool correctly.
          Vulpinemac
          • It's not about replacing your notebook with a tablet.

            It is about having the portability and convenience of a tablet when you need limited functionality. The problem comes up when you try to share iPad-created documents in a Windows-centric world.

            The best solution for this is using OneNote on the iPad - but for the price, it is not as good as using a Surface RT tablet.
            M Wagner
          • Why can't a tablet do all of those things?

            Tablets are computers, so why is trying to do computer related tasks somehow using the tablet wrong? Why can't tablets do more?

            I just don't get the mentality of "your using your tablet wrong, they are not supposed to do computer things".
            Emacho
          • They can do almost all those things, given...

            the somewhat limited power of their processors. However, as long as the user believes he has to do it "the Windows Way", that user is automatically making the task far more difficult than it needs to be. A Windows RT tablet doesn't need the Desktop to generate Desktop compatible documents and is much easier to use while you're standing up and walking around.

            In other words, it's not what a tablet can or can't do, its how it does the tasks it can, which are very nearly the same as those a laptop can--just differently.
            Vulpinemac
          • a tool is only as good as its user

            nice cliche for the fanboys BUT
            in the enterprise, it's more like "a user is only as good as his tools"
            warboat
          • Very few users in the enterprise are as good as their tools.

            Not when they mis-use their tools trying to make them do something they're not intended to do. It's really funny. Many of these "a tablet can't replace a laptop" complainers had no argument when a netbook--notoriously underpowered, clumsy and slow--couldn't perform any better, yet because a tablet replaced the netbook, these people think it should replace the laptop, too.
            Vulpinemac
          • Netbooks

            Lets be serious, no enterprise was deploying netbooks in any volume. It was a consumer trend for light weight.

            Most enterprise laptop deployments were traditional 15" 3-4pd options.
            MobileAdmin
          • @mobileadmin: Tell that to all the IT guys who insisted they used them.

            Right here on these boards.
            Vulpinemac
          • the iPad way

            "... Not when they mis-use their tools trying to make them do something they're not intended to do..."

            That's exactly what people do with iPads in the enterprise.
            warboat
          • iPad: you're holding it wrong

            how dare you try and do your job on the ipad!
            it's not meant to do that!
            That's the recurring theme of the apologist movement.
            warboat
        • It's not really that complicated

          MDM tools already segment work from home
          planner5
        • BES10 iOS management

          can do a Corp App Store sort of. We don't use it yet though so I can't speak to it in detail.
          dowlingm
          • It works great

            Too bad Blackberry doesn't have a tablet as BES 10 with Balance is everything Good and other MDM are not.
            MobileAdmin
        • Software available

          Why would you use iWork on iCloud through Safari on an iPad when the iPad apps are available (Pages, Numbers, Keynote), with iCloud support?

          For Project administration, OmniPlan is available, with sync to OmniPlan for OSX and import/export possibilities from and to MS Project. Other solutions exist too.

          But in general - why use an iPad instead of a laptop? An iPad is a supplement to a real computer, not a replacement.
          perronne
      • You say iPad is pointless, yet...

        Some of the biggest companies in the world use the iPad daily within the environment for mobility purposes within the office instead of laptops. They're simply more convenient across the board due to its light weight, small size and long battery life.
        Vulpinemac
        • For all of the reasons you mentioned

          they were the tool of choice in our enterprise to replace laptops for those that use it for heavy email use. It is less costly to purchase and maintain an ipad - as well as train users of the devices.
          planner5
        • For highly controlled vertical environments, perhaps so ...

          ... but flexibility is lacking.
          M Wagner