Most Apple fans have nurtured the dream that one day everyone will see sense and abandon Windows for a platform that just looks and works so much better. While that dream seems to be coming partly true among consumers, Apple seems no closer to winning over big businesses with its innovative but costly hardware and software combo.
The launch of a new version of OS X, on the back of a lacklustre performance by Microsoft Vista to date, looked like an opportunity to finally attract some large companies to all things Mac but, unfortunately, it now seems that the operating system (OS), code-named Leopard, is unlikely to appear much before October 2007. By this time Apple could well have squandered any potential advantage offered by Vista's struggle to gain momentum.
The issue here is that Vista sales to enterprises and small- to medium-sized businesses (SMBs) are still relatively low and are not expected to take off until 2008 at the earliest — not least because of the significant hardware upgrades required to run the new OS.
Moreover, says Rob Enderle, principal analyst at the Enderle Group, "a lot of shops are very frustrated with Microsoft and looking to try something different", and so a timely release of Leopard might have provided Apple with a window to take market share.
"Vista is not doing well and is vulnerable right now," explains Enderle, adding: "But that vulnerability may largely evaporate by October, so much of Apple's advantage may evaporate as well."
This is because, by then, Microsoft is expected to have sorted out existing device driver problems, which are currently causing Vista to crash, and to have released a range of other bug fixes.
But the question is whether Apple has any real interest in the enterprise, particularly as it has spectacularly — and expensively — failed to make its mark there in the past.
Apple's history in corporate computing
Apple first ventured into this world in 1977 with the introduction of the hugely successful Apple II machine. Despite a higher price tag than its rivals, it quickly became market leader, not least because it ran the VisiCalc spreadsheet, which was the first business "killer app".
Within a few years, however, Apple was struggling to compete against IBM and Microsoft PCs, which were making inroads into the corporate computing space — a situation that was compounded by the disastrous release of the Apple III in 1980.
Apple III's designers complied with co-founder Steve Jobs' request to omit a cooling fan from the machine, but this led to thousands of units having to be recalled because of overheating. While an upgrade was released three years later, purchasers were wary of being bitten again.
To make matters worse, however, in 1986 Apple also released Lisa, which it pitched as an office computing system. The machine was named after Jobs' daughter, was the first PC to be operated by a mouse and had two user modes — the Lisa Office System and Workshop. The former provided the first commercial graphical user interface for end users, while the latter offered a mainly text-based development environment.
While innovative at the technical level, commercially Lisa was a disaster from which it took Apple some time to recover. The machine's high price tag, lack of applications and sluggish performance put business customers off, as they opted to run IBM PCs and later IBM clones, all of which meant that IBM and Microsoft, in particular, continued to gain market share at Apple's expense.
Despite the release of two subsequent models, the line was discontinued in 1986, although the experience gained from the work on Lisa was absorbed into the first Mac, which shipped in 1984.
Apple's continued growth during this difficult time, however, was due in part to its dominance of the education sector, which was, in turn, crucial to...
...the later adoption of its computers in the consumer space, as parents purchased machines for their children to do their school work on at home.
But the vendor's position was also sustained by its role in helping to create the desktop publishing (DTP) market. A year after Lisa, it introduced the first reasonably priced laser printer in the shape of the LaserWriter, and PageMaker, an early DTP package, both of which ran on the Mac and exploited its advanced graphics capabilities. As a result, Apple at this time became — and remains — a mainstay of the publishing, design and graphics arts worlds.
By the early 1990s, however, things were not looking good in its ongoing competition against Microsoft. Apple was not only selling a broad range of machines that it failed to differentiate clearly, but was also unable to come up with a response to the improving quality of the Windows graphical user interface. It was likewise unable to match the wide range of business applications and peripherals that had been developed by third parties to run on and with Windows-based PCs.
A final nail in the enterprise coffin came in 1997 when Steve Jobs returned to the company after resigning more than a decade earlier when he lost a power struggle with then chief executive John Sculley. A key move at this time was to reverse a decision that had been made several years previously to develop an Apple OS clone market. This had succeeded in boosting the company's market share to a certain extent, but eroded its margins and profitability.
"They under-resourced the effort in the 1990s and finally abandoned the [enterprise] segment, leaving their early adopter clients high and dry, and folks don't forget that kind of thing easily. They also refused to do the two things that enterprises require — to provide a roadmap for at least two years and to allow a second vendor to sell the solution," says analyst Enderle.
Windows' dominance in the business world
This is important because enterprises can only source Apple machines from Apple, which means it is not possible to bid competitively for them, "limiting dramatically the available market for the solution". So while Jobs' move helped stem the company's financial losses, it also helped to kill any enterprise ambitions it might have had.
A general dearth of Mac skills in the enterprise also does not help, and, even if organisations decide to switch out their current PCs to go with iMacs, which since January 2006 have become Intel rather than RISC-based, the benefits are unclear.
Alex Kwiatkowski, lead analyst for Datamonitor's technical team, explains: "A key issue is the dominance of Windows. Why would large corporates want to go through the pain of replacing Windows-based PCs with something different? And, if they're so hacked off with Microsoft and desktop PCs, they'd still have to run Microsoft's productivity applications in most cases anyway."
He also cannot see Leopard changing the situation very much. "Leopard is about evolution. While it may bring various inherent advantages and pick up a few more enterprise-class customers, I can't see it transforming Apple into an enterprise company," he says.
But Ben Gray, an analyst in Forrester Research's infrastructure and operations practice, takes it a step further. According to the company's latest infrastructure survey of 676 PC decision-makers in North American and European enterprises, Apple provides a mere one percent of client operating systems, although it is still prevalent in desktop publishing, graphics and communications departments.
"As we're still at the long tail-end of the last corporate PC refresh cycle, in the hopes of increasing PC support efficiency by having a single, unified platform, more and more IT operations professionals, who are wary of instigating a culture war within, are feeling pressure to remove Macs altogether from their corporate environments," Gray adds. Moreover, most enterprises are currently in the process of planning their Windows Vista rollouts, even if they have not yet made the jump per se, and so "for the vast majority, Apple has already lost out in the corporate environment".
To make matters worse for the Mac, most organisations are also buying...
...their PCs almost exclusively from HP, Dell and Lenovo, which own about 90 percent of the North American and European enterprise desktop space and 80 percent of the laptop market.
Nonetheless, Enderle believes that Apple is in a good position to penetrate more deeply into the SMB market, particularly at the low end of the market.
"Apple has the right channels for SMB and SMBs like Apple better, so that's probably where they should be. They actually owned this space in the 1980s and, with the stores in North America, they could likely take and hold better than 20 percent of the market," he says.
In reality though, Apple's heart actually seems to lie in the consumer world. Although the company refused to speak to ZDNet UK, simply the fact that it has chosen to divert its limited resources into focusing on the much-hyped iPhone, leading to the delay in Leopard's release, implies as much.
The iPhone, which was launched at the Macworld User Conference in California in January this year, is a smartphone which also includes an iPod digital audio player and instant messaging capabilities in a slimline device with a large screen. The offering is scheduled to ship in the US market in late June and in Europe by the end of the year.
Another indicator of the vendor's intentions, meanwhile, was its decision to change its name in January this year from Apple Computer, Inc to simply Apple Inc. The move followed the unveiling of the iPhone and the announcement of its Apple TV digital video system, and again points towards a growing focus on consumer electronics, with the Mac at the centre.
Michael Gartenberg, vice president and research director at Jupiter Research, explains: "It's about allowing consumers to access digital content, whatever that happens to be, whether it's a phone, an iPod digital audio player or whatever, with the PC acting as a hub. It's all inter-related."
Moreover, the appeal of Apple has always been the tight combination of its hardware and software, which means that the vendor will continue to integrate all of its products together "to deliver a holistic experience".
"It's very hard these days to segment out the notion of difference between business users and consumers. Today, it's more about people using devices, and they take them home from work and vice versa," says Gartenberg. "But the ability to make that experience seamless is something that Apple has noticed and, as more technology becomes digital and people's lives move more online, it's counting on that to help it drive its initiatives forward."
So Apple's aim is to make the Mac a home media-entertainment hub, which consumers can use to download iTunes from their iPods, for example, or stream videos onto their TVs.
Nonetheless, Apple's ambitions here are scarcely unique, with vendors such as Sony and Microsoft putting forward similar visions of the future. "It's a battleground to win share in the home-entertainment market. We're already reaching the point where you can dock an iPod and be connected to a wider sound system and play video elsewhere in the house, so what it's really about is gaining dominance in the connected household," says Kwiatkowski.
But he believes that Apple has a number of things going for it. Firstly, it has a "cool" brand in the consumer space that "hasn't suffered too many tarnishments over the years", despite the failure of devices such as the Newton PDA in 1993 and the Pippin gaming console two years later.
Secondly, it commands very good brand loyalty and, thirdly, it excels in design. In addition, the ability of the new Intel-based Macs to run Windows has also boosted the machine's appeal and, as Gartenberg says: "We all know that consumer mindshare leads to strong market share."
As a result, Apple is starting to become one of the first truly blended consumer electronics and IT companies and, over the next five years, Gartenberg believes that the firm will "dramatically increase the consumer electronics side of their offerings".
But he has reservations as to whether it will have the resources to make heavy inroads into both this and the small business arena, particularly because, in the latter instance, there is "a newly-focused and resourced attack by HP and Dell, not to mention the emergence of a new number three" in the shape of Lenovo.
However, Gartenberg does believe that such an aim is necessary. While he acknowledges that the move into consumer electronics means that Apple is "healthier than it's ever been", he would still like to see "a little diversification, particularly with gas prices trending up sharply, which tends to do ugly things to consumer spending".
All of which means, of course, that it may not yet be plain sailing for Apple and that it may still face some difficult choices ahead.