Can iPad conquer the enterprise? Only if Apple has the guts to license iOS

With consumer iPad growth tapping out, Apple needs to do the unthinkable to push into line of business applications and vertical markets.

lenovopad
This theoretical product could exist in a possible future where Apple, IBM and its preferred enterprise PC hardware partner, Lenovo, join forces.

As we approach the holiday season most consumers have already made their wish lists for Santa Claus and Hannukah Harry, many which will be topped by tablet computers. And a lot of those will be iPads, such as the Air 2 and the Mini 3.

But the consumer market is saturated, as evidenced by the company's slowing sales of iPads in the last several quarters. Much of the iPads being sold are replacements for older generation devices, and as such reflects a mature consumer mobile device industry where tablet growth overall is slowing down .

For Apple to grow tablet share, it has to expand into additional markets. And the largest market of opportunity is enterprise line of business applications and verticals.

There's absolutely no doubt about this, whatsoever. In his analysis of the company's Q3 2014 earnings call , my colleague Zack Whittaker noted Apple CEO Tim Cook mentioned that 99 percent of the Fortune 500 use iPads in their organizations in some capacity. That being said, Cook acknowledged that,

Those businesses could see a better internal penetration rate, which remains about 20 percent. 'Both companies win from those streams,' Cook said, noting that Apple wins if it can drive that penetration number from 20 percent to 60 percent — which is where its Mac range of hardware currently stands.

Getting from 20 percent to 60 percent penetration in the enterprise is no easy feat, however.

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Apple's incredibly successful consumer-oriented device would now be going up against incumbent Windows-based and Android devices, both of which have very strong OEM and vertical integration software development ecosystems that are friendly to customization and adapting to specific customer requirements.

The iPad has none of these qualities. In every respect it is the wrong tool for the job. 

Windows on the x86 architecture of course has the advantage of legacy application compatibility as well as having a wide variety of programming languages and tools at its disposal, and Android has the benefit of being completely open source and easily modified for vertical use.

Google's open source contributions outside of Android itself are significant and too long to detail. Its leadership in this area is known.

And while the majority of Microsoft's OS platform, Windows, is not open source, the o pen sourcing of large portions of .NET under the MIT license  (with an explicit patent promise) along with its collaboration with Xamarin's Mono project makes it an attractive cross-platform server-side (and client side) environment for software developers.

This, including its other open source and interoperability efforts, represents a fundamental paradigm shift from the way Microsoft has operated in the past.  Even the company's staunchest critics now have to acknowledge this.  

What unique and notable Open Source assets has Apple contributed?

Well, there's Darwin, which is a BSD UNIX derivative, if you want to run the core OS on an X86 PC using a number of obscure distros. But it's not like you can do custom kernel and device development on iOS devices themselves unless you want to jailbreak your iPad, or as if the main Cocoa GUI framework that actually drives Mac OS X and iOS apps can be customized in any way, as they are proprietary and closed source.

There's WebKit, the HTML rendering engine included in many mobile web browsers which in and of itself is a derivative work from the KDE folks.

And there's Bonjour, which is a zero-configuration networking (zeroconf) protocol.

I'll acknowledge that Webkit has certainly been extremely valuable to the web and mobile development community at large, but Darwin and Bonjour? Not so much.

And yes, before the peanut gallery joins in, I work for Microsoft , which now develops and markets software for Windows, Mac, iOS and Android, and has declared itself under its current executive leadership as a "Mobile-First, Cloud-First" company. 

So you can take what I'm saying for what its worth as someone with an admitted bias. But I'm not saying anything here that a hundred independent analysts and technology bloggers haven't observed and said already. 

At the end of the day Apple and IBM need to have something to sell that enterprises actually want to buy.

To attract the enterprise, to be able to enjoy the kind of embedded and vertical development that occurs on Windows and Android today, Apple absolutely needs to be more open.

Again, what is perfectly acceptable for a consumer-oriented product has no bearing on the needs of the enterprise.

Software development issues aside, while it enjoys tremendous success in the consumer space, the iPad as it exists today is not an enterprise-worthy tablet. 

Why? I've explained this in detail recently , but here are the relevant bits for those of you in the TL:DR crowd.

... they need a device that is actually built to handle the rigors of day-to-day use within enterprise and vertical. The current aluminum, ultra-thin form factor is a total disaster in the making for a managed IT asset and plenty of organizations have stacks of dead iPads to prove it. 

Enterprise tablet apps need more screen real estate, so we need an iPad with a display that is more along the lines of 12 inches or larger. It needs an active digitizer with pen and handwriting support. It needs a OEM keyboard accessory that will allow for typing for extended periods. It needs better speakers and cameras for unified communications.

And it needs a powerful CPU and enough memory to handle more demanding applications, and can withstand closer to four years between upgrade cycles rather than one or two.

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Now, I won't dismiss the possibility that Apple may come up with a larger iPad with more memory, perhaps with pen capability, sometime in the near future.

But historically Apple has never been the kind of company to stomach direct interaction with large corporations and the needs of vertical markets; it has always gone through systems integrators and partners that specialize in those sort of things. And above all else it prefers a retail sales model with channel and resellers coming in at a distant second.

Fortunately, it has enlisted one of the biggest names in IT services and systems integration, IBM, as its sales and distribution partner to deal with the enterprise  and address their specific needs. But at the end of the day Apple and IBM need to have something to sell that enterprises actually want to buy.

Right now Apple has a DNA bottleneck. There are only two iPad form factors and there's very little room for vertical market customization. The product was never really designed for the kind of mobile application workloads that run in enterprises and vertical industries (healthcare, financial services, telcommunications, transportation, etc.) for which the partnership between the two companies is targeting.

Over the years I have advocated that Apple license their operating systems to Tier 1 OEMs, in order to expand their marketshare into business. Of course, the traditional answer to this has always been "Apple doesn't care about business, it makes plenty of money from consumers." The other issue has always been a concern about diluting the Mac customer base with inferior products with poor support and for very little financial gain from strictly OS licensing.

But 2008 is not 2014. iOS devices are not PCs with tons of components to validate. And Tim Cook is not Steve Jobs.

Apple's App Store, which along with iTunes and other downloadable content, on both the iOS and Mac OS X platforms, comprises about 11 percent of its revenue. I'm sure Apple would like this number to be larger, especially if we add business and vertical apps to the mix.

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Now, it's likely that a large number of business apps distributed on the App Store would be hooked into some type of subscription cloud service that could be activated out of band and would be free downloads or side loaded via MDM, but a good number of those services would also be bought through the store and Apple would get its cut.

If we look at growing business software sales on the App Store as a driver, then licensing iOS starts to make a lot more sense.

Sure, an "iPad Pro" sold and distributed to enterprises by IBM could generate some nice revenue, but not as much as if, say, a known enterprise player, such as Lenovo, and perhaps a number of others that participate in the vertical space, such as Zebra Technologies (which used to be what encompassed Motorola Enterprise Solutions and Symbol Technologies) were permitted to produce iOS-based tablet computers under license.

Obviously, Apple's main concern would be avoiding what my colleague Adrian Kingsley Hughes so famously referred to as the "Toxic Hellstew" of OS fragmentation, unpatched security vulnerabilities and questionable value-add OEM and carrier modifications that Android currently enjoys in the consumer space.

But if we are talking about addressing the enterprise space, this is really not a major concern, since licensees would be limited, and would be entrusted by enterprises to deliver up-to date iOS builds on their respective systems.  

Of course, much of this falls within the "ain't gonna happen" and "when Hell freezes over" speculation departments. But remember folks, Apple joined forces with IBM to conquer the enterprise. At Steve Jobs' Apple, that was practically unthinkable.

Is iOS licensing to select OEMs Apple's key to conquering the enterprise? Talk Back and Let Me Know. 

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