iPad mini: A bad apple in the enterprise space

Summary:Apple's latest creation, the iPad mini, just isn't designed for the enterprise. With Amazon making a loss and Google barely breaking even on their tablets, Apple just wants to make money, and offering a sub-$300 device for the enterprise simply wouldn't work.

Hello, iPad mini. (Oh come on, as if you didn't already know?)

But as we've learned from the event -- over a live stream - a rare move by Apple -- is that reading between the lines, despite the near endless adjectives describing it as "gorgeous," and "incredible," almost to the point one could play a game of "Adjective Bingo" -- is that Apple actively downplayed the event.

Why? Because a lot of people right now are screaming at their iPad screens, raging as to why they bought the iPad 3 when Apple knew it would today announce a slightly vamped-up iPad 4 -- because in the process, it killed the iPad 3 completely. Gone, vamoosh. In the space of an instant, it's no longer listed on the Apple Store.

But it streamed the event live? Yes, to Apple customers, the Apple faithful, the following and the flock of the company. It didn't need to make a song and dance out of it, the technology media did that on its behalf.

Center stage was this shiny, smaller tablet. Yet, during the the hour-long event, not one executive or vice-president, from Tim Cook to Phil Schiller, explained what or who the device was for. 

iPad mini: Same old, same old, but smaller

Unlike the original iPad -- which didn't just contribute to the tablet space, it actively created the tablet market -- the iPad mini is just a 7.9-inch version  of its older, larger, latest-generation sibling. It's not revolutionary, it's not a master of genius or innovation, and it's not even that exciting. It's just cheaper, and smaller, and marketed toward the education and consumer space -- something Apple wants to invest heavily in as a separate but all-but-'enterprise' base. 

Lacking the anticipated Retina display, the tablet includes the same form factor except with a thickness of a pencil at 7.2mm and a weight that matches that of a pad of paper (whatever that is.) It comes with the latest Lightning dock connector and features a 10-hour battery life.

The only surprise was that the iPad mini will come with 4G LTE connectivity. As per the iPhone 5, Apple will manufacture a bunch of devices to ensure they are as compatible as can be across the major four continents. 

The price stands at $329 for the base 16GB Wi-Fi only model, while the Wi-Fi + Cellular mode, including the 4G LTE connectivity, will cost $459 for the 16GB base model.

Again, this is not particularly new. Despite Apple's best efforts to keep its supply chain under lock and key from the prying public, leak after leak left little for the executives to actually announce. 

The iPad mini was the worst kept secret since... since the iPhone 5, which was publicly outed not a month ago when it was announced, but incrementally day after day in the online technology news.

Don't forget to slam the competition, honey

In the aftermath of the  Apple-Samsung thermonuclear war, Samsung's headquarters remains a smoldering wreck of lawyer carcasses. But when in war and the competition is rife, why not throw a bunker-buster down on them while they're out?

That's exactly what Apple did. Not content in hinting at the competition unlike previous events, where the one and only mention of Android would be in terms of how well the iPad is doing in tablet market share by comparison, Apple senior vice president for marketing Phil Schiller told the attending media:

Others have tried to make smaller tablets, but they've failed.

And then he showed a picture of the Google Nexus 7 for all to see. Ouch.

He then proceeded to, in style not typical of Apple, slam-dunk the Google-made mobile operating system by comparing the 'superior' device build quality to the "pale" Nexus range of tablets, and how the screen displays more per square-inch. And to really throw in a deep upper-cut was to criticize Google application store, calling it a "scaled-up phone experience."

That was on the world's stage, Phil, I think we got the message: Apple hates Android, and Google was left red faced. If that's not the definition of "industrial bullying," I'm not sure what is.

While Amazon was not directly mentioned, it's relatively low fry compared to Google, Apple's current competitor in the tablet space. 

There are two reasons to dish out the iPad mini, and no other. It's not because Apple "loves its users," said by the late Steve Jobs during the Antennagate extraordinary media event in July 2010. It's not because Apple wants to serve its ordinary consumers and enterprise customers in the best way it can.

It's all about the money. 

The iPad mini doesn't serve an actual purpose, besides being a clear strategic missile-lock on Amazon and Google, and to generate even more money for the technology giant.

The companies offer the same services that Apple does: iTunes vs. Google Play in music, films, television content, and applications. But above all else, the price point could be construed as a subtle dig at what Amazon and Google both provide in terms of enterprise offerings, mostly cloud and productivity features.

That's where the money is: not in the tablets where the profit margins are minimal. Amazon admits that its Android-powered Kindle Fire tablet makes a loss, but the retail giant makes up by way of offering cloud services that power the device's back-end. Its retail operations generate enough to cover the loss the Kindle Fire makes. Next to Google, where analysts believe the profit margins on the Nexus 7 are "razor thin."  From every $199 device the search giant sells, roughly $15 profit is generated -- or 7 percent per device -- according to the number crunchers. Yet again, the cloud offerings band-aid the pain away.

Apple's iPad mini would have, in typical Cupertino style, raised the bar on the price of the device to secure at least a healthier profit chunk on the new 7.9-inch tablet, but Apple has service back-end to support the thin profit margin line, notwithstanding its status as the world's wealthiest company.

The iPad mini is, at least from this point of view, simply a challenger to Amazon and Google's already established business, not only in the 7-inch tablet market but also as a cloud service offering.

The $329 price point gives Apple enough wiggle room to design, develop and build a tablet that still gives Apple the financial edge. It added a premium on the base Wi-Fi + Cellular model knowing that many IT spenders with a keen eye for the smaller tablet will jump on it to ensure its enterprise customers will have always-on connectivity in areas where there is no Wi-Fi available. That's a given.

But it also means consumers opting to sit on the couch at home and browse the Web, social networks, or watch YouTube clips for hours on end can still buy a cheap 7-inch tablet while Apple rolls in the vast sums of money it's scraping off the top of each tablet sold.

The same storage sizes are a dead giveaway. When faced with the "enterprise problem" of offering a slimmed-down iPad mini for business use, Apple would have had to go far lower than the $329 base model price it was offering, perhaps to $299 to retain the pricing consistency. But as many have pointed out, this would price the device at the same price as the iPod touch -- a mini-version of the already slimmed down iPad mini. 

It simply would not have made sense.

Had Apple reduced the price further, its business-priced device would have made a loss, or the profit margins were so thin that it wasn't a viable option. Apple doesn't give anything away unless it has something to gain from it. iTunes is only free for users because it's a looking-glass into the world of content on the iTunes Store, for instance. A sub-$300 iPad mini for business use, with customers unable to browse the vast number of apps in the Apple App Store because the tablet is locked down for sideloading or enterprise application use only, means Apple 'does an Amazon' and doesn't generate money.

After all, while Google makes just enough to cover its costs on its tablet business, and Amazon makes a loss on its Kindle devices, Apple stands alone as a company that just wants to make money.

It's a clever move, considering Apple doesn't enjoy the benefits of long-standing enterprise contracts with its customers unlike its closest mini-tablet rivals.

The real competition: Microsoft

Back to its roots, what Apple didn't say remains the most interesting and mystical. Who's the greatest challenger of them all in the enterprise space? Microsoft. It always has been, and while Google popped up for a while and took charge of the search and cloud-based services arena, Microsoft was at the core of Apple's consumer business: desktop and notebook computers.

"I'm a Mac, and I'm a PC." But it's no longer the battle over the desktop, it's a war between the iPad vs. Surface.

But now there's another twist to the ongoing battle between Cupertino and Redmond, because though late to the game, Microsoft is about to enter into not just the tablet market, but specifically the dedicated enterprise sector.

The iPad 4 remains an obvious competitor still. The iPad 2 is even more of a competitor to the Surface than the iPad 4 thanks to a simple matter of "it's cheaper." But the enterprise must focus on what the back-end infrastructure offers, as well as the front-end productivity of its users. 

Enterprises need their range of custom-built apps, particularly from legacy systems. There's no denying that the iPad -- any iPad for that matter -- still has a valid bring-your-own-device (BYOD) presence in the workplace, can sideload apps to create dedicated devices, and can be managed by enterprise administrators. 

Microsoft is days away from shipping, and the timing stinks of Apple trying to wedge its way in between the announcement and the launch of the business-friendly Surface tablets. 

Where does this leave the Surface?  Open and free to roam the business and enterprise space  in free-range nirvana.

Topics: Apple, iOS, iPad, Microsoft, Tablets, Tech Industry

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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