Apple's enterprise approach: Passive aggressive

Apple's enterprise approach: Passive aggressive

Summary: Apple's approach to the enterprise is passive aggressive. The expenses involved with courting the enterprise highlight why.

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Apple could be a bigger player in the enterprise, but chasing CIOs around could be damaging to its operating model.

In a talk arguing that Google and Apple were disruptive to Microsoft in corporate IT, Gartner analysts Tom Austin and David Mitchell Smith commented on the company's corporate ambitions. With Steve Jobs' passing, a few of us expect Apple to be more aggressive about the enterprise.

Jason Perlow recently outlined the case for Apple focusing more on corporate sales. Indeed, Apple CEO Tim Cook is an IBM alum and mentions the enterprise frequently on earnings conference calls. In fact, Cook is just about the only one that talks about Apple's enterprise gains via consumerization.

Also see: Apple in the enterprise: The road forward

"It's not that Apple doesn't care about the enterprise, but the enterprise doesn't drive product development," said Smith. "It let's consumerization happen and then does limited tweaks for the enterprise as long as it doesn't affect product design."

You can go through years of earnings call transcripts and find Cook mentioning the enterprise regularly once the iPhone launched. However, I've been told that Jobs chose to look the other way about budding enterprise sales---who can argue with profits falling out of the sky. Jobs tolerated small enterprise focused projects---say the B2B App Store and swat teams looking to poach verticals from RIM---but saw corporate customers as a distraction.

It's a distraction that may pay off though. The room here in Orlando was packed for a presentation about the prospects of Google and Apple as vendors. For our purposes, we're focusing on Apple here. A separate post looks at Google.

See: Google Apps for business: 0.5 percent of Google's revenue, says Gartner

Smith and Austin called Apple's approach passive aggressive. There's a good reason for Apple's approach though---targeting the enterprise is expensive. They said in their presentation:

Apple's operating expense (OpEx) numbers explain their passive aggressive approach to enterprise business. Enterprise direct selling and enterprise-specific requirements would severely distort that model. Apple wants enterprise business, but not at the type of price paid (in R&D and SG&A) by enterprise providers. Apple's vertical integration allows it not only to reduce cost of goods but also to exploit new technologies more quickly than competitors who are not as vertically integrated.

This is where consumerization gets so interesting for Apple. the company may not have to focus on selling to corporations because its customers will bring devices into the workplace anyway. In many respects, Apple fans are the enterprise sales team. And they happen to work for free.

Related:

Topics: Enterprise Software, Apple, CXO, Emerging Tech, IT Employment

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11 comments
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  • RE: Apple's enterprise approach: Passive aggressive

    My guess is large companies wouldn't tolerate IT departments that focused their technology around a company that has 30% to 40% margins. And with Apple you really need to be all in.
    clcrockett
    • RE: Apple's enterprise approach: Passive aggressive

      @ccrockett@... What do you know about Corp markets? MS gets even higher margins on software after volume sales. What the enterprise IT departments want is no or low development costs. Which is why most large Companies are slow to add new technology that does not directly impact their bottom line.
      owlwise@...
      • Not only MS; Oracle just recently discussed how they going to be ...

        @owlwise@... ... "aggressive" with <b>lowering margins to 40%</b> in their Sun hardware business.

        So Ccrockett mentioned something totally irrelevant to corporate business.
        DDERSSS
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        Edward1314
  • They tried this before

    Apple just does not get the Enterprise market. I cannot evaluate or control the risk on hundreds of unique devices. I need to control the systems centrally to mitigate risk and develop standards. It's too expensive to go Darwin.
    happyharry_z
    • mts converter

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      Edward1314
  • Would be a mistake IMO

    Part of what lets Apple innovate is that it doesn't have to get bogged down with legacy. It can throw everything out the window and start fresh anytime it needs to, and drop support for things which are no longer cool.

    If you are running enterprise you have to have some guarantees that the massive software investment you just made is going to keep on running for a decade and beyond with upgrades along the way. Heck, I still see the occasional MS-DOS app from the 80s in mission critical applications.

    Apple's innovation model can't really provide that kind of long-term warm-fuzzy for enterprise types.

    I think SJ had it dead right here. Apple should focus on the consumer, and if enterprise wants to follow as it can, by all means let them.
    SlithyTove
    • RE: Apple's enterprise approach: Passive aggressive

      @SlithyTove Steve Jobs never pretended to understand the enterprise space. Consumer != Enterprise and never will.
      MSFTWorshipper
    • you've grasped the right ideas

      @SlithyTove ... Enterprise (esp. Fortune 1000) simply won't tolerate being looked upon as [i]"a distraction"[/i] ... actually, what client base / customer does?

      When you treat *any group* with disdain and with luke warm attention, it is a sure recipe for disaster. Another post here said it right: with enterprise you have to be "all in". That effectively means, unless you are 100% committed to delivering the best service package to enterprise ... business / enterprise don't want to know you. It's outright, a non sequitur.

      It's like this, enterprise have many service providers to choose from, so Apple really can't afford to be arrogant about this huge market if it hopes to even pretend to be taken seriously by Enterprise.

      As it stands, Apple is consumer-centric (always has been) - and, deservedly therefore, is an after thought in most businesses / enterprises.
      thx-1138_
  • It&Atilde;&cent;s simpler than that

    Apple focus on the consumer market.<br>People become positively surprised over the fact that computers dont need to suck and bring that new and nice experience to their job.<br><br>Apple has more presence at companies than some here might think, but itll grow much like on the consumer market. Apple is like a tsunami, you can't stop them. <img border="0" src="http://www.cnet.com/i/mb/emoticons/happy.gif" alt="happy">
    Mikael_z
  • RE: Apple's enterprise approach: Passive aggressive

    Enterprise and business users usually hate the word 'upgrade'. They want the best solution, at the lowest price while keeping the most compatibility across every device and service.

    That rules out Apple. Plain and simple
    DreyerSmit