Where Apple walks will the enterprise vendors follow?

Where Apple walks will the enterprise vendors follow?

Summary: In this analysis, I speculate about a possible future for apps vendors based upon the ideas that Apple has brought to the consumer world. But can it fly?

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Apple data center investments have got my chattering classmates excited. And so it should. Larry Dignan's speculation about what really lies beneath is an opening gambit to what could be a much bigger play in the enterprise. But who, if anyone, will jump first and why?

Let's set the scene. The Apple AppStore model has proven incredibly popular. Half a million apps and 10 billion downloads represent eye popping numbers. Despite the fact many of the apps you find are...err...useless, Apple managed to earn $743 million in the last quarter from this source. Pundits reckon that will rise 30% in the coming year. But that only scratches the surface. If you take the six month numbers, double up and add for growth then an annual figure of $3.5 billion could be in the ballpark. What is not clear to me however is whether those numbers represent the gross revenue that AppStore generates or net sales for which Apple can take credit as its 30% commission. Let's stick with the smaller numbers and turn to the possible runners and riders.

IBM - Sure, IBM runs mega data centers - for premium paying customers. IBM's stated course is to continue down the services path. But if you take the Apple AppStore model and apply it to the enterprise then where to for all those consultants busy customizing everything to within an inch of existence? Many will remain busy for years to come but I can imagine a day when many will not.

Accenture - Again, they run data centers and again, if you've got the money they'll manage the whole kit and kaboodle for you. They also build apps. But can they figure out a way of not just flogging endless consulting for yet more customizations but productizing functionality and throw it over the appstore wall? That would require a wholesale change in business model but the potential rewards must look attractive to a company that already counts Salesforce.com as a strategic partner.

Microsoft - Investing in data center technology like crazy, mentioning Azure at every opportunity but seemingly unable to fully comprehend what it means to deliver applications as service. On the other hand it has a vast army of third party developers who I'm sure would love the opportunity to reach a global audience. Microsoft is building the skeleton, it has the foot soldiers but does it see the opportunity beyond Office 365?

Oracle - Who can possibly fathom what goes on in Oracle's mind? We know it's into private clouds but that only scratches the surface. Fusion must represent the longest pregnancy in applications history yet still the company wont put it out on general release. My spies tell me the company is secretly afraid that Fusion will only be desirable as a SaaS offering with all the risks of cannibalization that implies and difficulties in finding an appealing price point. But - Oracle has a secret weapon that could make Fusion a runaway success. It now has the ability to template and replicate instances of functionality. That means faster time to value, endless configurations and goodbye to consultants spending years on implementation. Does Oracle realise the potential that brings to beleaguered customers and fresh prospects? More to the point, will Oracle open the kimono enough to provide developers with the incentive to develop their own solutions for sale in an AppStore kind of way?  Again, they have an army of developers who would benefit. It has data center experience but most of that seems to relate to government bunkers.

SAP - Who can forget SAP in this discussion? Now rueing the day it sold its data center facilities, the company is kicking its heels as it waits for contract restrictions to time out. It has some of the applications in beta already. 40 are in active development, I've seen about 100 of one kind or another. Consultants are banging on the door to work with the Sybase Unwired Platform but so far no publicly stated commitment to building out super efficient, massively scalable data centers. Instead, the company seems content to wring millions out of initial customers rather than throw resources at building a truly scalable platform with the prize that could represent.

Salesforce.com - It's already there with some 200,000 apps and developers increasingly using the Force.com platform. But it is slow going and the company cannot set the trend by itself. Even so, it is showing the rest of us that building apps in an AppStore kind of way is possible.

What's stopping them?

This is the kind of thing that even my skeptical old chum Vinnie Mirchandani might welcome as something worthy of the label 'innovation.' In this fantasy play, everyone's a winner and especially customers. But only if it is done right combined with new thinking.

Many of the pieces of this puzzle are not in place with each vendor facing its own challenges. How for example can a vendor make it as easy as possible for developers to build apps for a particular platform? I know of moves afoot in the iOS world to make that happen but nothing has yet been said publicly. (Watch this space.) What APIs will vendors provide? Even Salesforce.com doesn't have this whole nut cracked.

We're not even close to seeing a model solution but the potential prize must be tempting some. Who would not give their right arm for a slice of the Apple pie as applied to the enterprise space? How big could those numbers get? I've done some back of fag packet calculations and reckon there is every possibility that in the SAP space alone, we could be looking at numbers in the $24-60 billion range. Even reckoning on a 90% BS factor leaves numbers any CEO would love to share in. But who really 'gets it?'

The oft touted notion that SaaS/cloud cannibalizes the enterprise vendors is less true today. Sure, there are risks but the prospect of selling small pieces of functionality must surely be tempting. I can't count the number of developers would would like nothing more than to appear on an Oracle or SAP price list at few bucks a pop. It's do-able but the will to make it happen rests with the vendors who have yet to come to terms with low cost high volume sales and complex product management.

Amazon is emerging as the de facto 'test and build' low cost arms dealer. Its problems with Oracle will be ironed out. As it gains experience you can expect it will attempt to bring apps from other vendors to a wider audience. Right now it is very much baby steps with many questions up in the air.

Apple doesn't really like enterprise - or so many commentators would have you believe. And of course they have that all powerful final decision making capability that means you're either in or out. But if Apple could figure out how to properly support the enterprise then there are some very rich pickings to be had.

HP should not be forgotten. If Larry Dignan's speculation is half right, they could turn out to be a powerful force as either hardware arms dealer or operational player. If they so choose and have the vision to turn that success into a repeatable winner and of course assuming they don't get distracted by webOS and their own tablet ambitions. Dell has its own play but is it willing to move into this business in a big way? Oracle only really fits if you believe the world centers around...Oracle. But they have their own opportunities as mentioned above. And then there are the new generation of super efficient server builders that no-one's really heard about. SeaMicro springs to mind.

In all of this we should not forget that openness can act as a powerful gravitational pull. That's proved in Google's recent rise in the appstore world. As one developer told me, being able to see inside the OS is a real help, even if changes across releases is proving a pain in the butt. But then does Google's apparent mis-step in allegedly violating Oracle's IP means we all end up paying an Oracle tax? How many would be willing to do so?

But what do you think? Does the prospect of having hundreds or thousands of enterprise apps you can tap for any platform and at low cost sound appealing? What big pieces of the puzzle have yet to be solved?  Does Apple hold too may of the winning cards for this to make sense or will enterprise pressure prevail? Or do none of the technical and legal problems matter? Has Apple simply shown us the way towards easily consumable apps and now the enterprise vendors have little choice but to follow?

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Topics: Storage, Apple, Banking, Data Centers, Hardware

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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52 comments
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  • Many enterprises want to own their data locally, so Apple's approach is ...

    ... lucrative.

    Apple in general has totally different idea of what the cloud is, comparing
    to other companies, which host the data in the cloud.

    iCloud is synchronisation service, rather than storage-software service. If you are editing a document in Pages or presentation in Keynote, you do it locally on Mac, iPad, iPhone, iPod touch -- with full speed, responsiveness and polish of local specified application (no logins, log-outs, denial of service errors or blackouts). Synchronization goes background. In this aspect, it is not Google Docs at all.

    Apple's approach admits that people still want to have as much data as they can locally, always accessible, and process it (create, edit) with polish and full speed.

    How well this approach is applicable and scalable to enterprise use remains to be seen. Apple does not plan offer any enterprise services. Individual setups by users for iCloud is not an option, obviously.
    DDERSSS
    • RE: Where Apple walks will the enterprise vendors follow?

      @DeRSSS
      So it's LiveMesh, SkyDrive, DropBox...?
      man_strosity
      • No, it's something that actually works without being a

        PITA
        fr_gough
      • RE: Where Apple walks will the enterprise vendors follow?

        @man_strosity
        chuckle...
        to put DropBox into a sentence with enterprise... :D
        rhonin
    • RE: Where Apple walks will the enterprise vendors follow?

      @DeRSSS <br>While the Apple model has some appeal, when you look at the functionality, the "restrictions" and the fact most large or global enterprise systems want it kept close to home, they are very leary.<br>Then again, when it comes to enterprise level security, there is no real proven track record.<br><br><img border="0" src="http://www.cnet.com/i/mb/emoticons/plain.gif" alt="plain">
      rhonin
    • webapps

      @DeRSSS The solution should be obvious to everyone. Apple is (was ?) as supporter of HTML5, Adobe is a supporter of HTML5, Microsoft is a supported of HTML5, Google is a supported of HTML5, Mozilla is a supporter of HTML5.

      It is able to run on any device you own.

      So create 'webapps' or whatever you call them these days and run it on your private cloud in the enterprise.

      We used to call this an intranet site, but that probably just reminds to many people about IE6-websites.

      But it still is the way to corporate freedom.
      silentlennie
  • RE: Where Apple walks will the enterprise vendors follow?

    Apple's strategy is completely consumer driven and that's why that model will never work in enterprise. People who equate Apple success in consumer space to enterprise will always be disappointed, somehow Enterprise market does not seem lucrative anymore
    rjgeek
    • RE: Where Apple walks will the enterprise vendors follow?

      @rjgeek - and I would equally argue that it is precisely because Apple has shown the way with their model that enterprise vendors should at least be looking at it. It is do-able and way more lucrative than some imagine. The numbers I have run simply based on a few apps from SAP prove the point hands down.
      dahowlett
      • RE: Where Apple walks will the enterprise vendors follow?

        @dahowlett <br>I think all software and service providers will have some type of app store in the future. It's not a question of if - it's when. <br><br>For the Enterprise though I fail to really agree with you. In the Enterprise space customers want custom... custom SLAs, custom apps, custom custom custom... and providers bend over backwards for them to gain their business. <br><br>The App Store mentality works in the realm of consumers but business needs controls, governance, and then the right types of devices (like iPad for instance.)
        jessiethe3rd
      • RE: Where Apple walks will the enterprise vendors follow?

        @jessiethe3rd<br>I have to completely agree!!<br>Go ahead and take something "off the shelf", then let a government regulatory agency come in and audit.<br>You are dead meat. <img border="0" src="http://www.cnet.com/i/mb/emoticons/shocked.gif" alt="shocked">
        rhonin
      • RE: Where Apple walks will the enterprise vendors follow?

        @dahowlett
        1. Mobile apps needs the kind of agility where it can be quickly produced and consumed, not heard in enterprise.
        2. SAP has no standard interfaces in place or they have plenty addons that provide point 2 point interface...no easy access to workflow or business data build your own rfc and then the whole game starts.
        3. Support,extensibility, performance and maintainability a nightmare.
        4. Cost for the customer is too high ( would require mobile dev, functional guys and licenses ) and the ROI be better good but the problem is there is no discussion on valid use cases, everybody wants everything on mobile just because it looks good.
        5. Apple is consumer driven, it has point to point applications, simple protocols and interfaces ( iCloud interfaces in all apps), hard technically to emulate in enterprise.
        Time will tell :)
        rjgeek
    • RE: Where Apple walks will the enterprise vendors follow?

      @rjgeek Yes, and that is its strength. At the moment you have 20-30% of the device market, you support those devices with consumer oriented cloud services you increases your device customers value which in turn might lead to more devices sold. Think of the following scenario. You run a creative shop of some kind, you have no other interest in computers than that they work. For these business Mac computers is a valid platform, bind those office devices with portables of different kinds and bind them together in a working iCloud. Use Force.com or something similar for accounting and other bread and butter stuff.
      Its more money to earn in the SME market than among the fortune 500 companies. They are stuck in politics, but also adopting iPad?s at the executive level.
      elandre
      • RE: Where Apple walks will the enterprise vendors follow?

        @elandre
        I have to dissagree.

        The one BIG thing Apple has against it: Single Source.
        If I buy Apple I have no other options unless I want to tear-down and rebuild.
        Flexibility sucks.

        Sorry.
        rhonin
    • RE: Where Apple walks will the enterprise vendors follow?

      @rjgeek
      What enterprise would trust Apple as the conduit or repository for their data, given their appalling handling of privacy, security, and uber-control over [everything].

      There are a ton of apps available via the app store and 99% are crap.
      man_strosity
      • RE: Where Apple walks will the enterprise vendors follow?

        @man_strosity
        Apps don't matter, the security does at that level.
        Almost nothing is "off the shelf", and if it is it has been modified and security locked.
        SOP for big business.
        Then again they have no real choice.
        rhonin
      • Question for you, man_strosity.

        If you're a company looking for a "cloud" solution, would you rather trust your data to a company that"s "open" or one that is "uber-controlling"?
        Userama
    • RE: Where Apple walks will the enterprise vendors follow?

      @rjgeek - are you following events with Gateway and River?
      dahowlett
    • RE: Where Apple walks will the enterprise vendors follow?

      @rjgeek I partially agree... I think that software and hardware companies are noticing that Apple is starting to gain a lot of consumer attention and business. Companies like Microsoft are making a shift to consumer goods to maintain market share in the consumer market. I think this makes people feel like enterprise is less lucrative, but truth be said... the real money is in business and enterprise data and systems.
      Apple is a consumer driven company that doesn't want much more market share than it already has. I think this statement can be answered by looking at the server rooms at every company in the world... there are very few companies using Apple server technology. I in fact have never seen a single Apple server platform in any business. In addition, Apple has stopped production of X-Serve all together. Some will argue that this is because of their cloud strategy, but I think this was a decision based on X-Server not making money.
      As for Enterprise following Apples steps? I don?t understand the question. What does Apple have to really offer enterprise besides iPhones and iPads? What are businesses taking from what Apples is doing? I would believe that Apples corporate HQ is still housing their own data and not relying on the cloud. Not sure, maybe I am missing something.
      apetti
  • RE: Where Apple walks will the enterprise vendors follow?

    Vendors of Apple products.

    Enterprise doesn't trust the cloud, or private clouds. In no shape or form is Apple fit to be trusted.

    That simple.
    man_strosity
    • Let me guess

      You have trust issues. I guess they are at least as amusing as anti-trust issues. So, you're paranoid, or maybe just a secret agent who has orders to, "trust no one."
      ego.sum.stig