How Apple can take bite of business market

June 10, 2009

Eric Auchard— Eric Auchard is a Reuters columnist. The opinions expressed are his own —

Apple Inc is taking steps to make its computers run on corporate networks, but these moves fall far short of ensuring Mac users win equal standing in business.

Full corporate access for Apple computers inside businesses remains years away. If and when it comes, acceptance is more than likely to be the result of broad trends reshaping the office computer market, rather than Apple’s own product genius.

This week, the reigning consumer king of computers, music players and smartphones showed off a new operating system, dubbed Snow Leopard, with a handful of tantalizing features built for business.

The new software, due out later this year, will connect Macs to Outlook e-mail systems running Microsoft Exchange — the way that most office workers manage their e-mail, calendars and contacts.

In doing so, Apple is addressing a key issue in the classic Mac vs PC debate over whether its machines are practical for office tasks.

Of course, multimedia-rich Macs already predominate among graphic artists and many Web software designers. And Apple computers are popular with small and medium-sized businesses with skeletal technical staffs.

However, in large organizations, personal computers running Microsoft Windows software remain, by and large, the only option. This is primarily due to cost: Business PCs are half the cost of any Apple machines.

Any notion that Apple can dance its way into offices ignores the fact that corporate technology adoption is not a matter of individual choice but under the rather rigid control of technical administrators. This power extends not just to networks or computers but down to the programs staff use or even what Web sites they see.

Macs, which provide great consumer security protections, lack essential features corporations demand. Nothing Apple has said suggests the company is going to address these vulnerabilities soon.

Beyond the cost of the machine, the network tools for managing complex combinations of servers, desktops and notebooks and storage devices often are kept track of using technologies such as Microsoft’s Active Directory. In hundreds of unseen ways, Apple Macs remain a far cry from standard corporate issue.

But there are other factors that may work in Apple’s favor. Office workers increasingly spend more of their time working on the Web searching for information, checking e-mail, ordering products, watching corporate training videos or listening to Webcasts. Instead of using standard desktop applications, this activity all happens inside browsers and is delivered via network servers rather than being powered by local machines.

Apple machines, with easy-to-use software, slick audio and video features and simple wireless access, have many advantages in this emerging way of working.

Another technology known as visualization gives corporate managers the ability to treat every contact that computers have with their networks as discrete events that can be far more precisely managed. It matters less and less what brand of notebook, Blackberry or other computer device is connecting.

Many companies are moving to a model where they no longer expect only company-purchased devices on their networks. There are too many different work roles requiring too many devices to keep up with it all.

Instead, using a mix of software security techniques, they can grant employees specific access to their office network data from a range of locations and devices, in the office, on the road and at home.

There is growing acceptance that office employees may be working on their own computers, from home or wherever else they may be. This is in part because companies want to save money on providing PCs. It is another potential opening for Apple.

Twenty years after Apple largely conceded the business computing market to Microsoft Windows and PCs, Apple is making tentative steps to once again win acceptance for its machines in corporate offices. Whether or not Mac users win equal footing in business will depend less on Apple’s own initiatives than on management choices that companies are already making.

— At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. —


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Of course, they’ll need to actually want to do it. When Mac OS X first came out, I seem to remember an up-tick in business purchases of Macs, because the internationalisation simply worked, out of the box, with a single keystroke. To this day, I have Russian penpals who don’t understand how I can write in Cyrillic on a computer I bought in the UK!

But Apple failed to capitalise on the fact that (some) businesses liked their technical advantage then. I don’t see any reason to assume that they’d do any better a second time around.

Posted by Ian Kemmish | Report as abusive

There is another factor that will lead to Apple’s ascent in the business market and it has little to do with Apple or Microsoft. It has more to do with demographics.

Every toddler, teen and young adult in the US uses an IPod or an IPhone. More and more, the parents of these children are buying Macs and MacBooks for use in high school or when they head off to college.

When these children become adults and move into the workforce, they will begin to demand familiar products. While the workforce usually can’t sway a company too much, workers who are in demand – such as programmers – will have some influence.

Thus there is a pull factor that will help Apple establish a beachhead. Eventually that beachhead will lead to substantial market share.

Posted by Vincent Benefico | Report as abusive

We have a Mac at home and like it. My wife is having to fill in an online accounting form to the state government because of her business. The state government is requiring the procedure use Access which only works with PCs, not Macs. It is things like this that will make it extremely hard for Apple to make inroads to the business world.

Posted by John Frommish | Report as abusive

I have been using a MacBook Pro in a business environment for almost 10 years. When my job won’t pay for it, I buy it myself. I find that I work much faster on it, and with VMWare, I can run any necessary Windows apps without problem.

I am part of the Cult of Mac, there is no doubt, but I have to worry far less about malware than my colleagues with their Windows boxes.

Posted by Dave | Report as abusive

This is ridiculous. Apple is no more likely to target the large-scale enterprise market than Mercedes and BMW are to try to corner the rental car market. That’s why Apple is the most profitable (and highest-valued) computer company in the world. Moreover, big businesses have IT departments that cherish the dependence of their internal customers and are staffed by geeks with a vested interest in cheap and failure-prone hardware.

Many universities are a good example of hardware-agnostic environments where user preferences are respected rather than ignored. And many university users bear the full cost of hardware and software themselves, meaning that they care not only about purchase price but life-cycle cost (including maintenance and expected re-sale value). Apple’s share of this market is staggeringly high.

Posted by Rationality | Report as abusive

The first problem with Apple is that it fails to accommodate business needs. Businesses invest incrementally, weighing the value of any technology according to how it improves the bottom line. That is, Macs may do some gimmicky things that PCs generally don’t, but that is of no value to a business.

Also, Apple charges a premium for its machines, offering far less customization of machines, which increases business cost while limiting flexibility. PCs dominate exactly because Microsoft never tried to control the hardware on which its products run (yes, I know, some will launch digressive arguments about how PCs conform to Microsoft product needs, but that is a natural market response to a dominant product).

Furthermore, if Apple thinks that penetrating the youth market will help it, it must have forgotten the last 20 years. When I began college in 1987, through going to completing graduate school in 2000, I used Macs, too. When I entered the legal profession, I switched to PCs to enhance my productivity. When we grow up and find we need to make a living, we rightly leave childish things behind.

Finally, the gulf between Macs and PCs in terms of performance or reliability is a myth. I had at least as frequent problems with my Macs as I have had with PCs. On top of that, OS X actually has more reported vulnerabilities than Windows Vista – only Macs aren’t targeted by hackers because so few people use them that those hackers who are looking for financial gain from their efforts can reap a greater return hacking PCs and those hackers attacking PCs for the rep are victims of Apple’s slick cultural marketing. That is, the security data on Macs shows they are not inherently less vulnerable, only that they are targeted far, far less because they are such a distant runner-up. Frankly, with all the positive reports in Windows 7, Apple will find itself that much farther from any significant penetration into the business market.

That said, I don’t think Apple wants to be in the business market. It does quite well charging premium prices for cool products that only better-off consumers can afford. Apple has a sweet niche and would have to abandon its cultural cache to appeal to rational business decision-makers… which would be its end.

Posted by Bill Chastain | Report as abusive

Apple has not had great success in the business market for many reasons, but the main reason is the “beta vs. vhs” phenomenom, where the higher quality format always loses to the format with more options/choices.

Apple hardware is near identical to Windows hardware. That makes it much easier to compare quality/features. Apple is not going to try to compete at the bottom, Apple has traditionally favored higher margin niches.

In the upper pay scale business market, Apple is managing to do very well. For example, Google employees are choosing Apple over Windows at an equal level, plus or minus 10%. Low wage businesses are and will remain dominantly Windows environments. This means Apple is unlikely to get more than modest footholds in small businesses.

Globally, it is worse. Outside of Apple’s traditional markets, most international business are and will remain Windows based. The move away from Windows internationally is towards Linux variants, not Mac OS X.

Apples next best hope is with IT departments. Many in these niches favor Unix, the base upon which Mac OS X sits. However, Microsoft has done a fabulous job of building a base of tools which businesses require (as the Access example above demonstrates).

Another challenge Apple faces is the antagonistic attitudes towards Apple by most eastern European and Asian technologists and business management. Apple is a long way from getting past single digits in these markets, i.e. India, China, Russia, etc.

My feeling is while Apple sales are on a clear upwards trend, there is a hard limit in market share they face, probably around 10% world-wide.

Even at 5% worldwide market share, Apple will be fabulously successful. The only path to higher market share would have to be from licensing Mac OS X, which will never happen while Jobs is a key influencer at Apple. When he leaves, this could change. But Apple will be very wary of repeating the fiasco of its prior licensing experiment, when clone manufacturers captured much of the high end, high margin, Macintosh sales.

Posted by Mark James | Report as abusive

IMO Apple has no chance in corporate environment. Most intranet applications were developed to run under Internet Explorer. More often than not management instructs developers not to spend time to make Web based apps compatible with FireFox – 2nd most popular browser, and they don’t even want to hear the words “Opera”, “Safari” and whatever other alternative browser names. Web apps for customers are different – business doesn’t want to lose any paying customer because of their browser choice, but most Web apps for internal use are IE-only. And the last version of IE for Mac was 5.x – helplessly obsolete, and not exactly compatible with its Windows counterpart.
Sure Mac can be dual-booted to Windows. But I can’t make a business case for significantly more expensive computer and, on top of that, extra expense for Windows, and extra effort to install Windows with full set of Windows apps and support of dual boot. A plain Dell box will do the same job for half the price.

Posted by Anonymous | Report as abusive

There is nothing like the phenomenon of “Windows” in recorded human history, other perhaps than the Black Plague, or the balmy times of Ergotism when people ate tainted rye knowing it would result in madness, gangrene, or even death – but went on doing so, anyway. They probably felt they had no other choice, or talked themselves out of having such.

We don’t refer to the above as the Good Old Days at all – nor will we, looking back on Times Present under MS-GOD. Just because lots and lots of people limp along, handicapped by sickening malware and snotty IT guys doesn’t make it right.

Readers and writer alike seem too prone to convolute what a computer system actually is before opining on what is at issue here. A computer these days is basically a dongle (look it up) for running software, which performs the calculus to the best ability of the underlying hardware.

Apple hardware is now, by and large, all Intel-based. One can run Mac OS X on a whole slew of existing “WIndows” PCs and get rid of the misleading “Windows” sobriquet altogether, thereby ridding oneself of the plague that is Microsoft OS-anything with zero-to-little actual hardware investment at all.

One has to want to take this step, cultivate the desire to terminate all institutional mediocrity and be prepared to stop using unlicensed software, then the virus-ridden days of riding a two-bit computer operation may be finally over, once and for all.

Enlightened people do not use “Windows”. It uses them, but only if they let it.

Posted by The Bell | Report as abusive