Apple’s Taking a Pass on the Enterprise Prize

It’s the unofficial motto of the lottery industry: You’ve got to play to win. A couple of decades ago, the vast majority of microcomputer companies realized that the jackpot was in sales of computers to businesses. Apple opted not to play, and as a result, it had a troubled history throughout most of the 1990s.

Now, for the first time since the Mac was introduced in 1984, Apple has a real opportunity to play to win by focusing some of its resources on selling computers to the enterprise. Apple isn’t a large company, however, and it’s headed in an entirely different direction, transforming itself from a consumer computer company to a consumer electronics company. But is that truly the right move for Apple? It might be, but it’s not without risk. And it may mean passing up a golden opportunity.

Small Window
Don’t believe the siren song emanating from Redmond about how well Vista is doing. It’s not doing all that well. That doesn’t mean Microsoft is in trouble long term, because as things stand now, Vista (and its mildly improved derivatives) will eventually take over the Windows marketplace and wind up being the largest-selling version of Windows ever.

But there’s a brief period of time — a year, perhaps 18 months — in which a determined competitor with a better operating system and a more customer-focused strategy might be able to gain a toehold among enterprise computer buyers.

It’s not just the fact that Vista requires powerful hardware and has received a mixed reception that threatens Windows’ dominance. A small but growing number of IT pros have begun questioning Microsoft’s understanding of and commitment to their needs. The software giant’s increasingly self-serving policies, its obsession with software piracy, its inability to create a reliable desktop environment, and the constant need to upgrade software and hardware to keep pace with newer versions of Windows are wearing down the patience of its customer base.

That gives Apple an opening. And on the desktop, the Macintosh offers a combination that no other alternative does:

1. Mac OS X’s FreeBSD roots provide a level of reliability matched by no version of Windows and no previous version of the Mac. In other words, it’s nearly as reliable as Linux. The improved reliability and the fact that malware is targeted at Windows machines means reduced help desk calls and longer life spans for purchased Mac units.

2. On top of that, OS X has a rich user interface that is familiar to both Mac and Windows users, since Windows and the Mac use virtually all the same underlying UI techniques.

Groundwork Laid, but Where’s Apple Now?
Apple’s current opportunity in the enterprise marketplace is the direct result of its brilliant work in designing the best-of-breed desktop operating system back in 2001 when it introduced Mac OS X 10.0. More than six years and two versions of Microsoft’s Windows later, OS X is still the state of the art in desktop operating systems. OS X has also revitalized the Mac software marketplace (despite Apple’s poor showing in supporting independent software vendors).

Last year’s switch to an Intel-based architecture capped off a long series of moves by Apple — including aggressive and inexpensive updates of OS X, much better interoperability on Windows networks, and the release of the Boot Camp software for booting Windows on a Mac — that have prepared the company to make a run at the enterprise.

But since then, the focus has been on the iPhone and new iPods. Apple even pushed back the release of OS X 10.5 “Leopard” for that purpose. Cupertino shows no signs of pursuing a serious strategy to grow enterprise sales.

I tried going to the source to find out more. About three weeks ago, I put the question to Apple’s PR department: What is Apple’s strategy for selling computers to enterprises? The company has had every chance to answer that question; several very good PR people have contacted me, but they haven’t had anything of substance to say. The sum total of the direct response so far has been: “Look at the Business page on the Apple website.” The Apple Business page is aimed at small businesses, not enterprises. There’s nothing on this page of interest to corporate IT pros.

In order to succeed in the enterprise marketplace, Apple has to do several things. It needs an enterprise product line (a thought I’ll elaborate on in a moment). It needs enterprise pricing, including a volume-licensing strategy. It needs an enterprise sales force. It needs IT-oriented support policies and quality levels.

It’s not clear to me that Apple has the right stuff to sell to the corporate marketplace. Who knows, perhaps Steve Jobs is making the right decision in steering away from the enterprise. Maybe he knows Apple can’t succeed there because it just isn’t culturally suited to the business of selling to other businesses. But when it comes to building hardware for big business, there’s no doubt in my mind that Apple could succeed.

Enterprise Macs
Over the past year or two, a number of experts and pundits — some of whom were writing for Computerworld — have said that Apple’s existing product line would work fine as is for IT. But that’s just not the case. There are several issues with Mac hardware that keeps it from being ideal.

The MacBook Pro 15 and 17 models are too expensive by about $600 to $700 to compete with top-quality Windows notebooks, such as the Lenovo T60 series. Enterprises need to be able to purchase a MacBook Pro for around $1,900 with 2GB of RAM and a 120GB drive.

While it’s very easy to upgrade RAM in the MacBook Pros, it’s difficult to replace hard drives. To succeed in the enterprise, Apple needs to adopt user-removable hard drives. That makes it much easier for IT departments to troubleshoot and fix their users’ problems without having to crack the case of a notebook — something that’s a little touchy with the Macs.

The lack of a docking station option from Apple is also a serious drawback. It may sound minor, but docking stations are used heavily by companies that have adopted the no-desktop approach. Busy employees bring their notebooks home to work there, and also on the road. The docking station cuts down on cable connections, which, in turn, cuts down on help desk calls. At the very least, without the docking station, the 15-inch model needs a third USB port like the 17-inch MacBook Pro.

In some enterprises, a 13.3-inch-screen subnotebook has become the staple computer. Frequent travelers prefer the smaller size and heft of subnotebooks. Apple’s MacBook occupies this form factor, but the company designed it for students, not execs.

Like the MacBook Pro 15, it lacks ease of upgradeability for anything but RAM, it has only two USB ports, it doesn’t have a docking station, and the screen is small for work on spreadsheets, presentations, and other common business pursuits. Happily, the MacBook does support an external display at up to 1,920-by-1,200-pixel resolution. But back on the downside, the Chiclet-style keyboard isn’t appealing to touch typists.

Finally, the MacBook is thicker than the MacBook Pros. In order to build the small and light notebook that many enterprise users crave, Apple should start with the MacBook Pro case and trim it for a 13.3-inch display. It doesn’t have to be aluminum, but it does have to look upscale, and it needs the same flexibility and upgradeability I suggested for the MacBook Pro.

IT pros should be able to snag this 13.3-inch MacBook for business at around $1,400 with 2GB of RAM and a 100GB hard drive.

Not every business organization has settled on notebooks, and this is the area in which Apple is the weakest. To succeed in the corporate world, Apple needs to build an expandable/upgradeable desktop Mac that lets IT shops easily upgrade RAM, easily replace the original hard drive, add a second hard drive, upgrade the video, and have at least one free card slot or internal expansion area.

It should also come with a DVI port (and VGA adapter) for an external display. There’s no reason why the basic specs shouldn’t be similar to those of the iMac. But it needs to sell for $1,000 (without monitor) with 2GB of RAM and a 120MB hard drive.

In case you’re wondering, the iMac is not a good business machine. It’s barely upgradeable, and enterprises can often get more mileage out of LCD displays than they can out of desktop computers. Besides, if either the monitor or the computer needs to be sent in for service, the other piece must be sent too. The iMac is just not well designed for enterprise use.

Getting There?
By now you’ve probably gathered that there’s very little reason to suspect that Apple takes the enterprise market seriously. Just the fact that we really don’t know what Apple thinks about this is enough to say there’s no strategy. Business-oriented strategies aren’t secretive. That’s a consumer marketing thing.

To make it all happen, Apple would have to design and sell new business Macs with a pricing structure aimed at volume sales. It would have to make a stated commitment to take care of its enterprise customers.

In other words, Apple would need to stop looking at corporate computing as a dirty word. The aloofness Apple exudes as a consumer electronics company plays fine to that marketplace, but that doesn’t play well in the business-to-business space. IT customers want to be listened to and respected, and they want the company they buy from to offer innovative products and services that address their needs.

A public move by Apple in this direction would generate a ton of interest. Enterprise buyers stake their careers on their purchases. They need to feel the goodwill.

The truth is that Apple already has the goods, both in terms of the Intel-based architecture and the great operating system software. What it lacks is the hardware packaging and services that would make the Mac a lot more appealing to business users.

Even three years ago, it would have been totally laughable to write about the possibility of Apple being able to carve out a beachhead on the shores of the corporate marketplace. Now even dyed-in-the-wool Windows shops recognize that a small percentage of companies are moving this way, even if they think such companies are nuts.

It wouldn’t seem so crazy if Apple had some skin in the game. You’ve got to play to win.

One Response to “Apple’s Taking a Pass on the Enterprise Prize”

  1. dpi » Blog Archive » Apple in the Enterprise: What is the Story? Says:

    […] gloom to euphoria. Headlines on the apocolyptic side included Apple in the Enterprise rudderless?, Apple’s Taking a Pass on the Enterprise Prize, and Steve Jobs Still Doesn’t Get Business Customers. On the positive side we have How Apple […]

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