When Apple met the enterprise

Apple’s days as a corporate outsider selling premium kit to the cognoscenti are long behind it. Nowadays the company is targeting its iPhones and iPads at enterprises, with the help of one-time arch-enemy IBM.

Apple isn’t the first company that springs to mind when the word ‘enterprise’ comes up. Of course, the company itself is a massive enterprise, regularly posting record quarterly sales figures and boasting an unprecedented market capitalisation of $758 billion at the time of writing. But as a quintessential 1970s Silicon Valley ‘garage startup’, Apple — particularly under co-founder and arch ‘hippie capitalist‘ Steve Jobs — always cultivated a renegade/outsider image, seemingly more comfortable selling its designer products to the cognoscenti rather than slugging it out in the mass-market.

Nowhere was this self-image so evident as in the famous Macintosh-introducing 1984 commercial, in which a sportingly-clad female rebel gatecrashes an assembly where an on-screen Big Brother-like figure is addressing serried ranks of grey workers. In his 1983 keynote introducing the ad, Steve Jobs articulated the contrast between outsider Apple and corporate behemoth IBM, saying:

“IBM wants it all and is aiming its guns on its last obstacle to industry control: Apple. Will ‘Big Blue’ dominate the entire computer industry? The entire information age? Was George Orwell right about 1984?”

So it’s ironic that, three decades later, Apple’s market cap is nearly 4.5 times that of IBM, and that the two companies last year formed a partnership to develop and deliver business appsfor the iOS platform (more on this later). Who’s the Big Brother now?

APPLE TODAY

In its latest quarterly financial results (for fiscal Q2 2015, ending 28 March) Apple reported revenue of $58 billion and net profit of $13.6 billion. The company sold 61.2 million iPhones (down from an all-time record 74.5 million in Q1 2015), 12.6 million iPads and 4.6 million Macs. Here are the unit sales and revenue figures for the last 14 quarters, showing a distinctly iPhone-dominated picture, particularly after the iPhone 6/6 Plus-boosted 2014/15 holiday season:

apple-sales-sf.jpg
Data source: Apple

If the iPhone is the product sales story of recent quarters, then China is the story as far as geography is concerned, the region’s contribution to the Cupertino coffers jumping from 18 percent of revenue in 2014 to 29 percent in Q2 2015:

apple-sales-territory-2.jpg
Data source: Apple

In a recent (10 February 2015) on-stage conference interview with Gary Cohn, president and COO at Goldman Sachs, Apple CEO Tim Cook had this to say about China:

“We’ve invested in a ton of people there. We’ve invested in stores there, in flagship stores. We’re rolling out more stores. We’re now at 19 in Greater China. We’re going to be at 40 by mid next year…We’ve brought on 40,000 point of sales at our indirect channel partners. We’ve partnered with top Chinese companies, like China Mobile and China Unicom and China Telecom, and great services companies like Baidu on search and Tencent and Yoku. And so, we’ve done things with people that really understood China and had desire of services there. Maybe more than anything, we’ve put our personal energy into it and tried to deeply understand the market and respect it. And it — over time, it began to work. Five years ago, we were at less than $1 billion of revenue. In the last 12 months, we were at $38 billion.”

China, and in due course territories with similar potential such as India, may be the focus of Apple’s geographical ambitions, but as consumer markets saturate in mature territories, the enterprise also looms increasingly large in the company’s plans.

HOW ENTERPRISES SEE APPLE

VMware: The Apple Enterprise Invasion
In June last year, VMware published the results of a survey of 376 IT professionals, entitledThe Apple Enterprise Invasion. The study found that two-thirds (66%) of the businesses surveyed were using Macs in the workplace (how many was not revealed), with a 70/30 percent split between official and unofficial (BYOD) support. The main reason given for the presence of Macs in these companies was ‘user preference’:

vmware-mac-reasons.jpg
Data source: VMware

Only a quarter (25%) of the IT professionals surveyed by VMware considered Macs easier to support than Windows systems, with 36 percent regarding the support effort as about equal. That leaves 39 percent of the opinion that Macs are harder to support than PCs:

vmware-support-sf.jpg
Data source: VMware

When it comes to business-critical applications, only 8 percent of VMware’s IT professionals reported that all of their enterprise applications were ready to run on Macs, although 24 percent felt that most were Mac-friendly. That leaves 47 percent with some Mac-compliant enterprise apps and 17 percent with none:

vmware-enterprise-apps.jpg
Data source: VMware

Although the increasing use of browser-interfaced SaaS applications and other cloud-based services is likely to level this playing field in the future, the top three Mac capabilities valued by IT professionals in VMware’s 2014 survey were basically about application compatibility: the ability to run Microsoft Office (59 percent); the ability to enable secure access to enterprise applications (59 percent); and the ability to run Windows (41 percent) — the latter presumably to access legacy business-critical apps that don’t run natively. (On that note, VMware naturally asked its survey respondents about the value of virtual desktops such asFusion Professional, receiving the following replies: 45 percent deemed them ‘very valuable’, 46 percent ‘somewhat valuable’ and 9 percent ‘not valuable’.)

Although many employees apparently prefer to use Macs, there clearly remain some challenges for IT professionals charged with managing them in Windows-dominated enterprises. However, the picture is significantly different when we look at mobile devices.

Good Technology: Mobility Index Report
Leading enterprise mobility management provider Good Technology publishes a quarterly Mobility Index Report (MIR), the latest being for Q1 2015. Metrics cited in the reports are generated from Good’s internal data, aggregated from the company’s worldwide customer base. The headline metric is the number of new device activations among customers with at least five mobile devices. For the last couple of years, Apple iOS smartphones and tablets have consistently outperformed Android devices, with Windows making a negligible impression (BES-managed BlackBerry devices are not counted, but would undoubtedly feature among the also-rans if they were):

good-mir-devices.jpg
Data source: Good Technology

In Q1 2015, the iPhone 6 accounted for 26 percent of all activations logged by Good Technology, while the most popular Android device was Samsung’s Galaxy S5 smartphone. Between them, Apple and Samsung clocked up no less than 28 of the top 30 mobile devices. According to Good Technology’s figures, Apple is strongest in the education sector, with iOS devices accounting for 83 percent of activations in Q1 2015, followed by public sector (80%) and financial services (76%). Android, meanwhile, is strongest in unregulated industries such as high tech (47%) and energy (44%).

Taking smartphones out of the picture and looking just at tablets, we find Apple well on top again, with iPads accounting for 81 percent of activations compared to Android’s 15 percent in Q1 2015. However, the tablet trend is one of increasing diversity, with Apple’s share declining from a high of 92 percent and Android increasing from a low of 8 percent in Q1 2014. Windows tablets have also made an impression in the last two quarters, accounting for 4 percent of activations in Good Technology’s most recent MIR:

good-mir-tablets.jpg
Data source: Good Technology

As far as app usage on mobile devices is concerned, the Q1 2015 MIR shows secure browsing leading the way with 21 percent of all app deployments, followed by secure IM, custom apps, document access and document editing — the latter two categories showing growth rates of 68% and 51% respectively (mostly on tablets).

Recent enterprise trends towards cloud-based applications and services, mobility and BYOD have all helped create a more favourable climate for Apple devices in businesses. Now let’s examine what Apple itself has been doing to increase its enterprise footprint.

HOW APPLE IS APPROACHING THE ENTERPRISE

IBM MobileFirst for iOS
In June last year Apple and IBM announced a wide-ranging MobileFirst for iOS partnership, with four main strands: 100-plus industry-specific native iOS apps; iOS-optimised IBM cloud services (including device management, security, analytics and mobile integration); AppleCare for Enterprise service and support; and packaged IBM offerings for device activation, supply and management.

The first wave of 10 MobileFirst for iOS apps, which appeared in December 2014, addressed six vertical markets: Travel & Transportation (Plan Flight, Passenger+); Banking & Financial Markets (Advise & Grow, Trusted Advice); Insurance (Retention); Government (Case Advice, Incident Aware); Retail (Sales Assist, Pick & Pack); and Telecommunications (Expert Tech).

So far in 2015, a further 12 apps have been unveiled, six of which address new vertical markets: Healthcare (Hospital RN, Hospital Lead, Hospital Tech, Home RN); Energy & Utilities (Field Connect); and Industrial Products (Rapid Handover). The remaining six new apps are in Travel & Transportation (Passenger Care, Ancillary Sale), Banking & Finance (Advisor Alerts), Insurance (Risk Inspect) and Retail (Dynamic Buy, Order Commit).

mobilefirst-growth.jpg
Apple has said that 100 MobileFirst iOS apps will be available for different vertical markets by the end of 2015.

For the very latest developments, which include the addition of Apple Watch and Apple Pay support for some apps, check IBM’s MobileFirst for iOS website.

Here’s Apple CEO Tim Cook on the IBM partnership, speaking at the recent Goldman Sachs Technology & Internet conference:

“When we started thinking about, how do we do this, how do we really do this, we came to the realization that we didn’t know enough about any number of verticals. And we didn’t have all these people on the street. And we didn’t have huge numbers of engineers that could write apps that were unique to these. But, we knew that we had to have apps that were at the job level within the enterprise — not just productivity apps, like a presentation app, which is very important in enterprise…But, when you start talking about the tool for the nurse, the tool for the pilot, the tool for the flight attendant, the tool for the salesperson, when you’re — the banker. When you’re down at that level, you need unique apps. And so, we knew we needed to partner with someone, and we looked around. And it became clear to us that IBM was the — was an outstanding partner.”

It’s interesting to consider the respective benefits Apple and IBM are likely to reap from this partnership. Apple will sell more iPhones and iPads into enterprises on the back of the vertical iOS apps, and will support them with help from IBM (see below). For its part, IBM stands to gain from its extensive portfolio of back-end services. As Sriram Ramanathan, CTO at mobile app development platform provider Kony, put it in a recent conversation with ZDNet: “The whole thing, for IBM, is to find a vehicle to sell you services…they’ve got this thin veneer of native apps, and they’ll walk in and say ‘we’ll build you something like this’ — and it might be seven thousand hours of services, two million dollars, custom integration.”

AppleCare for Enterprise
A major component of the Apple-IBM partnership is AppleCare for Enterprise, which combines assistance from Apple’s customer service group with next-business-day on-site service (for one, two or three years) from IBM’s GTS (Global Technology Services) group. Given that, as VMware’s survey quoted above shows, IT professionals still have some issues with Mac support, the ability to have an AppleCare Account Manager on tap — offering ‘IT-department-level’ support for up to six designated technical contacts on issues ranging from mobile device management to Active Directory integration — should prove attractive. After reviewing the customer’s IT infrastructure, the account manager will provide monthly activity reports for support calls and repairs. Support is available 24/7, with one-hour response times for priority issues.

Support is also available for IBM’s MobileFirst iOS apps (described above) and you can combine AppleCare for Enterprise with Apple’s existing AppleCare iOS Direct Service Programme, to cater for rapid hardware replacement.

AppleCare for Enterprise was unveiled in November 2014, but as yet there’s no word either on pricing or on how the service is working out in practice. However, if it performs as advertised, it should make IT managers a lot more comfortable about deploying iPhones, iPads and Macs in their organisations.

Business Development Executives
Earlier this year, reports emerged that Apple was hiring IBM Business Development Executives tasked with “developing a community of Apple and IBM field based sales and technical roles who strive to collectively transform how business is done with iOS (namely iPad and iPhone) and mobility at the center”. These region-based posts are targeted at the vertical industries addressed by the MobileFirst apps (the description quoted comes from a New York-based post covering Financial Services & Retail). The idea seems to be to persuade enterprises that already use iPhones and iPads to deploy many more of them — something that might help to address this worrying (for Apple) trend in iPad sales:

ipad-growth.jpg
Data source: Apple

OUTLOOK

Apple has come a long way since its IBM-baiting days of the early 1980s, and so, thanks to cloud computing, mobility and BYOD, has the enterprise. Mutual self-interest has now brought Apple and IBM together in a partnership designed to populate enterprises with more Apple client devices and deliver more opportunities for IBM to sell its back-end services.

It’s still early days, though, and it’ll be fascinating to see how the relationship plays out over the coming months and years.

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