Who Cares if Apple Focuses on the Enterprise?

Ever since Mac OS X Server shipped in 1999 and the desktop version in early 2001, many Apple and enterprise I.T. watchers have pontificated about Apple possibly moving into enterprise sales in a big way and making it a focus of effort.

On a scale of 1-10 (with “10” being hyperfocused on a strategic market), I believe Apple’s interest in the enterprise is a “2”.

My friend, Graeme Thickins (blog; business), sent a few of us an eWeek article today entitled, “Apple Goes Enterprise.” The authors premise? That enterprise I.T. is clueless unless they seriously consider Mac OS X Server and Apple’s Xserve or Xsan hardware for their server room due to the world-class aspects of these products and his argument was on the merits of what Apple offers.

I’d agree they’re worth a serious look, but I see one huge caveat to this article from the point of view of someone who was a manufacturer’s rep for Apple in the early 1980’s, worked again for the company after Jobs came back in 1996 for three years, was in leadership positions in the enteprise software space (e.g., Vignette; Lawson Software) and have thought long and hard about what Apple is up to while simultaneously knowing what it takes to kowtow to and please enterprise I.T. folks.

The enterprise wants every conceivable feature and typically places their bets on technology momentum, a new class of product or a vendor if they deliver a corresponding support infrastructure (i.e., a vendor that invests in support for enterprises specifically) or demand is off-the-charts high. Currently Apple’s support for the enterprise is modest…at best…and many of Apple’s former resellers (who could support the enterprise) are gone due to the Apple Store juggernaut.

In a January 2000 Fortune magazine interview, Jobs said this about Apple’s new directions — including any sort of focus on enterprise sales — in response to a line of questioning about why they wouldn’t pursue the enterprise after Apple’s reenergized and growing sales as well as the then well accepted “jelly bean shaped” iMac:

We think that a lot more big businesses will eventually come back to us, because FORTUNE 500 companies use a lot of consumer products. If you want a minivan for your corporation, you don’t have one custom made; you go to the Chrysler dealer and buy one. They make great minivans, even though they don’t make them for Corporate America. Even so, a lot of big companies–including ours–buy them.

It’s really hard to serve multiple masters–different sets of customers with completely different points of view, requirements, and ways of approaching computing. I think Microsoft is experiencing this.

I’ve always believed that the biggest market for PCs is consumers.

I’ve personally heard him say and posit the reasons why he’d rather sell to millions of consumers instead of less than 2,000 I.T. decision-makers inside of the corporate world. Apple’s investments in an enterprise sales, services and support organization is correspondingly minimal.

From Apple’s Annual Report filed November 15, 2007 which clearly articulates what they ARE hyperfocused on:

“The Company’s customers are primarily in the education, creative professional, consumer, and business markets. The Company distributes its products through wholesalers, resellers, national and regional retailers and cataloguers. No individual customer accounted for more than 10% of net sales in 2007, 2006, or 2005. The Company also sells many of its products and resells certain third-party products in most of its major markets directly to consumers, education customers, and businesses through its own sales force and retail and online stores.”

…and Apple’s areas of focus that are, again on a scale of 1-10, a “10”…

“The Company is currently focused on opportunities related to digital content distribution, consumer electronic devices, including iPod and Apple TV, and mobile communication devices, including iPhone.”

These are the two primary statements about targets and market segmentation discussed in the report. Selling to millions of customers and focusing on digital content, the devices to create and use it, and the continued momentum in mobile devices for the always-on, always-connected people in the culture of participation is pretty clear.

Apple is the preferred creative engine and catalyst platform behind most traditional media creation (e.g., publishing, music, video) but, more importantly, are perfectly aligned with the explosion of user-generated content and the emergent participation culture so prevalent today. Ironically, all of us participating on the Internet are highly coveted by marketers as well as corporate I.T. leaders looking to the lessons of the exploding Web 2.0 software world and attempting to shift to some form of “Web/Enterprise 2.0” delivery of their own I.T services.

Seems like a much smarter strategy for Apple to empower the 1.2 BILLION global Internet users who increasingly are part of an Internet-centric culture of participation than to invest and target 10,000 or even 50,000 global mid-to-enterprise level corporations, doesn’t it?

A 40,000 FOOT VIEW
But if we drag ourselves out of this argument about Apple in the enterprise and rise higher above it for a moment, consider that you and I are living in an always-on, always-connected world where “cloud computing” (i.e., hosted Internet and Web services you access while online) is becoming more and more imperative as the weeks go by.

I don’t know about you, but my purchases of shrink-wrapped software is nearing zero. I rarely buy from a retail store anymore unless it’s an operating system or the recent iLife and iWork suites from Apple. Everything else I download, including Adobe’s products (e.g., Photoshop, InDesign) and virtually every other tool I use on my desktops as well as all the computers in our office.

Most of my software use today is in the cloud. Each month my personal and company purchases of cloud-based software increases. From web conferencing to voice to stock photos to collaboration to marketing and analytics, hosted applications now comprise over 50% of our I.T. expenditures and personally is well over $150 per month (e.g., online storage, digital photos, VoIP telephony).

Think about how Apple is positioning themselves right smack dab in the middle of cloud computing and could be the remote controls and human interfaces of our cloud-based future. Apple’s devices and user interfaces are usable by non-tech-savvy people and will increasingly be used to create-n-control the flow of media, information and communications generated either by traditional sources or the accelerating base of users generating all the rest (and huge amounts of it too, I might add).

Yes, I understand Apple will innovate, create new categories and point the way while others deliver devices and software many of us will choose and use instead. In other areas Apple will fall short while others excel. Known for hitting the sweet-spot of usability and the hiding of complexity, Apple is uniquely positioned to be a (or the?) dominant force at the intersection of cloud computing and the devices we use to conduct the integration of our lives with the cloud.

When you also consider that the world is eyeing Apple’s moves and the company is seen by the participation culture and user generated content producers as THE cool company with the NEATEST devices and software (e.g., iPod, iPhone, Macbook, iLife, iTunes, iPhoto), you’ll also see that users are ready for these devices and software and Apple is setting the tone for how to make accessing the cloud elegant, enjoyable, useful, powerful and easily made a part of our daily lives.

So I’m guessing the enterprise will remain clueless and be puzzled about what’s happening, too conservative to move fast enough, and so agitated that every feature and major support from Apple isn’t available they’ll continue to mostly not embrace anything Apple does or ships.

As a stockholder, I don’t care if the enterprise embraces Apple or not. As a user, I don’t care because most corporate I.T. is irrelevant except inside their four walls. As a strategist and futurist who can visualize the need for coordination and orchestration of cloud computing with our devices and we as humans connecting to each other and managing our digital lives, I care a lot.

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9 Comments

  1. Graeme Thickins on January 19, 2008 at 5:25 pm

    Right on, Steve — great post! It’s about connecting humans, and Apple gets it for sure.



  2. PXLated on January 19, 2008 at 6:01 pm

    Nice post Steve and agree, Apple doesn’t much care, they’ll invade the enterprise through the back door. Employees will want the same tech and ease of use they are getting in the consumer space. It used to be that most people got their computer/training via their workplace. That’s not the case now (especially with the younger set) and that will cause the corporate IT departments to loose control and be able to dictate platforms/apps. And, as you point out, as we move more stuff to the cloud, the traditional tech matters less and the employee will be able to choose how to connect to it and that will be with advanced consumer goods.



  3. Viswakarma on January 19, 2008 at 10:21 pm

    Very succinct and to the point! Why waste time and energy on Corporate IT. The Corporate IT is like Exxon Valdez, and most of the IT honchos are asleep at the wheel. Microsoft is the only way to go for Corporate IT, since it keeps the IT empires going.



  4. lrd on January 20, 2008 at 9:29 am

    Great article! Very well balanced. Steve Jobs is doing a great job placing
    Apple where the puck will be come a year or two from now and not
    where the puck is now. To be quite frank, corporate IT departments
    are facing challenges beyond what you mention in your article. Many
    are being down-sized and their positions being outsourced to India. Most are
    worried about having a job period. In addition, the current “social” revolution is
    an individual one not a corporate one. You Tube, My Space, Face Book & Blogs are to free of constraints for corporate IT worried about legal aspects all the time.
    And lastly, Apple should focus on small businesses where decisions are’nt committee based and where the real growth will be.



  5. lrd on January 20, 2008 at 10:35 am

    Another tidbit: I was at the Apple Store in Freehold, New Jersey yesterday and OMG the place was packed! People were buying the new iMACs like crazy. I thought it was Christmas. There were more people in the relatively small Apple Store then Macys and Lord & Taylors combine and these stores are like 30 times the size!!!!!



  6. Thomas on January 20, 2008 at 11:26 am

    Best piece of analysis and writing I have read in the past week.

    Question: For IT professionals who are threatened by downsizing, or those who want to skate where the puck will be, do you see employment opportunities for those who retrain and obtain certified Apple IT skills?



  7. lrd on January 20, 2008 at 11:55 am

    IT pros shouldn’t be in a hurry to re-train in Apple IT skills anytime soon.

    It’s a shrinking field in the US; but one that won’t disappear anytime soon for those Certified in Windows.

    It’s not like it’s going to disappear anytime soon; but most of the exciting new products will appear in the prosumer space with only small incremental and less WOW factor improvements in the enterprise.

    For example, if you consider a BlackBerry with a touch-screen as big improvement in the enterprise market; then maybe in 6 months from now that will materialize.



  8. Mark Fuller on January 21, 2008 at 8:06 am

    It actually doesn’t matter. Linux will continue to slowly invade enterprise markets too. Microsoft has a large problem. They can’t continue to milk enterprise out of larger and larger licensing fees. You can start to see some of the cracks considering how fast, if at all, companies are moving to the new office and vista.



  9. Tom B on January 21, 2008 at 8:10 am

    Billions of dollars are wasted every year supporting MS Windows. The “productivity paradox”; that money spent on Tech has yielded poor ROI. That’s largely because of Windows.



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