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 "They've tried to ... focus on the enterprise but over the last two
years it has really not been successful," said Daniel Ives, a senior
analyst at FBR Capital Markets. The enterprise market, which is how
Apple refers to its business customers, represents 10 percent of its
$183 billion annual revenue, he said.
Apple has at least one client so far: General Electric has given
some of its 305,000 employees the option to use Apple devices at
work, with 20,000 iPads and 60,000 iPhones now available in their
offices. It is not clear how much this is worth for Apple, nor how
it generates about $18 billion a year from the enterprise market.
Apple officials declined to comment on plans to market iPads to
business customers, referring queries to a product announcement
event that happened Sept. 9. At that event, Phil Schiller, Apple
senior vice president of worldwide marketing, said the iPad Pro was
faster than 80 percent of portable PCs, signaling that Apple may
think the device could replace workplace laptops from companies like
Dell and HP. Schiller called the iPad Pro "ideal for professional
productivity."
Selling tablets to corporate buyers is an attractive option for
Apple amid slowing global iPad sales, which have fallen for two
quarters. Research firm Forrester projects that sales to businesses
will represent as much as 20 percent of the overall tablet market by
2018, compared to 14 percent this year, as the market grows from 218
million units to 250 million units.
"The iPad Pro is important for Apple because they're beginning to
saturate the personal device space and it's a logical step for the
company if they wish to expand their market share," said Michael
Yoshikami, head of Destination Wealth Management, which has $1.5
billion under management and owns Apple shares.
The price of its products is one obstacle Apple faces as it tries to
move deeper into the enterprise market.
The iPad Pro starts at $799 but costs more than $1,000 if buyers
also want a keyboard and an optional stylus. That's more than
Apple's existing tablets as well as devices made by Microsoft Corp
and other PC makers like Lenovo. It's about the same price as
Apple's own MacBook Air, a laptop.
The iPad Pro's biggest competitor is likely Microsoft's 12-inch
Surface Pro 3, also geared towards the business market. While the
Surface has the same starting price as the iPad Pro, Apple charges
extra for a keyboard and stylus.
In July, Microsoft said its Surface line of tablets brought in $888
million in the most recent quarter, up 117 percent from the same
time last year, boosted in largest part by the Surface Pro 3 and the
launch of Surface 3.
"The most formidable opposition to adoption is price ... The iPad
Pro has a lot of utility and technology that Apple brought to bear
but unfortunately the price never goes away as a challenge," said
Keith Bachman, a senior analyst at BMO Capital Markets.
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It's also not clear how Apple is going to expand their sales to
businesses, as only a few companies like GE have made any
significant investment to switch to Apple devices, said J.P. Gownder,
a Forrester principal analyst.
At GE, which gives employees the option of using Apple devices at
work, just 10,000 of its 170,000 office workers using computers on a
regular basis use a Mac.
In the meantime, Apple has entered into partnerships with IBM and
Cisco, aimed at creating more enterprise-friendly software to run on
iOS, the Apple operating system, but little is known about these
partnerships.
The iPad Pro is "going to be a real accelerator for our partnership
and Apple as well," said Katharyn White, IBM's vice president of
strategy and markets for the company and Apple's partnership.
"Clients that have seen it and are thinking about it are really
excited about it."
A Forrester survey last year of more than 4,000 office workers found
that they still rely heavily on laptops at the workplace and
estimated that global information workers are three times more
likely to use them for longer than four hours per day than tablets.
Finally, analysts say that the vast majority of companies use
custom-built applications and databases that are still not
compatible with Apple's iOS and are unlikely to switch to Mac
devices.
GE has an internal group dedicated to developing applications that
can run on Apple's mobile devices, and IBM and Apple are developing
a number of iOS applications for enterprise clients in industries
ranging from banking to healthcare.
But for most companies, Gownder said, "You still can't run all your
business-critical applications through Apple."
Gownder wrote in a report on Thursday that technology
decision-makers currently favor Windows over iOS for ease of support
by 42 percent to 16 percent.
"Enterprises have spent billions on applications that are unique to
their business and having 40 apps from IBM doesn't change that fact
overnight," he said.
(Editing by Stephen R. Trousdale and John Pickering)
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