Posted by: Michael Morisy
Apple, Cloud computing, iPhone, Mac OS, virtualization
When I first started out as a beat reporter covering mobile for SearchMobileComputing, it was an interesting time: The iPhone was relatively new, BlackBerry was the only true “corporate” phone, there were serious questions between whether Android or LiMo would win out, and Palm was still a decrepit if beloved classic OS.
I even wrote a gem called Six simple steps to killing the iPhone (ignore reg link and keep scrolling down), advice that’s not too embarrassing until the last one:
Step 6: Take a deep breath
Others disagree, but both Hughes and Gold say the iPhone hysteria is no different in principle from other phone crazes before it — the Sidekick or the Motorola RAZR, which was at one point ranked #12 in the greatest gadgets of the past 50 years but is now regarded as a mid-tier feature phone at best.
“Somebody needs to come up with something that’s really innovative, and then you’ll see loyalties switch in a second,” Gold said. “I think it’s probably going to be folks in the Far East: LG or Samsung, or maybe a Chinese company we don’t even know about yet.”
The point is, at the time, iPhones were just a flash in the pan. They’ve now thoroughly invaded the enterprise; early IT resistance has softened, to the point that it’s hard to find an IT vendor who doesn’t offer some sort of server management tools for the iPhone (I’ll give Gold some points for his “company we don’t even know about yet,” as Taiwan’s HTC has come from underground white labeled device maker to very public contender).
That’s the background I come from when I read Preston Gralla’s predictions that Apple’s enterprise growth isn’t sustainable, and why I think he looks at the right data, but draws all the wrong conclusions:
- Apple started small. Gralla points out that, while a 68% jump in enterprise sales is impressive sounding, it’s only a drop in the bucket when you’re starting at 3% of market share. “It’s easy to post eye-popping percent gains when you start with very low sales figures, which the Mac has,” he writes. “But as your sales grow, it becomes increasingly difficult to post large percentage gains.” But since Apple is still small, continued market share growth seems plausible for the next few years. Just using the numbers quoted in Gralla’s article and extending them out at their current growth rates (which were quarterly, not yearly), I came up with the following:
This chart should absolutely not be used as a prediction of growth, but we’re talking about the benchmarks of whether Apple’s current enterprise growth is sustainable. I think the answer will turn out to be a definite “yes,” at least until 2014 when, if the trends roughly continue, Apple will have about 12% of the enterprise market. Traveling around, I see more and more groups of workers going Mac, and while 12% from their current 3% is a huge gain, I think it’s definitely in the ballpark of achievable based on a number of other factors.
- Virtualization and cloud computing. “In a cloud-based world, your hardware platform loses importance, because apps are run from the cloud,” Gralla correctly notes. “Why pay a Mac tax for a higher-priced computer in a cloud-based future, when a less expensive piece of equipment will do the same job?” Two points: The Mac Tax isn’t new, is often overstated, and obviously hasn’t been hampering adoption lately. Second, virtualization and cloud computing make it much, much easier to add in a Mac to the corporate lineup, while giving IT the control it needs and users the apps they need. Virtualization and cloud computing have also made IT more comfortable with supporting user-purchased devices, which I think will be the real driver of Mac adoption: Users bringing in their own, or buying them with an IT “budget” they can allocate.
- Tablets. Preston asks, “Why spend several thousands of dollars for a Mac when you can get similar work done with a $500 tablet?” There’s no reason to, but that’s also a bit like asking why spend hundreds of thousands on a firetruck when you can buy a pair of shoes. Only Apple’s highest end gear is more than $2,000 (2/3 of Mac Pros are less than that!), with MacBooks starting at just under $1,000, with better pricing for bulk purchases. I do think tablets will impact this market, but they’re much less a threat to Macs, which are coming in to replace power users’ computers, than they are to PCs, particularly in niche applications where mobility is key, like medical, warehouse, sales, etc. These sales weren’t going to Macs to begin with, but they will actually help drive Apple’s increased marketshare as fewer PCs are needed in these areas.
In 2007, after the iPhone came out, the conventional wisdom was that Motorola, BlackBerry and Windows phones had very little to worry about from Apple, particularly in buttoned-down corporate environments. It took a platform that didn’t even exist at that point, Android, to provide a credible market alternative. History has shown it’s a dangerous game to bet against Apple in favor of the status quo.