Here's How Apple Wins the Enterprise

Now that reports show the Mac gaining market share, reporters and analysts alike are wondering when Apple (Nasdaq: AAPL  ) CEO Steve Jobs will go after the corporate market.

Never, I hope.

Never?
It's simply the wrong war, for two reasons:

  1. Corporate customers don't prize innovation.
  2. Corporate customers only embrace new technology when they must.

Makes it easy to understand why Dell (Nasdaq: DELL  ) has been so successful as a corporate supplier, doesn't it? Keep it cheap, don't surprise me, and don't push new stuff on me till there's no other choice.

Or think of Microsoft (Nasdaq: MSFT  ) . What makes Windows great -- and I really mean this -- is its legacy. Plenty of software written for earlier versions of Windows still works with current versions of the OS. (Well, XP at least.) Apple can't say that about the Mac OS.

Here's why that matters. IT managers, above all else, are charged with maintaining corporate systems. Improvement isn't really the point; it never has been. What matters is creating a controlled environment where rogue software and devices don't compromise security.

An obsession with control has led to an obsession with "standards." All software is built from these cookbooks of code -- even the underpinnings of the Web -- because adherence to common principles preserves compatibility between software and systems, allowing data to be shared and business to get done.

Raise your hand if you think Apple's products are great because (a) they're really interoperable and (b) they strictly adhere to standards. I didn't think so.

Connect with the insurrection
Having said all that, I am not arguing for Apple to avoid the enterprise. I'm just saying that directly courting corporate customers would force Apple's culture to shift from innovation to safety. I believe that would immeasurably damage the company's brand and destroy its moat.

Nevertheless, Apple can, and I believe will, win in the boardroom. It merely needs an insurrection -- an uprising that pulls its consumer technology into the enterprise market.

We know such radical shifts are possible. Consider Research In Motion's (Nasdaq: RIMM  ) BlackBerry. From 1999 to 2004, it was mostly a cool gadget that users brought to work. IT managers dealt with the intrusion, and since that time, RIM's subscriber base has grown from 2 million to more than 14 million.

Or think of Firefox. Devoted consumers have downloaded the browser by the millions in a rebellion against Microsoft's Internet Explorer. The result? Big firms such as IBM (NYSE: IBM  ) have told their IT teams to figure out how to accommodate the upstart.

So with history as our guide, it follows that if Apple really wants to win the corporate market, it needs to keep winning consumers. And those consumers, in turn, have to sway IT managers to make room for their gear. Gear like, you know, the iPhone.

Steve Jobs: arms dealer
Here's the good news for investors: Jobs already knows the pattern, and he's arming consumers to take the fight to their IT departments.

Witness Apple's March unveiling of business tools for the iPhone. Among the list: added security features, a kit for creating new business software for the device, and built-in interoperability with Microsoft's Exchange software for managing corporate networks.

I'll understand if you're primarily interested in that last point. Exchange is arguably, outside of the Web itself, the software platform for networked business today. Connecting to it lifted the fortunes of the BlackBerry and, for a time, Palm's (Nasdaq: PALM  ) Treo. Conducting an enterprise insurgency without Exchange support would be like fighting a war without ammo. Now, the iPhone has plenty.

And its supply lines are getting richer by the day. Legendary venture capitalist Kleiner Perkins Caulfield & Byers has established a $100 million "iFund" to encourage development of software for the iPhone, which it sees as a platform for business computing. I think it's right; we'll see whether IT managers come to agree.

Long live the iPhone insurgency.

Brrrrring! It's related Foolishness calling:

Apple is a Stock Advisor selection. Dell and Microsoft are Inside Value recommendations. Try either of these services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers also writes for Rule Breakers. He owned shares of IBM at the time of publication. The Motley Fool has a market-beating disclosure policy.


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  • Report this Comment On May 22, 2008, at 9:31 AM, Steve516 wrote:

    "Or think of Microsoft (Nasdaq: MSFT). What makes Windows great -- and I really mean this -- is its legacy. Plenty of software written for earlier versions of Windows still works with current versions of the OS. (Well, XP at least.) Apple can't say that about the Mac OS."

    There are a few items in your article I take issue with. The reasons are many, and complex so I will try to make this short.

    Apple legacy software (OSX wise) was fully supported on all Macintosh models through the G5 series (mini, iMac, Power Mac, Power Book, etc) at the end of 2005. Legacy support ended with the shift to Intel processors - but only on new machines. Even with the Intel processors, you have the ability to open older software in a built in "Rosetta" emulation mode to improve performance.

    The next comment is that there is a tremendous amount of software available for OSX - far more than most folks realize. And most of it has been tested and approved by Apple, and is available on their own website for download. So, anything you could do 10 years ago before OSX was released, you can do today. The iLife and iWork software from Apple (bundled and also available reasonably priced) works amazingly well.

    For the record, I do not work for Apple, and I do not own any stock.

  • Report this Comment On May 22, 2008, at 10:02 AM, TMFMileHigh wrote:

    Thanks, Steve516.

    On balance, I agree. But I don't think there's any arguing that more software is available for Windows and that there's a different emphasis at work here.

    Apple -- rightly, I think -- has emphasized innovation. Microsoft has emphasized interoperability. Both approaches have merit but they are different.

    FWIW and Foolish best,

    Tim

    TMFMileHigh

  • Report this Comment On July 08, 2008, at 3:39 PM, Agathezol wrote:

    Tim, I think you have a couple of points backwards. Apple has stressed innovation AND interoperability (by which I presume you mean "backward compatibility"). Sure, where there's an either/or situation, innovation usually wins - but the same can also be said of Microsoft. Every release of Windows has broken loads of software - drivers and applications alike.

    More importantly, however, you missed the boat on the whole "standards" support. Apple has been the one to EMBRACE open standards. Microsoft frequently eschews open standards in lieu of their own, proprietary, standards. Where Microsoft has appeared to embrace open standards, they often add their own proprietary extensions to the standard in an effort to stamp out said open standard.

    Where do you get your information on these technical matters!?

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