Good news for Google's Chromebooks. Source: Google.
During the recently completed third calendar quarter, Google's (GOOGL -1.23%) Chromebooks overtook Apple's (AAPL -1.22%) iPads in the education market by becoming the most popular device for school districts and colleges where devices are purchased in bulk. According to data from IDC, via The Financial Times (subscription required), Google shipped 715,500 Chromebook devices to U.S. schools in the third quarter, beating Apple's total of 702,000 iPads during that period. Even better for Google, its Chromebooks went from no market share to over a quarter of the educational market in a mere two years.
Although it should be noted that Apple maintained a small lead over Google overall once you include its Mac line of computers, Apple losing its spot as the most popular device portends trouble for its moves into the enterprise -- a term that mostly denotes large-scale government and corporate purchases -- and a future boon for Google and its hardware partners. Here's why it matters (and doesn't) for Apple.
Why it matters: Inertia is a powerful thing
In a way, this fight echoes the Mac-vs.-PC battle of the late '80s and early '90s. Apple fell behind in market share to Microsoft (MSFT -1.27%)-enabled PCs because of the companies adopted dramatically different strategies: Microsoft chose to work with hardware partners (like Google) to increase supply and adoption; Apple chose to focus on quality by controlling the whole process. Microsoft won the early battle and still finds itself as the dominant operating system on desktop and laptop computers.
And while it should be noted that Apple rebounded in the '00s by growing in mobile and taking advantage of its walled-garden approach via premium pricing, the fact is that first-mover advantage (as in being the first operating system a user learns) is tough to overcome. By moving aggressively into the educational market, Apple hopes to introduce itself to a new generation of users that will -- hopefully -- buy products for decades to come. Instead, school districts appear to be increasingly opting for cheaper, keyboard-included Chromebooks rather than Apple's iPads.
Why it doesn't: This is still a small, undefined market
That said, this is a rather small part of Apple's overall business. In fact, it's a small part of Apple's iPad line. In its recently reported fourth fiscal quarter, the third calendar quarter, Apple sold 12.3 million iPads. Therefore, U.S. educational sales were roughly 5.7% of total iPad sales. So the iPad educational market is not a large part of Apple's revenue haul... yet.
Apple isn't resting on its laurels in its moves into the greater enterprise. The company has partnered with IBM to address the enterprise by adding 100 industry-specific enterprise solutions and apps for the iPhone and iPad, IBM-optimized cloud services, and Apple Care service and support tailored to enterprises. Apple is also rumored to be working on a larger 12-inch iPad, tentatively called the iPad Pro, that appears to be a play for enterprise users.
Good Technology's report is good news for Apple and the enterprise
And when it comes to the greater enterprise, and not simply educational, Apple is performing better than Google. A recent Good Technology Mobility Index Report found that iOS phone activations were 69% of all enterprise-related phone activations during the recently completed third quarter for its clientele of over 6,000 customers. For a tablet-to-tablet comparison, that number was even more lopsided, with iOS tablets taking 89% of all tablet activations.
Overall, the data isn't as bad as it initially appeared for Apple. Yes, Google's move into the educational market is astonishing and should be watched closely with respect to the greater enterprise market. However, if the reason for its growth is simply cost among cash-strapped schools, look for Apple to continue its dominance with less miserly corporations in the broader enterprise segment.
