While many investors focus on the smartphone and tablet consumer markets, one sometimes overlooked front in the mobile device war is in the enterprise, or corporate, segment. And it's in this important area that Apple (NASDAQ:AAPL) is excelling above the competition. The tech titan noted in its most recent conference call that research firm Good Technologies found that among its corporate clients, the iPhone 5 was by far the most frequently activated device of any kind, and iPads represented 88% of all tablet activations.
In regard to the iPhone, Apple CFO Peter Oppenheimer had this to say during a recent conference call:
iPhone also continues to be the smartphone of choice for business. Given the security and stability of iOS, enterprise and government customers around the world continue to deploy iPhone on their networks in ways that go far beyond personal productivity. Companies have built tens of thousands of custom apps to improve every aspect of their business. Global companies, including American Airlines, Cisco, General Electric, Roche, and SAP, have deployed more than 25,000 iPhones each across their organizations. U.S. government organizations, such as NASA's Jet Propulsion Lab, the National Oceanic Atmospheric Administration, the ATF, and the National Geospatial-Intelligence Agency, are supporting and managing thousands of iPhones on their networks, and continue to create both customer-facing and internal iOS apps. And just this past quarter, iOS 6 was granted FIPS 140-2 validation by the U.S. federal government and approval by the U.S. Department of Defense to connect to their networks. Combining sales to business, government, and education customers, iPhone holds a 62.5% share of the U.S. commercial market, based on the latest quarterly data published by IDC.
In the enterprise smartphone segment, former leader BlackBerry (NYSE:BB) has seen its market share plummet. BlackBerry dominated the corporate market for years thanks to a reputation built on security and the reliability of its network. But in recent years the bring-your-own-device trend has led many corporations to support multiple devices and operating systems, which has benefited Apple and Google (NASDAQ:GOOGL) as the popular iPhone and Android-powered devices quickly stole share from the less consumer-focused BlackBerry. But while Android currently holds the top spot in overall smartphone OS market share, Apple's reputation for security has led to more wins among corporate buyers. With BlackBerry's global smartphone market share now estimated at a minuscule 3%, it appears that this will be a race between Apple and Google -- a disturbing thought for BlackBerry investors and one that has led to a devastating loss in value for the once high-flying company:
Microsoft (NASDAQ:MSFT) has risen to the No. 3 spot ahead of BlackBerry, but with its small share of the overall market, Microsoft probably won't benefit from the BYOD trend to the same extent as Apple and Google. Still, Microsoft is a competitor not to be taken lightly, and it could present a threat to Apple and Google should Windows 8 help to accelerate the adoption of Microsoft-powered smartphones.
Another area where Microsoft poses a threat is in the enterprise tablet space. Its Surface Pro device runs full versions of Windows and Office applications, which are dominant among corporate workers. But if the sales of the struggling Surface RT tablet are any indication, Microsoft may also have a tough road ahead in the tablet market. Microsoft recently took a $900 million charge related to slashing the price of the Surface RT – a less expensive tablet that doesn't run many MS applications – that led to fourth-quarter results that came in well below Wall Street's revenue and earnings projections.
"I want to be very clear," new Microsoft CFO Amy Hood said in the conference call. "We know we have to do better, particularly on mobile devices." Judging by the performance of Microsoft's stock since its earnings report, investors seem to agree.
The Foolish bottom line
Apple's ability to maintain its lead in the enterprise mobile device market will be a key determinant of the company's long-term success. But will Apple be able to fend off Google's Android assault? Will Microsoft rebound from its missteps and begin to take share in this vital market?
Editor's note: A previous version of this article incorrectly attributed the quote to CEO Tim Cook. The Fool regrets the error.
Joe Tenebruso manages a Real-Money Portfolio for The Motley Fool and is an analyst on the Fool's Stock Advisor and Supernova premium service teams. You can connect with him on Twitter: @Tier1Investor. Joe has no position in any stocks mentioned.
The Motley Fool recommends Apple and Google and owns shares of Apple, General Electric, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.