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Do Businesses Really Want Bigger Tablets?

By Adam Levy – Jan 12, 2014 at 8:45AM

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Samsung unveiled bigger "Pro" tablets at CES. Is this a threat to Apple's growing enterprise business?

Apple (AAPL -2.63%) won 8% of global business and government spending on computers and tablets in 2012. That number, which doesn't include the iPhone, is expected to grow to 11% next year from just 1% in 2009 as more business elect to use tablets over PCs. Most of that business is being taken from Microsoft (MSFT -2.31%), which once held a near-monopoly on commercial computers.

The growing trend of tablets in the workplace as a replacement for Windows machines is a thorn in the side of Microsoft. Meanwhile, Apple rival Samsung (NASDAQOTH: SSNLF) plans to capitalize on the trend by catering to that market with its own line of Google Android tablets. Can any of them overtake Apple, though?

Professional-level tablets
Samsung unveiled its line of Galaxy Pro tablets at CES earlier this month. The new line features a couple oversized 12.2-inch tablets that aren't nearly as portable as smaller 10-inch tablets like Samsung's flagship line or Apple's iPad. They are meant to be laptop replacements -- not iPad replacements.

Apple is rumored to planning the release of a larger iPad in 2014. The new device could potentially expand its lead over Android tablets in the workplace. Meanwhile, Microsoft has struggled to gain traction as PC sales slip and its Surface Pro falters. Despite its ability to run Windows software, a key advantage in the corporate world, the Surface Pro has not appealed to many businesses.

Last year, the company reduced the price on its first iteration of the device, and took an inventory writedown. So far, the Surface 2 has had trouble staying on the shelves, but Microsoft's partner, Best Buy, has indicated that it's likely due to supply shortages rather than overwhelming demand.

Will form-factor change much?
iPads have gained popularity with businesses in large part due to their portability and cost. A more expensive, less portable device is not what businesses are buying. They're being used by warehouse workers to scan barcodes, and by helicopter patrollers surveying power lines.

In addition, because businesses have adopted the iPad over Android competitors, the vast majority of business apps are written for iOS. According to Good Technology, a mobile security software company, over 90% of all business apps were deployed on iOS, which makes it the main focus of developers. With Apple's latest iteration of the iPad, the company is now bundling its productivity suite with every device.

The app ecosystem is a huge hurdle for Samsung and other Android makers. Businesses that make custom apps for their employees don't want to make both an iOS and Android version.

The cloud is Apple's biggest threat
As cloud-computing takes hold of corporate software, perhaps Apple's app advantage will fade. Corporations are looking for devices that can easily connect to a virtual machine where software runs remotely on a server. Almost any computing device sold in 2014 ought to be able to do that.

This has doomed Microsoft, even as the company has embraced the trend with its Azure service and Office 365. The ability to run software that used to be Windows-only on any device means businesses are less likely to tie themselves to an OS long-term. So, even though iOS has seen tremendous growth in the workplace over the last five years, that doesn't mean businesses will remain loyal.

Still, Apple's first-mover advantage, its ease of use, and engrained user base will be hard for Samsung or Microsoft to overcome with a just new form-factor.

Adam Levy owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. We Fools may not 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.

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