Despite choosing iPads for its pilots (citing $1.2 million yearly in fuel savings compared to paper manuals), American Airlines (AMR) chose Samsung (SSNLF) Galaxy Tab 10.1 tablets when it decided to offer 6,000 tablets to customers as in-flight entertainment devices in premium seating. The comparative cost likely factored into that decision, with the Samsung coming in at $100 less than the entry-level iPad.
American has apparently been happy with the arrangement. This year, the company announced that it was handing out Samsung tablets for staff rather than buy more iPads. After testing various devices, comparing ease of use and security, the airline invested in Galaxy Tabs and Galaxy Notes for business class customers, maintenance staff and flight attendants.
According to an interview in Business Insider, Samsung’s advantages include easier customization and the tablets’ SAFE (Samsung for Enterprise) security features. American has now bought 23,000 tablets from Samsung, compared to the initial 10,000 iPads purchased for the pilots.
When it comes time to upgrade the pilots’ tablets, it’s not difficult to picture a scenario where the Galaxy Tab replaces the iPad. When it comes to enterprise hardware, IT departments love security and standardization (which makes it easier for devices to interact with each other and reduces support costs).
But all is not lost in the sky for Apple. The U.S. Air Force picked up 18,000 iPads last year to reduce in-flight weight, and Hawaiian Airlines (HA) recently swapped out in-flight entertainment systems on 14 of its planes with 1,500 iPad Minis.
However, Apple faces a real and growing challenge in enterprise. The iPad made early inroads in the corporate world on the back of its popularity with consumers and its first-to-market advantage. But the tablet market is maturing, and while the iPad has remained consumer-focused with a premium price tag, the competition has evolved.
Thus the decision by Delta to choose a tablet that’s hasn’t sold well with consumers — it runs familiar Windows software and lets IT keep personal and corporate use of the tablet separate. It’s the same reason American passed over the iPad: The company wanted a cheaper, customizable, more secure device.
This battle for enterprise supremacy is not limited to the air (that’s just a very visible front); it’s playing out in businesses around the world. Apple isn’t down and out yet, but it’s no longer the only game in town and its overall tablet market share continues to slide. Microsoft isn’t giving up on the tablet game despite its early stumbles, and Samsung is coming on strong.
There’s a risk that the “mother of all markets” as Apple CEO Tim Cook has described tablets, could turn into a repeat of decades ago when cheaper, more configurable and Windows PCs left Apple behind to dominate the enterprise PC market.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.