It’s been on the market’s radar for a while, but as of this week it’s right in front of us — Apple Inc (AAPL) is now officially wading into enterprise waters, ready to go toe-to-toe with companies that are much better established in the corporate arena.
How do we know Apple is serious about its enterprise ambitions? It’s not just the recently announced partnership with International Business Machines (IBM). The clincher is news that Apple has hired a dedicated sales force to call on corporate America, selling its products and services.
The follow-up question investors should be asking: If AAPL wins in the enterprise world, who loses? There are actually a handful of potential victims of Tim Cook’s budding brainchild.
Threatened by an Enterprise-Friendly Apple
Truth be told, it’s not exactly clear what Apple is “selling” through its newly hired sales force. Cook and his cohorts have been relatively mum regarding what the end goal here is; this week’s buzz was 100% stirred up by the media’s almost-manic coverage of nothing more than the fact that a sales force is known to be making sales calls. So, take these speculations as nothing more than just that — speculations.
On the other hand, it’s not as if the company has a lot to offer enterprise-level customers other than a potentially superior technology experience that’s largely centered on tablets and mobility.
With that as the backdrop, here are the stocks and companies that stand to lose if AAPL is able to make a splash in the corporate world, from least-threatened to most-threatened.
Least-Threatened: Oracle (ORCL) and SAP (SAP)
As cool as iPhones and iPads are, and as skilled as partner IBM may be at building and maintaining databases, it’s not as if Apple is anywhere close to unseating Oracle (ORCL) and SAP (SAP) in the data-management space.
For better or worse, companies that utilize business apps designed by SAP and Oracle are so neck-deep reliant on them, it’s almost too much trouble to undo those relationships. Apple could (and apparently is) building business apps anyway, which potentially connect a remote user to a corporate-wide database. If the iPhone or iPad app is little more than a facade to connect to a Windows server, or a Unix or Linux system, though, why would that company need to bother with Apple?
More-Threatened: Microsoft (MSFT), Google (GOOG)
While Microsoft (MSFT) may still own the OS market for business PCs, the assumption that this PC foothold would translate into control of the mobile OS market was flat wrong. In the third quarter, 89% of tablet activations were made by iPads. Windows-based tablets are barely even a blip on the radar.
And yes, big businesses are buying iPads. Apple’s Cook said in April that 98% of Fortune 500 companies use iOS devices. To what extent they’re used isn’t clear, but it wouldn’t be a stretch to say iPads are not yet an integral, must-have part of their business. If these iPads can start to serve a deeper business function and play nice with existing infrastructure though — as appears is going to be the case — the full leap from a PC-based environment to an iOS-based environment becomes a much shorter distance. It’s a much easier switch than users of Oracle or SAP services would face anyway.
The mobile enterprise market share race is still in flux, to be fair, but it’s a race that might be ending sooner than later now that Apple is swinging for the fences in the corporate world.
The catalyst? Office productivity suites, like Microsoft Office/Office 365, and of course, the always-free-everywhere Google Docs, which are jockeying for adoptions. For what it’s worth, Microsoft has already thrown up something of a white flag on this front, perhaps fully aware that Apple is a legitimate threat to its mobile enterprise business. How so? Microsoft Office, formerly for sale, is now available for free for the iPhone and iPad.
The reason for the free availability isn’t tough to figure out — Microsoft would rather retain at least some connection to existing users and fans of Microsoft products than risk alienating them and then losing those customers altogether. It’s a maneuver that’s as desperate as it looks. Ironically, it’s also a maneuver that may make the iOS even more attractive now that it supports a key piece of software.
As for Google (GOOG), it’s a parallel situation … a war of operating systems. Android has fared a little better than Windows for Mobile has in terms of adoption. Last quarter, only 11% of tablet activations were for Android devices. Moreover, it seems unlikely Google is interested or able to mount any sort of cohesive counterattack against the Apple enterprise push.
Most-Threatened: BlackBerry (BBRY)
Although it has largely been left out of discussions of who loses the most should Apple start to take market share within the corporate world, yes, BlackBerry (BBRY) has the most to lose here.
There’s no denying BlackBerry has become almost comically irrelevant to the average consumer. Within the business world, however, BlackBerry devices are still top-notch products to some, boasting near-flawless security and reliability, not to mention the best QWERTY keyboard ever seen on a mobile device. It was never meant to make a dent against the iPhone or Android devices in terms of total sales, but it was always going to be a hit to a small but rabid user base.
If Apple is serious about making its mobile devices highly functional for business though (and can shore up some of its security issues), then the budding BlackBerry resurgence could end up being stopped dead in its tracks.
Bottom Line
It’s still too soon to say Apple is a contender in the enterprise arena. It probably will be, though until there’s some clarity about what it’s actually selling, investors may want to remain reticent; the sales team will need to be able to do more than simply tout the capabilities of iPads. These salespeople will need to convincingly illustrate that the iPad and its business apps increase sales, decrease expenses or both. Anything short of that, and it’s just another experiment.
The most likely outcome is decent sales success. But the term “game changer” may be a little strong for this enterprise initiative.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
