How Apple Could Continue to Own the Enterprise Tablet Market

by Tim Bajarin   |   April 25th, 2014

When Steve Jobs announced the original iPad, he emphasized its role as a consumption device. In fact, he purposely stayed away from even suggesting it could be used for productivity. However, he hedged his bet when he asked Apple’s Senior Vice President of Worldwide Marketing, Phil Schiller, to come out and briefly show off Pages, Keynote and Numbers for the iPad. The only other thing mentioned at the launch event relating to enterprise was Apple would provide some way for business users to obtain apps outside of the app store for use in dedicated business software distribution if needed. But after Schiller spoke, Jobs went right back to showing how the iPad was ideal for consuming content — showing off two games and one health related app created specifically for the event.

Jobs knew the iPad would be a big hit in the enterprise but understood that to focus on its role as a productivity tool instead of a content consumption device would have opened the iPad to serious criticism at the time. When the iPad was launched in 2010, tablets for the enterprise had been used in some vertical markets for at least ten years yet the industry had sold only one million tablets worldwide the year the iPad launched. But enterprise watchers were surprised when companies like SAP and Salesforce.com bought over 10,000 iPads each in its first six months on the market. We estimate in the first 12 months the iPad was shipping well over 1 million units that were tapped specifically for use in serious mainstream enterprise programs.

In its second year on the market, airlines, car makers, manufacturers and hundreds of companies we would classify as enterprise started buying iPads in large numbers and implementing them in their IT programs. Apple’s development tools were rich enough for most to be able to create their own apps for the iPad. At the same time, the iOS development community went into high gear and started creating all types of complimentary business apps that clearly took the iPad far beyond its role as a content consumption device.

However, there was one enterprise app almost all IT users wanted — Microsoft’s Office. While enterprise companies created their own apps, Apple’s own suite of productivity tools just did not meet the needs of many. Unfortunately, most enterprise users cut their productivity teeth on Office and could never get the hang of Pages, Numbers and Keynote. For a lot of IT users, the iPad was a great business tool but its lack of Office made it a wounded product for them. That is actually odd since Apple’s productivity tools are powerful but apparently you can’t teach old dogs new tricks. For many, Office spelled productivity regardless of what alternatives were available.

Now that Office is available on the iPad, it is clear the iPad has the missing link it needed to get even broader attention in the enterprise market. Ironically, the iPad is the #1 tablet in enterprise already. 98% of the Fortune 500 are using iPads and 91% of enterprise activations in IT are on the iPad. But I believe Microsoft’s stamp of approval of the iPad with Office kicks it up a notch for many IT users. Now it has the apps necessary for them to consider the iPad even more seriously as an IT tool.

While this is an important development, it is not the reason why Apple will make even stronger gains in the enterprise. I think it will be three distinct reasons that complement the Office availability on Apple’s iOS tablet platform.

The first is it is still the most secure OS tablet on the market. Android has a long way to go to fix its security problems. Until it does, its ability to gain ground in enterprise is questionable. While Win 8 tablets are pretty secure, it still has more security attacks than Apple has on iOS and that is a factor for a lot of IT buyers.

The second issue has to do with form factors. Apple’s iPad Air is still the thinnest and lightest on the market and to date I have not seen any Win 8 tablet that come even close to the iPad Air’s design. But lightness and thinness is not Apple’s only draw. The overall app and services Apple offers for all users is still superior to what is available on Android and Windows 8. In the Windows case, the lack of apps hobbles its acceptance in a lot of markets.

Finally, the real reason I believe Apple will own the enterprise is Apple has to respond to a growing trend for demand in hybrids and convertibles in the enterprise. The versatility of these designs speaks for themselves. While Microsoft’s Surface has not been a big seller in IT so far, companies like HP, Dell and especially Lenovo are making serious inroads into IT via the hybrids and convertibles they offer their customers. Apple can’t sit back and just let the competition gain ground in enterprise without doing something competitive and to tilt this trend towards the iPad as much as possible.

In the past, Tim Cook has said Apple is not interested in hybrids. The problem is his customers are. I saw some research recently that said the attach rate of keyboards to iPads in enterprise is almost 30%. I’ve been one of those users from the beginning. Although I have gone through a few Bluetooth keyboards over time, I now use the Zagg Folio Keyboard with backlit keys. It pops into a shell and fits the iPad so well it looks like a small clamshell laptop. In fact, I have been in many meetings where people asked me what laptop I was using. The iPad with a keyboard has been a powerful productivity tool for me from its early days and Apple has clearly tracked this trend with interest.

So how would Apple respond to this challenge? At the very least they could take a strong stand about the iPad in enterprise and start showing it off in IT settings with third party keyboards doing heavy lifting tasks in various enterprise settings. To date, Apple has had no ads for the iPad taking direct aim at its use in business. However, I think Apple has an opportunity to innovate and create something unique. If you look at Apple’s history, you know they did not invent the portable music player. They re-invented it. They did not invent the smartphone. They re-invented it. And they did not invent the tablet. They just reinvented it with the iPad.

I think they are going to re-invent the enterprise computing device with some type of sleek, thin combination that puts what is already on the market to shame and brand this as the ultimate business productivity tool. I’m not sure if it would be a MacBook Air class of device or an iPad/keyboard combo but Apple has the design skills, software and ecosystem to do something really new at these technology levels. Personally, I would like a thinner Macbook Air with detachable keyboard that can dock to a large monitor that runs iOS and Mac OS X but that may be asking too much. I believe if Apple innovates around something like this, it could cement Apple’s role in business productivity and insure their devices dominate this market even with Microsoft and Android nipping at their heels.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • Bruno Deserto

    I couldn’t agree more. I do hope they announce something in this direction in June. iPads are fantastic devices and can be used pretty much for everything. I am trying to bring iPads to where I work proving that we don’t need Windows to deal with texts, exams and the productivity tools we work with. All computers we have are plagued with adwares, viruses all due to misuse. I showed them that a few MacBook Airs and tablets (iPads) we would be far more productive and quicker than with a Windows machines there are far too slow because of the problems I mentioned above.

  • jbwales

    There is now an opportunity for the iPad (and IOS) to disrupt today’s desktop PC in both business and consumer markets. Apple could do this by launching a larger screen iPad with built-in cradle stand that allows the device to sit at the approx. 30 degree angle ideal for touch computing at a desk. No need for a battery, which would be a considerable cost saving. Bluetooth keyboard an option, but the larger screen would allow a full size virtual keyboard.

    • Mauryan

      It is possible that the Macbook Pro or Air will switch to ARM based architecture, becoming more light-weight in further development. Or Apple might develop a version that runs on the ARM. Then there might be an iOS version of the laptop with apps expanding from mobile to the laptop realm. Apple might slowly integrate everything unlike Microsoft which tried to convert a Hummer into a luxury car overnight. If and when Apple makes the laptop even thinner by bringing in the elements from the iPad, a detachable keyboard would make sense. I don’t think Apple will make the iPad into a notebook hybrid. It might rather take the laptop and bring it closer to the iPad by creating an ARM/iOS based hybrid.

  • jfutral

    “In the past, Tim Cook has said Apple is not interested in hybrids. The problem is his customers are. I saw some research recently that said the attach rate of keyboards to iPads in enterprise is almost 30%. I’ve been one of those users from the beginning. Although I have gone through a few Bluetooth keyboards over time, I now use the Zagg Folio Keyboard with backlit keys.”

    Two things about this. Even with enterprise adoption I have serious doubts “enterprise”, i.e. IT, will ever be Apple’s customers. If that ever becomes the case then they really can be labeled as becoming Microsoft.

    Second, Apple (I think rightfully so) already enables this, as you illustrate, with third party opportunities. There is no need for iPad to be anything other than it already is. At this point, hybrid is an enabled feature, not a product. I think that is the problem other hardware makers have, thinking hybrid is a product.

    Joe

    • pk_de_cville

      “In the past, Tim Cook has said Apple is not interested in hybrids.”

      Remember Steve Jobs? “Tablets smaller than the iPad are too small.” (Or pretty close to that.)

      • jfutral

        Sort of. Steve didn’t change his mind as much as he had his mind change. And what they came up with was still larger than the prevalent non-iPad tablet size—8″ vs 7″ and smaller.

        I also remember all the calls saying Apple was going to lose the netbook potential. Then the iPad came out and turned all that on its head. They did what the netbook was doing, but in a different form. I think the same is true with regard to hybrid vs iPad. Apple doesn’t need to make a hybrid because the iPad already addresses that market, and to a lessor extent the MacBook Airs do, too.

        Joe

  • Lou

    If you want a physical keyboard, I believe a 9.7″, 4:3 screen ratio iPad is too small. The smallest laptop with a full-size keyboard is an 11″, 16:10 screen ratio MacBook Air.

    So maybe the iPad Pro would be an 11-12″ 16:9 or 16:10 screened device, with a (detachable?) keyboard.

    And maybe Apple will have an ARM-based MacBook Air, as I posited last fall: http://loumiranda.com/2013/09/11/apple-has-thrown-down-the-gauntlet-64-bit-desktop-class-a7-chip-and-free-iwork-office-suite/

  • qka

    Please send a copy of this to fellow Tech.pinions writer Jack Gold.

  • DrewBear2

    Apple probably has a tablet/laptop hybrid in their labs, but their energies are focused on creating the best tablet and best laptop. iOS & OS X are still two very different UI/UX that are best kept separate. Microsoft has been trying to combine tablets with laptops for over a decade. There is a market for such devices, but it’s not large.

    One possible solution is if Apple could find a way to dual-boot iOS & OS X on a MS Surface-like hybrid. Attach a keyboard and OS X appears; detach the keyboard and iOS pops up. The technology is not available yet for such a hybrid, but maybe Apple is working on it?

  • Christopher

    I believe the word you were looking for was not ‘insure’, but ‘ensure’.

    Excellent post, very insightful and salient…