The Pull of Enterprise for Consumer Tech Companies

This week, Apple announced yet another enterprise partnership, this time with Deloitte. Next week, Facebook is expected to open its Facebook at Work product to more companies and with a tweaked business model. For Insiders, I wrote recently about Samsung’s push into the enterprise mobility space. It’s increasingly clear consumer technology companies don’t just want to stay in the consumer box. They’re quite keen to take a stake in enterprise, even as erstwhile leaders in the enterprise device space like BlackBerry decide to exit the market. It’s worth exploring why and what their prospects are.

The fastest-growing segment in mature smartphone markets

Less than a year ago, in reporting on Apple’s September 2015 quarter, Tim Cook said:

We estimate that enterprise markets accounted for about $25 billion in annual Apple revenue in the last 12 months, up 40% over the prior year and they represent a major growth vector for the future.

During that same timeframe, Apple’s total revenue was around $276 billion. So enterprise markets accounted for around 9% of all of Apple’s revenues. Bearing in mind several Apple categories aren’t even really applicable in the enterprise (including the iTunes store, iPods, Beats, and the like) the percentage of addressable categories is likely even higher. A year later, the 9% figure is probably in the teens, since Apple’s overall revenue growth was 28% that year and has been flat or negative since.

The reality is, in the context of mature and increasingly saturated consumer smartphone markets, the enterprise represents a large untapped market for smartphone sales. And, for a company like Apple, also for iPad, Mac, and even Apple TV sales, given its historically low penetration of the computer and conference room display markets. The challenge for Apple as first and foremost a consumer technology company is that it doesn’t have the skills or other assets to make complex sales in the enterprise, especially when those sales need to be tied to consulting, app development, and broader business transformation to be effective.

This, of course, is where Apple’s set of four major enterprise partnerships come in. IBM has developed over 100 apps for iOS, while Cisco networking optimizations are built into iOS 10 and SAP has created SDKs for iOS to allow software developers to tap into its software. The Deloitte relationship now takes this a step further and has a major consulting organization selling business process transformation capability closely tied to iOS devices. While Apple itself has focused on making it quicker and easier to deploy fleets of iPhones and iPads in the enterprise for generic productivity use, these partnerships take that a step further and focuses on the more customized, process- and industry-specific use cases many enterprises need to support.

As I mentioned, Apple is not the only company doing this – Samsung has made a big investment in enterprise mobility and security around its smartphones in order to facilitate a push into the enterprise and will be pushing even deeper as it seeks new growth opportunities while its consumer business grows more slowly.

Consumerization of IT the enabler

The enabler for all this is what’s often been called the consumerization of IT. There was an interesting transition that happened from the time I first started working in the 1990s through the early and late 2000s. When I first started working in an office, everything was better technologically there what I had at home – I experienced things like email, broadband internet, and more first in the workplace and only later at home or in college. But in the mid- to-late 2000s, things began to change. I experienced technology like the new breed of smartphones, mobile apps, web apps, and social networking first in a personal context. These things tended to arrive at work only as people like me brought them there and tried to make them fit in corporate settings. There had been earlier examples – executives bringing personal laptops to work being an obvious one – but those had remained the exceptions rather than the rule.

The iPhone was arguably at the center of all this, as one of the things that pioneered the bring your own device (BYOD) model in the workplace, but also as an enabler of many of the apps that would make the same journey later. All of this fomented a sea change in purchasing patterns around technology, in which the buyers went from being heads of IT departments to being end users. The same transition later enabled apps like Dropbox, Yammer, Google Docs, and Evernote to take hold in the enterprise in a very different way from the apps they often displaced – starting with individual end users and only later catching the attention of IT departments.

Consumerization of IT goes back the other way

The interesting thing about Facebook at Work is that it’s both offensive – in the way Apple’s and Samsung’s forays into the enterprise have been – and defensive at the same time. Whereas saturating smartphone markets are the driver for Apple and Samsung in the enterprise, it’s a saturation of leisure time that’s driving Facebook to look into people’s working hours as a possible new addressable market. But it’s also a threat from a new breed of enterprise applications threatening to come back into the consumer market that’s driving Facebook from a more defensive posture.

Slack is one of the latest and most successful of a breed of enterprise apps that has piggybacked on the consumerization of IT trend, borrowing heavily from consumer app design and user interfaces, and enabling individual employees to sign up without any sort of corporate blessing. End users love it but, as a result, many are using Slack in settings for which it was never intended – planning dinner with their spouses, discussing weekend plans with friends, or managing PTA meetings with fellow parents and teachers. After roughly a decade of tech going from the consumer world into the enterprise, we’re now seeing some of this technology going back the other way and that’s the threat to Facebook. Having failed to capture people’s attention in the enterprise proactively, Facebook now finds itself having to do so reactively as a bulwark against possible encroachments from enterprise apps.

We’re going to see more of all these trends – the increasing consumerization of IT within the enterprise, both from a devices and software perspective, the bleeding back into the consumer world of certain functionality, and the efforts from consumer technology companies to push into the business world as both an offensive and defensive strategy. That requires a major strategic and cultural shift on the part of many of these companies and they’ll inevitably need help from established players in those markets along the way. Facebook seems to think it can go it alone. It will be fascinating to see if it can succeed.

Published by

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

286 thoughts on “The Pull of Enterprise for Consumer Tech Companies”

  1. “Samsung has made a big investment in enterprise mobility and security around its smartphones…”

    Has Samsung created partnerships w major enterprise players? Which ones?

    1. Partnerships and investment are 2 different things,. I’d argue they’re mostly opposite things: on the one side, you tell someone else to go take care of it, on the other side, you do it yourself.
      Samsung has developed security, management and apps for verticals. They also have a few partnerships (SAP, Oracle, Red Hat… IIIRC)

      1. You can frame them as “opposites” if you like. But, investment is usually intended to result in partnerships, and they go hand in hand. Why would Samsung “invest in enterprise mobility and security around its smartphones” if Samsung didn’t want enterprise clients to take them up on it in a big way?

        In any case, I think your framing of them as opposites (you do it yourself, or you tell someone else to go take care of it) is a bit of a false dichotomy. Indeed, it is more of a partnership from end to end — for example, Apple lays some groundwork concerning enterprise APIs and security, etc., and IBM builds on that. IBM probably told Apple some of the things they would like to see done by Apple — because both parties saw some potential benefits and synergies, and sought a partnership.

        The Samsung “partnerships” you cite sound like partnerships designed to make something of Samsung’s investment — to make products and services that enterprise clients should be wanting to use, choosing to deploy loads of Samsung smartphones to their staff on the basis of the investment into those products and services. That kind of partnership and “partnerships w major enterprise players” are 2 different things.

        What large teams and workforces are being equipped with Samsung smartphones, is what I think is being asked. If this kind of partnership is few and far between for Samsung (despite being the largest smartphone producer in the world), then the value and point of its “investment” is questionable.

  2. Again, a great article.

    I agree that corporate is definitely where the growth is. Whereas Silicon Valley has mostly talked about how BYOD and user-initiated SaaS instalments are disrupting the enterprise IT market, I expect us to see a reversal of the tide.

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