Introduction and rise of the iPhone
Apple made $25 billion (around £17.5 billion, or AU$34 billion) from selling hardware and software to businesses last year, a 40% increase over the year before, according to the company’s regulatory filings. The new business, which relies on iOS, the Mac, the iPad and the iPhone, means that Apple, a company most closely associated with selling things to everyday customers, is now one of the top 15 enterprise companies today in terms of revenue.
The growth, achieved over a few short years, is likely down to Tim Cook, the replacement for Apple’s co-founder and long-time CEO Steve Jobs. Cook joined Apple in 1998, first working on the supply chain and then as the company’s Chief Operating Officer, giving him a view of how the business-to-business world works and, more importantly, how profitable it can be.
Cook, considered to be a quieter, more thoughtful executive than the often brash Jobs, is likely the driving force behind Apple’s recent expansion into enterprise, which comes at a time when analysts are sceptical about the growth prospects of the iPhone business, which makes up over 60% of the company’s revenue.
Working profits
New revenue streams are hard to come by, especially at the scale Apple has achieved, and the $25 billion (around £17.5 billion, or AU$34 billion) figure represents around 10% of Apple’s total revenue for 2015, outshining nearly every business the company has besides the iPhone.
Apple’s enterprise offerings come from several areas, including the iPhone, iPad, Mac, iOS, and OS X. The iPhone, by far the most popular high-end smartphone available today, has become embedded in the business world while the iPad is fast-becoming essential for the on-the-go work of creative professionals and executives.
The company has played to its strengths and is both selling devices directly to businesses – something that even Microsoft finds hard to perfect, leading to deals with HP and Dell to distribute the Surface tablet – and hosting enterprise-friendly software, such as that from IBM or Box, on iOS.
IBM, a stalwart of the enterprise world, is arguably Apple’s biggest enterprise partner and has been instrumental in bringing business software to the iPhone. The two companies have built over 100 enterprise-ready apps, many of which take the backend knowledge of IBM and tie it into Apple’s design prowess. Other deals, like one with Salesforce, follow a similar pattern and use the iPhone to distribute software.
Rise of the iPhone
The rise of the iPhone in businesses – which, it’s worth noting, starts at the bottom and makes its way to the boardroom – is down to a phenomenon called Bring Your Own Device (BYOD). In the “old days,” the company distributed phones – most likely BlackBerrys – to employees with pre-installed software. After the iPhone, however, everyone started carrying an Apple-branded device and businesses shifted away from BlackBerry OS to making software for the iPhone.
For a time, Apple just let this happen. Companies built iOS apps, many of which were distributed via the App Store, and that was it. But in recent years the company has been building more and more enterprise-ready features, such as extended device management for system administrators, into iOS which can be accessed by businesses.
The iPad, too, has seen a big uptake by businesses, especially at the top levels. Multiple people we’ve spoken to have praised the iPad for its versatility, flexibility, and ease of use, especially for anyone with an iPhone.
Apple has taken this to heart and, late last year, released the iPad Pro, a bigger tablet that, as the name suggests, is aimed at getting work done. The success of the iPad Pro is largely yet to be determined but, according to analyst estimates, it generated as much revenue as Microsoft’s Surface tablet in the first three months of sale.
The Surface tablet, developed internally by Microsoft, is emblematic of a broader shift within the enterprise world as old-guard companies, like Microsoft, look to create new businesses. After some initial hiccups, the Surface is now a growing business for Redmond.
However, the iPad still has the name recognition and, thanks to Apple’s new partnerships, an increasingly attractive set of apps. Of course, iOS can’t quite match Windows – which has been the go-to operating system of businesses for decades – but that doesn’t mean Apple isn’t going to try.
Mac success
The Mac is also a growing success story after many years of being considered the plaything of creative types. IBM has started buying Macs and has seen a drop in its requirement of technical support, according to Apple. OS X isn’t likely going to replace Windows any time before 2030, but the shift towards the needs of businesses – and the approval of businesses – is a promising sign for the company.
Indeed, Apple has started building its own software that makes it more appealing to institutions like schools, including multi-user modes on the iPad, which will debut in the next version of iOS. Recent reports have also suggested Apple is going to start making software that lets administrators pre-install apps onto phones as well as blocking others en masse.
The iPhone won’t be around forever and it remains unclear how Apple is going to tackle countries where Android, developed by Google, is more popular than its own operating system. Businesses in India or China, for example, don’t have the same broad uptake of iPhones at the moment. It is also unclear, however, whether Google is planning on leveraging this potential business.
The enterprise business Apple has created will, most likely, remain pretty much as it is now – the company sells iPhones, iPads, and Macs to businesses, and partners with others, like IBM, to ship software that looks good and works in ways businesses want.
Pro to oust Air?
One recent report has suggested that the company is going to discontinue its ‘Air’ branding, found on the iPad, to be replaced by ‘Pro’. This would mean that two iPad models – the 9.7 and 12.9-inch versions – would both be called ‘Pro’ and could appeal to businesses. (The iPad mini, it’s reported, would remain as the low-end option.)
The rumours of an iPhone Pro – with a big screen, powerful internals, and differentiated software – may also prove correct, as analysts predict there will be a model above the iPhone Plus, representing around 30% of devices sold.
The business Apple has created is, most likely, set to expand in the coming years as more and more people get an iPhone, iPad, or Mac. Apple has positioned itself perfectly as a benevolent distributor of software while taking the money it makes on the iPhone. In the future, more of the software could be Apple-made, potentially displacing its current allies, but Cupertino seems set to follow a similar playbook in the nearer term.
Source: techradar.com
