Can Apple change its enterprise spots?

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Cath Everett ZDNet.co.uk

Published: 02 May 2007 13:56 BST

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...their PCs almost exclusively from HP, Dell and Lenovo, which own about 90 percent of the North American and European enterprise desktop space and 80 percent of the laptop market.

Nonetheless, Enderle believes that Apple is in a good position to penetrate more deeply into the SMB market, particularly at the low end of the market.

"Apple has the right channels for SMB and SMBs like Apple better, so that's probably where they should be. They actually owned this space in the 1980s and, with the stores in North America, they could likely take and hold better than 20 percent of the market," he says.

In reality though, Apple's heart actually seems to lie in the consumer world. Although the company refused to speak to ZDNet UK, simply the fact that it has chosen to divert its limited resources into focusing on the much-hyped iPhone, leading to the delay in Leopard's release, implies as much.

The iPhone, which was launched at the Macworld User Conference in California in January this year, is a smartphone which also includes an iPod digital audio player and instant messaging capabilities in a slimline device with a large screen. The offering is scheduled to ship in the US market in late June and in Europe by the end of the year.

Another indicator of the vendor's intentions, meanwhile, was its decision to change its name in January this year from Apple Computer, Inc to simply Apple Inc. The move followed the unveiling of the iPhone and the announcement of its Apple TV digital video system, and again points towards a growing focus on consumer electronics, with the Mac at the centre.

Michael Gartenberg, vice president and research director at Jupiter Research, explains: "It's about allowing consumers to access digital content, whatever that happens to be, whether it's a phone, an iPod digital audio player or whatever, with the PC acting as a hub. It's all inter-related."

Moreover, the appeal of Apple has always been the tight combination of its hardware and software, which means that the vendor will continue to integrate all of its products together "to deliver a holistic experience".

"It's very hard these days to segment out the notion of difference between business users and consumers. Today, it's more about people using devices, and they take them home from work and vice versa," says Gartenberg. "But the ability to make that experience seamless is something that Apple has noticed and, as more technology becomes digital and people's lives move more online, it's counting on that to help it drive its initiatives forward."

So Apple's aim is to make the Mac a home media-entertainment hub, which consumers can use to download iTunes from their iPods, for example, or stream videos onto their TVs.

Nonetheless, Apple's ambitions here are scarcely unique, with vendors such as Sony and Microsoft putting forward similar visions of the future. "It's a battleground to win share in the home-entertainment market. We're already reaching the point where you can dock an iPod and be connected to a wider sound system and play video elsewhere in the house, so what it's really about is gaining dominance in the connected household," says Kwiatkowski.

Apple's appeal
But he believes that Apple has a number of things going for it. Firstly, it has a "cool" brand in the consumer space that "hasn't suffered too many tarnishments over the years", despite the failure of devices such as the Newton PDA in 1993 and the Pippin gaming console two years later.

Secondly, it commands very good brand loyalty and, thirdly, it excels in design. In addition, the ability of the new Intel-based Macs to run Windows has also boosted the machine's appeal and, as Gartenberg says: "We all know that consumer mindshare leads to strong market share."

As a result, Apple is starting to become one of the first truly blended consumer electronics and IT companies and, over the next five years, Gartenberg believes that the firm will "dramatically increase the consumer electronics side of their offerings".

But he has reservations as to whether it will have the resources to make heavy inroads into both this and the small business arena, particularly because, in the latter instance, there is "a newly-focused and resourced attack by HP and Dell, not to mention the emergence of a new number three" in the shape of Lenovo.

However, Gartenberg does believe that such an aim is necessary. While he acknowledges that the move into consumer electronics means that Apple is "healthier than it's ever been", he would still like to see "a little diversification, particularly with gas prices trending up sharply, which tends to do ugly things to consumer spending".

All of which means, of course, that it may not yet be plain sailing for Apple and that it may still face some difficult choices ahead.

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