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Apple faces hurdle to sell iPad Pro to business

The price of its products is one obstacle Apple Inc faces as it tries to move deeper into the enterprise market.

Yasmeen Abutaleb September 16, 2015 | Updated 12:12 IST
Apple faces hitch to sell iPad Pro to businesses
Apple faces hitch to sell iPad Pro to businesses (Photo: Reuters)

Apple faces significant challenges selling its larger and more powerful iPad Pro to businesses because companies are reluctant to switch software vendors and use an expensive device that lacks specialized business apps" analysts said. "They've tried to ... focus on the enterprise but over the last two years it has really not been successful" said Daniel Ives" a senior analyst at FBR Capital Markets. "The enterprise market" which is how Apple refers to its business customers represents 10 per cent of its $183 billion annual revenue" he said.

Apple has at least one client so far: General Electric has given some of its 3,05,000 employees the option to use Apple devices at work" with 20,000 iPads and 60,000 iPhones now available in their offices. It is not clear how much this is worth for Apple nor how it generates about $18 billion a year from the enterprise market.

Apple officials declined to comment on plans to market iPads to business customers" referring queries to a product announcement event that happened on September 9. At that event Phil Schiller, Apple senior vice president of worldwide marketing said, "the iPad Pro was faster than 80 per cent of portable PCs" signalling that Apple may think the device could replace workplace laptops from companies like Dell and HP.

Schiller called the iPad Pro "ideal for professional productivity." Selling tablets to corporate buyers is an attractive option for Apple amid slowing global iPad sales" which have fallen for two quarters.

Research firm Forrester projects that sales to businesses will represent as much as 20 per cent of the overall tablet market by 2018" compared to 14 per cent this year" as the market grows from 218 million units to 250 million units.

"The iPad Pro is important for Apple because they're beginning to saturate the personal device space and it's a logical step for the company if they wish to expand their market share"" said Michael Yoshikami head of Destination Wealth Management which has $1.5 billion under management and owns Apple shares.

The price of its products is one obstacle Apple faces as it tries to move deeper into the enterprise market. The iPad Pro starts at $799 but costs more than $1000 if buyers also want a keyboard and an optional stylus. That's more than Apple's existing tablets as well as devices made by Microsoft Corp and other PC makers like Lenovo . It's about the same price as Apple's own MacBook Air.

The iPad Pro's biggest competitor is likely Microsoft's 12-inch Surface Pro 3 which is also gearing towards the business market. While the Surface has the same starting price as the iPad Pro, Apple charges extra for a keyboard and stylus.

In July Microsoft said, "its Surface line of tablets brought in $888 million in the most recent quarter upto  117 per cent from the same time last year boosted in largest part by the Surface Pro 3 and the launch of Surface 3.

"The most formidable opposition to adoption is price ... The iPad Pro has a lot of utility and technology that Apple brought to bear but unfortunately the price never goes away as a challenge," said  Keith Bachman a senior analyst at BMO Capital Markets.

"It's also not clear how Apple is going to expand their sales to businesses as only a few companies like GE have made any significant investment to switch to Apple devices," said J.P. Gownder, a Forrester principal analyst.

At GE which gives employees the option of using Apple devices at work just 10,000 of its 1,70,000 office workers using computers on a regular basis use a Mac.

In the meantime Apple has entered into partnerships with IBM and Cisco aimed at creating more enterprise-friendly software to run on iOS, the Apple operating system but little is known about these partnerships.

The iPad Pro is "going to be a real accelerator for our partnership with Apple" said Katharyn White, IBM's vice president of strategy and markets.

Finally analysts say that the vast majority of companies use custom-built applications and databases that are still not compatible with Apple's iOS and are unlikely to switch to Mac devices. GE has an internal group dedicated to developing applications that can run on Apple's mobile devices. IBM and Apple are developing a number of iOS applications for enterprise clients in industries ranging from banking to healthcare. But for most companies, Gownder said, "You still can't run all your business-critical applications through Apple."

Gownder also wrote in a report on Thursday that "technology decision-makers currently favour Windows over iOS for ease of support by 42 per cent to 16 per cent. Enterprises have spent billions on applications that are unique to their business and having 40 apps from IBM doesn't change that fact overnight."

(Editing by Stephen R. Trousdale and John Pickering)


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