Apple Business Software & Hardware Technology

Could Apple exit the hardware business? Part 2

an image of Steve Jobs presenting with the Apple logo in the backgroundBusinesses respond to pressure, be that commercial, consumer or technological. Good businesses anticipate pressure and move ahead of the issues before they become problems. Apple has made some canny moves recently, but can they keep ahead of the wave?

In the first installment, I looked at what makes Apple money, the hardware they have in place right now as well as their current crop of multimedia offerings.

In this second installment, I’ll be looking at big business and some ideas about how Apple could make good ground on unfamiliar territory.

But then there’s Apple and the dreaded ‘E’ word: Enterprise!

I recently found an article about Apple and their dalliances with the enterprise market which – to me at least – perfectly summed up Apple’s on-off but mainly off relationship with the enterprise:

1. Degrees of Freedom. Apple steadfastly minimizes constraints. Government regulations are complied with, but handled behind the scenes so that managers and engineers can just get to work. Internal policies tend to be simple and minimalist (yet strictly enforced). As a result, one feels a certain level of freedom and technical empowerment working for Apple.

Business relationships tend to generate constraints. For example, client companies that want to, for example, fixate on a particular product line will suggest that Apple guarantee that a certain product will be available for X number of years. Apple could never have done this just before the Intel transition.

2. Partnerships. Companies that want to do business with Apple often need to have a say in the products they’re going to buy. Perhaps they have special computing or storage needs. Or, as happened recently, they need to switch from PC-X to PC-Express quickly, to support peripheral products. Every time Apple agrees to operate on the customer’s schedule, without taking into account global impacts on their product line and system integration, it takes away another degree of freedom … Apple doesn’t always jump on new technology bandwagons fast enough to suit their high technology customers, and that upsets the customer.

3. Consistency. Apple is a company driven by Return on Investment (ROI). If it doesn’t make money, it’s dropped quickly. Contrast that philosophy to that of Microsoft, which seems to have an endless supply of money to lose, dabbling in markets it views with incestuous intentions.

Fast money has its allure. Long term, steady commitment is harder to justify. And harder yet to walk away from when market conditions change. Even so, that long-term commitment is just what many enterprise customers look for and require.

4. Infrastructure. Apple has a field sales system that depends on sales executives and system engineers dispersed around the country. There are far too few of these people to support a local agency, company or even a city. So they must travel extensively. As a result, every time a business customer needs on-site support, it results in a call to their sales representative to schedule a visit by one of these engineers. Except for special cases (as well as the geography around Silicon Valley), this means a corresponding delay while an engineer is scheduled to come visit them. The delay is often intolerable because Apple is spread so thin in this area.

It’s not something that’s impossible to fix. Rather, it’s simple mathematics. Apple business sales are too small a percentage of overall sales to justify business support engineers in every major city. It’s a Catch-22. Perhaps, some day, when Apple’s business revenue is soaring, the investment will be justified. But considering the other constraints mentioned here, it’ll be a long time coming.

5. Business Software. Companies have broad-ranging software needs to support their operations. They have special requirements for sales reporting, finances, taxes, inventory, secure communication Get the Facts on BlackBerry Business Solutions, storage and backup, video conferencing, and customer services. While we as Apple enthusiasts like to focus on what Microsoft does wrong, we have to remember that they are very good at meeting the overall needs of a corporation. Even if the circumstances surrounding the extraction of database technology from Sybase are suspicious, Microsoft has a database system, SQL Server, that fills the bill for many small to medium sized businesses.”

If these observation are to be taken literally and as a matter of fact, then it’s hard to see the Apple Inc. we all know moving into the enterprise market anytime soon with the kind of energy and verve we’d expect of them. However, there is a space for Apple, and it’s on the edge.

Back in [the] Black: high-end media production back on the agenda

If you think about how Apple has surrounded themselves with such a deep and solid collection of high-end media applications (such as: Shake, Motion, Logic Pro, Final Cut Pro, Aperture, DVD Studio Pro et al), there may well be a couple of reasons for all of this.

Firstly, there’s the old Apple and the desire to dominate high-end media production. Over the last few years, with the Apple market share sliding, there was a moment’s pause where commitment from the likes of Adobe, the former Macromedia and Microsoft seemed long in coming.

So it’s easy to imagine an Apple meeting whereby the outcome was to throw all of the internal resources into either producing the best media applications out there, or buying the best ones out there and giving them the Apple touch.

In a flash of cash Apple bought: Logic, Final Cut (from the former Macromedia), Shake, Motion and I believe, DVD Studio, too.

I’ll spare the run-down of consumer, or ‘pro-sumer’ software, because that we know in the guise of the iLife range. However, the strategy is still broadly the same: produce the best media applications bar none.

Out of all of this furious activity, Apple put together a stable of high-end media applications that set them apart from the other guys. And to further consolidate this lead – and to free themselves from their dependency on Adobe – they looked to the Xserve and Xsan as a way of tying all of this heavy-duty media production together.

Put simply, Apple went ‘end to end’ in a very short period of time. In doing so, they produced a platform that would sit quite comfortably on the edge of a large network and be self-sufficient, competitively priced and rock-solid.

So after all of this, are we to believe Apple is about to abandon the hardware for the software?

OK, this brings us to the second possible reason. So let’s give this idea some thought: right now, what with the very broad, high quality and comprehensive range of software that Apple has, could it be argued that with Apple moving to Intel – and the work in progress to move the entire range of Apple software over to Intel – that this could be a prelude to a possible abandonment of the Mac, the MacBook, iBook, iMac and the Mac Mini?

Without knowing more about what profit Apple makes from their software sales, I couldn’t say with any unwavering degree of confidence, but I will say that I feel that Apple isn’t going to walk away from the hardware business. And here’s my reason why.

What do you think all of this software needs to work? No, the Intel chip is at the other end, you need the operating system, first. So with Apple abandoning the hardware and going to generic PC boxen, they’d have the onerous task of re-building market share based purely around Apple Mac OS X running on PC’s.

Personally, I don’t think this is something that can be achieved transitionally. I think something like this would hurt Apple so quickly that there wouldn’t be a transition at all.

The sales of the Mac, the MacBook, iBook, iMac and the Mac Mini would dwindle more quickly than the profits from Mac OS X would be able to keep pace with.

In addition, Apple would be taking on precisely the same problems that Microsoft has in terms of hardware support, but without the benefit of market share to justify the expense of covering those support issues with the depth required.

So how might Apple deal with such a scenario? What are Apples options? Stay tuned for part 3 and I’ll try to paint a picture of a possible ideal scenario for Apple in which they don’t just survive, but thrive…

Part 1, 2, 3

By Wayne Smallman

Wayne is the man behind the Blah, Blah! Technology website, and the creator of the Under Cloud, a digital research assistant for journalists and academics.

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