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Case Study: Apple continues to mostly ignore the enterprise (part 1)

Is Apple destined to remain a side-act in the industry's play for the enterprise?

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Apple continues to mostly ignore the enterprise, observers say
Is Apple destined to remain a side-act in the industry's play for the enterprise?
Darrell Dunn, Computerworld

This is the first part of a two-part article. The second part is here.

For consumers, the Macintosh's hip quotient is being hammered home with one of the largest and most memorable advertising campaigns in Apple's history. But the enterprise isn't getting any of that attention.

Despite being roundly ignored, corporate America seems to be perking up its collective ears a bit to some of Apple's newer wares. The company's switch to x86 processors, though way too long in coming by some accounts, has opened doors to some enterprise accounts that otherwise would have remained shut. Businesses that make the switch to Apple generally begin by using Mac desktops and laptops, but many ultimately graduate to the Xserve server platform.

When it comes to Apple's hardware and software, corporate customers report being happy campers indeed. But support and service are another story entirely.

"I definitely say Apple's enterprise support is lacking compared to someone like Sun, which is very good," said Andrew Oliver, director of operations at LiveWorld, a provider of Web conferencing services for companies including Intel, BEA Systems, Campbell Soup and eBay LiveWorld has an Apple data centre deployment of about 120 Xserve dual-processor systems.

"Their baseline support is too weak and is frustrating," Oliver said. "Once we upgraded to their enterprise support programme, that improved, but anytime you want to step out of the box, they almost want to wash their hands of you. They do need to sharpen up there."

That frustration with support, however, hasn't stopped LiveWorld from making a major commitment to building its infrastructure around Apple equipment during the past few years. A primarily Sun Microsystems and Solaris house, the company in 2003 found that it could get more capacity and performance with an Xserve server and Xserve RAID system at a lower cost than it was getting through its traditional network appliance vendor.

LiveWorld decided to test one Apple system and was so pleased with the performance that the company is now primarily a Apple house, with the vast majority of its servers, storage and PC deployments now Mac-based.

"Most of the people I talk to in the industry are a little surprised when they find out about our infrastructure," Oliver said. "Our servers are hosted in a commercial data centre. Two years ago, we were the only Apples in there. Now, when I walk around the floor, I see at least a dozen other companies that are using Apple to some level. We are still a little oddball, but I think lots of other businesses are beginning to see value in Apple, although for most, taking the plunge to change their whole architecture is something they aren't going to do."

Rob Enderle, an analyst at The Enderle Group, says Apple's market share in the enterprise remains nearly nonexistent, with perhaps a one per cent total penetration. Enderle said barriers include Apple's longstanding nemesis -- the Wintel platform -- the absence of a proven enterprise road map, bad memories of previous Apple efforts in the enterprise and the company's lack of commitment to the market will likely keep it a bit player in the enterprise. According to Enderle, Apple made a bit of an enterprise effort a decade ago but "abandoned" customers when there was insufficient progress in the market.

"The enterprise market is a tough market to penetrate," Enderle said. "It typically takes a good chunk of a decade to become a viable vendor, and building up an ecosystem can take a substantial amount of time. The enterprise tends to be a relatively low-margin business, where companies tend to buy in the mid- or bottom line of product offerings. Success in the enterprise is a pain in the butt, with long sales cycles, and long product cycles."

Charles Smulders, an analyst at Gartner, said he has seen no real change in Apple's approach to the enterprise. "Apple is not pursuing a broad enterprise strategy," he said. "Most IT departments remain resistant to introducing Apple because of the cost to support an extra platform. However, overall Apple usage within enterprises may have risen slightly as part of the 'consumerisation of IT' that has seen consumers, rather than the IT department, have increasing influence over driving technology adoption in the enterprise."

Apple seems indifferent to its success in the enterprise and allocates most of its resources in terms of advertising dollars, executives dedicated to the market and to its highly successful consumer efforts. The company sells, on average, more than 10 million iPods per quarter.

Not that it's doing badly in computers.

For the most recent quarter ended in March 2007, Macs represented 56 per cent of Apple's product revenue, and portables accounted for 59 per cent of all Macs sold. Apple shipped over 1.5 million Macs in total, and over 10.5 million iPods during the quarter, representing 36 per cent growth in Macs and 24 per cent growth in iPods over the year-ago quarter.


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