Apple discovers gravity, again

Apple aesthetic

Adelaide reseller and winner of last year’s CRN Fast50, LeetGeek, managed 300 percent growth in the 2011-12 financial year, largely due to a sharp uptick in sales of Apple products and solutions. But it’s solutions which the company tries to focus more of its energy on, meaning discussions with Apple tend not to revolve around products as such.

Nevertheless LeetGeek director Ben Corbett admits the intense emotional attachment users have for Apple devices is an inevitable factor for customers.

“One thing we have noticed is people are very seduced by the Apple aesthetic and Apple brand,” he says. “They do a great job with their marketing.”

Corbett doesn’t however agree with every decision Apple has made. Its decision in 2010 to drop the Xserve range of server products, for instance, made it harder for the company to deliver back-end integration for customers wanting to mesh Mac and Windows environments. Since then Apple has been without a business server line to speak of.

But Corbett feels Apple has made many other decisions likely to endear it to business customers. For instance, the vigilant way in which Apple manages its App Store, as well as the proprietary nature of its iOS mobile operating system. 

“Look at Android; there’s a ridiculous number of iterations,” he notes. “Apple, on the other hand, is very consistent with regard to how its devices can be managed.”

If there’s anything Corbett dislikes about Apple, is the sense, at least in Australia, one has that it is a US-run company.

“The buck stops in the US, not here. You feel that.”

Corbett admits he was miffed at how long it took before Apple began offering discounts for bulk purchasing of apps in Australia. Apple announced last September that nine countries, including Australia, would be able to get the discounts, long after US buyers started receiving them.

“A question we were getting asked a lot in education was why it wasn’t available for so long in Australia.”

No road map

Apple’s unexpected status as a supplier of technology to business comes at a time when Microsoft’s long-held dominance of the corporate market appears vulnerable, arguably for the first time in its history.

Yet unlike Microsoft and other traditional suppliers of enterprise IT (eg IBM, HP, Dell and others), Apple doesn’t have a well-developed business channel, despite not having a direct sales force for business customers. It has no services to assist with the implementation nor support of enterprise solutions, with Gartner reporting that the Apple Store is usually the best source for CIOs (see chart p32).

Apple also doesn’t provide product roadmaps nor information regarding how long products are likely to be supported; something which senior IT buyers typically insist on. And perhaps most riling of all for Apple’s partners and customers, it flatly refuses to offer volume discounting. 

If an organisation orders 10,000 iPads it pays virtually the same per-unit price as a company ordering 10. Those companies wily enough to negotiate a discount usually do no better than around 2-4 percent.

Further, Apple has no global structure to deal with large scale procurements, with customers and partners forced to seek out and deal with representatives in individual countries.

With Apple’s incredible success over the past few years, not just in redefining new product categories like ‘smartphones’ and ‘tablets’, but also dominating those markets, the company has become even more stubborn and inflexible. Last year Apple became the world’s most valuable company, while revealing that it had a staggering $US100 billion cash in the bank.

The much documented arrogance and hubris of Steve Jobs is well and truly alive within Apple’s DNA. Jobs’, and Apple’s, attitude has always been “it’s our way or the highway”.

But here’s the rub. Over the past several months Apple’s shares have fallen sharply as investors absorb and react to the many headwinds facing the company.

Bitter rival Samsung, for instance, recently overtook Apple as the world’s leading supplier of smartphones. The two companies have fought a protracted and often nasty patent battle in the world’s courts over the past few years, with neither side appearing close to victory.

Apple is also further enriching patent lawyers in battles with Google – a company which Jobs openly despised – and others including HTC. Mobile devices running Google’s open-platform Android operating system now outnumber those running Apple’s iOS by at least 2:1. 

To many in the industry, Apple’s apparent obsession with patents reflects a desperation to reverse its falling market share. After all, Apple itself borrowed heavily from the ideas of other technology companies, most famously the user interface developed by Xerox PARC in the late ’70s and ’80s, which eventually informed the “windows” style of desktop management for Apple, and soon after Microsoft Windows itself.

 In his younger years, Jobs was fond of quoting the famous Pablo Picasso line, “good artists borrow; great artists steal”. But in today’s tech marketplace, there’s much more at stake. 

On the wane

Without a doubt, Apple’s dominance as a supplier of consumer technology is beginning to wane as companies like Samsung, Lenovo, Huawei and Google close in. And while Microsoft has got off to a slow start with Windows 8, few are bold enough to write them off.

Logic dictates Apple should simply transform, or at least partly transform, itself into a business technology company. But quite aside from its obvious disdain towards the business channel desperate to help it, Apple has a number of shortcomings that are harder to address.

“They’ve tended to be a company with an extraordinarily narrow product offering,” says Gartner’s Baker, adding that major product announcements are typically years apart.

But he feels Apple knows it has no choice but to address this. The launch last year of the iPad Mini was proof of this, while rumours that a cheaper, stripped down iPhone may be coming to market is another positive sign – despite being sniffed at by Apple zealots – that Apple is moving in the right direction, Baker says. After all, it’s a product strategy which worked well with the iPod.

“There you have different versions separated by around $50 or so.”

Excitement has also been brewing around Apple’s long-rumoured plans to release a TV, although Baker is sceptical about the wisdom of such a move, at least while Apple has more pressing priorities. And it needs all the focus, creativity and precise execution it can muster.