Apple's Tortured Relationship with the Enterprise

NEW YORK (TheStreet) -- After the desktop publishing bonanza of the late 1980s that was launched by the early Macs and laser printers, Apple (AAPL) sought to further develop its position in the business world.

But as history tells it, a mistake by CEO John Sculley opened the door to Microsoft's (MSFT) Windows. By 1995, Microsoft was briskly improving its control of the enterprise with, after some false starts, Windows 95. At the time, the casual and damaging consensus was that Windows 95 was "just as good as a Mac," and by early 1996 Apple was foundering.

This is not the place to retell the story of Steve Jobs's return. It's been superbly told by many others, in book-length form. What I do want to do, however, is relate some of the interesting observations I encountered from my own experience because they shed light on Apple's topsy-turvey relationship with the enterprise over the years, especially since 2000.

CIO Encounters

When I worked for Apple in Federal sales, starting in 2003, I was assigned to sell into the Federally Funded R&D Centers. I met with almost every CIO of those organizations, and they were generally in the Microsoft camp. Microsoft products were designed for the enterprise from top to bottom. Microsoft understood the business needs of the enterprise and government and "checked the boxes" for the CIO's needs.

So firmly entrenched was Microsoft that, even when confronted with a superior, more secure UNIX OS, called Mac OS X, they generally declined. That's because convincing one person in an organization, even a CIO, won't turn the ship around. Plus, an OS is just a point solution. The whole suite of business services, such as the Microsoft Exchange Server, was more critical to a business in their view. Finally, Macs being the very best were too expensive, and every business wanted the cheapest possible hardware for its cubicle dwellers.

Of course, I had champions in some of those agencies, but by and large if an organization was already Mac-friendly, and they were few, sales were brisk. Otherwise, it was an uphill battle. Organizations don't change unless there's a catastrophe. (And in some cases, there were some major security events with Windows XP that earned Apple important customers.) But those were small battles, not the larger war.

In October, 2001 Apple launched the iPod. I was in the room when Steve Jobs pulled the first iPod out of his pocket and gleamed at us. This was a new beginning. From that day on, Apple was able to get on the consumer bandwagon and appeal to individual purchase authority. If a product were very cool and well made and simple and fun, out came the individual's credit card. That has been Apple's mantra and key to success ever since.

Back to the enterprise. When it came to selling Macs of any kind, Apple was, in my impression, carefully treading so that it could dance its own dance. What was at stake was innovation. By that I mean that businesses and government can be plodding -- and demanding all at the same time.

While Microsoft catered to those businesses, Apple knew that it had to move relentlessly forward with technology in order to claim that it makes the very best products. Today, we need only look at the organizations still using Windows XP, even though Microsoft and the U.S. government have pleaded with them to leave that 14-year-old OS behind.

The Influence of Steve Jobs

Very often, the Apple federal and enterprise sales teams would look to the charisma and influence of Jobs to inspire a customer in special executive briefings on the Apple campus. These were customers critical to Apple's business sales.

Sometimes it worked very well, but there were times when Jobs declined to intervene with his influence. It's possible he sensed that a particular technical area was unwise for Apple to pursue, like supercomputing and compute clusters. Plus, there were probably times when he was vey focused on his pet projects, like the iPad and iPhone, and he felt that if his sales team were really, really good, they could close the deal without him.

Finally, as I mentioned above, there's always that enterprise demon -- businesses and government want stability and long-term commitments. That's something Apple couldn't engage in if it were to stay in the business of radical advances in consumer technology.

Apple's approach has generally been to put great products out there while moving forward briskly. If an organization embraces those Apple products, all's well. But if an organization thinks it can obtain concessions from Apple by making high-value purchases, that generally hasn't worked out well. All this explains why Apple pursues the enterprise on its own terms and why there are organizations that embrace Apple and those that consider Apple products and services (or lack thereof) unsatisfactory for their broad enterprise needs.

There was a time in the early days of [Mac] OS X (2001-2005) when the security situation was a nightmare with its competition, Windows XP. If perhaps Jobs had gone all out, at every opportunity, to sway those organizations besieged with Windows viruses, maybe things would have been different.

But even when faced with security calamities, the approach was not to change platforms. Instead, it was for Microsoft to fix the problems, and the company pretty much did that with Vista and Windows 7. For some very personal history on the opportunities Apple may have missed, see, for example, Could Apple have been even more successful?

The Bottom Line

Today, it seems like a simple matter to suggest that if only Apple tried harder, it could generate much more Mac revenue in business and government. But the fact is, Apple has morphed into a very successful consumer electronics company. Enterprise sales are sought and won daily, and NASA is a major Apple customer. But Apple is always following its own vision, advancing the state-of the-art briskly, and asking its enterprise customers to be on that ride with them.

Now, in the post-PC era, with drastic reductions in PC sales and most consumer and enterprise customers finding that the classic tablet, conceived by Apple in the iPad, meets their needs, Apple's forward-looking vision has been vindicated. Try as Microsoft might, the Surface tablets are not the future whereas Apple has significant iPad and iPhone penetration in the enterprise.

Before the iPhone and iPad, it was a rocky ride for Apple's Mac in the PC world. But the decision to race into the future with the iPhone and iPad looks to have paid off.


At the time of publication the author was long AAPL.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

John Martellaro was born at an early age and began writing about computers soon after that. He is a former U.S. Air Force officer and has worked for NASA, White Sands Missile Range, Lockheed Martin Astronautics, the Oak Ridge National Laboratory and Apple. At Apple he worked as a Senior Marketing Manager, a Federal Account Executive and a High Performance Computing manager. John is currently the Senior Editor for Analysis and Reviews at The Mac Observer. His interests include skiing, chess, science fiction and astronomy.

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