Apple Might Need Enterprise To Survive

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Apple Inc. (NASDAQ:AAPL) has been looking to enterprise in recent months. The company is trying to break into the market after years of apathy and ignorance. There are clear advantages to getting a slice of enterprise, and Apple may need those advantages if it wants to continue growing in the coming years.

The iPhone is not going to stay the best game in town forever. Android manufacturers are beginning to offer premium smart phones at a lower price point. Across the smartphone world margins are being cut to the bone. Apple Inc. (NASDAQ:AAPL) is the only company with margins in the high thirties. The situation is untenable, though it can be extended almost indefinitely by good management. The next extension may come from enterprise.

Apple Heads For Enterprise

In order to keep margins high, Apple needs to differentiate its products. The company has managed that over the last five years by boosting the specs of its device, and investing in a unique design. That has worked, but margins are now falling. People are more willing to choose Android premium smart phones over the iPhone now. Apple has started increasing the cost of the parts in order to woo customers.

That’s a problem, and it’s one that may prove impossible to solve. There are ways to differentiate a device that do not weigh on hardware costs. The App store has been a key way for Apple to attract customers, and iOS is one of the major selling points of the iPhone. Apple can differentiate itself through software, and it should be doing its best to do so.

Apple Inc. (NASDAQ:AAPL) doesn’t have the best office software out there, but it is functional. The company offers very few enterprise products, and it will need to extend that line if it wants to get into the market. iCloud is not built for business, and iWork is not as functional as some competitors. It is those competitors that matter in the fight for the enterprise market.

Microsoft Looms In Enterprise

Microsoft Corporation (NASDAQ:MSFT) is the king of enterprise, and its recent earnings numbers appear to suggest continued dominance. The Redmond company offers solutions that are tailored to enterprise, and the offer plenty of support in order to make those products useful. The difference between Apple Inc. (NASDAQ:AAPL) and Microsoft is their source of revenue. Microsoft makes money from selling software, Apple makes money from hardware.

If Apple gets into enterprise software, it will be able to sell its products for substantially less than Microsoft, and it may even be able to give them away for free as it does with iWork. Before that, however, Apple will need to get those products out there.

In order to ad value to iOS, Apple Inc. (NASDAQ:AAPL) should be aiming for enterprise. In order to do that the company needs to change the focus of its software. Whether the company tries to do so remains to be seen.

Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted.