Apple faces hurdles as it positions iPad Pro for business use
By Mari Saito and Yasmeen Abutaleb
SAN FRANCISCO (Reuters) - Apple Inc. faces significant challenges selling its larger and more powerful iPad Pro to businesses because companies are reluctant to switch software vendors and use an expensive device that lacks specialized business apps, analysts said.
"They've tried to ... focus on the enterprise but over the last two years it has really not been successful," said Daniel Ives, a senior analyst at FBR Capital Markets. The enterprise market, which is how Apple refers to its business customers, represents 10 percent of its $183 billion annual revenue, he said.
Apple has at least one client so far: General Electric has given some of its 305,000 employees the option to use Apple devices at work, with 20,000 iPads and 60,000 iPhones now available in their offices. It is not clear how much this is worth for Apple, nor how it generates about $18 billion a year from the enterprise market.
Apple officials declined to comment on plans to market iPads to business customers, referring queries to a product announcement event that happened Sept. 9. At that event, Phil Schiller, Apple senior vice president of worldwide marketing, said the iPad Pro was faster than 80 percent of portable PCs, signaling that Apple may think the device could replace workplace laptops from companies like Dell and HP. Schiller called the iPad Pro "ideal for professional productivity."
Selling tablets to corporate buyers is an attractive option for Apple amid slowing global iPad sales, which have fallen for two quarters. Research firm Forrester projects that sales to businesses will represent as much as 20 percent of the overall tablet market by 2018, compared to 14 percent this year, as the market grows from 218 million units to 250 million units.
"The iPad Pro is important for Apple because they're beginning to saturate the personal device space and it's a logical step for the company if they wish to expand their market share," said Michael Yoshikami, head of Destination Wealth Management, which has $1.5 billion under management and owns Apple shares.
The price of its products is one obstacle Apple faces as it tries to move deeper into the enterprise market.
The iPad Pro starts at $799 but costs more than $1,000 if buyers also want a keyboard and an optional stylus. That's more than Apple's existing tablets as well as devices made by Microsoft Corp and other PC makers like Lenovo. It's about the same price as Apple's own MacBook Air, a laptop. Continued...