Apple's Zen Strategy for Business

Tuesday Jul 17th 2007 by John Welch

Winning without attacking is working well, as Apple scores some SMB wins.

Taking a step back from the iPhone, I wanted to look at the implications of two articles that have shown up recently in the Mac web. The first, from CNET, entitled "Mac desktops are 'smarter money,' says CIO," and the second, "Mac Attack! An enterprise PC shop switches to Apple," from Computerworld.

The first article is rather vague. While it has some choice quotes from a CIO for a mid-sized U.K. property management company, Capital & Regional, it's not so much a ringing endorsement of the Mac OS and Apple hardware as it is a sign that Microsoft's assumed front-runner status is no longer as universal as it was. The CIO, Richard Snooks points out some fairly obvious things. For browser-based applications, Windows offers no real advantage, i.e. ATMs could run Linux/Firefox with the same user experience and advantages they get with Windows. A hardened kiosk gains nothing from Windows that can only be found in Windows beyond a bigger software licensing budget.

Snooks also point out that if he's going to be forced to buy Vista, that Apple and Mac OS X is "smarter money and cheaper." His claim that it's cheaper is, I'm assuming, based on normal corporate 3-5 year desktop life-spans, and based on hardware and OS alone. If he already has Office on those desktops, then the cost of migrating to Microsoft Office 2004 on the Mac would offset some of those savings. However, if a significant portion of his user population would be happy with NeoOffice, then up-front Office migration costs are nil. The Microsoft rep quoted respond with the usual blandishments about advances in deployment and security in Vista.

What's interesting about this article is that the source for most of the quotes, Richard Snooks, is the CIO of what is essentially a finance/real estate kind of company. This is not a market that has ever shown a great deal of interest in anything that did not come from Microsoft. In fact, they've been one of the most loyal users of Microsoft tech as a market segment. For example, look at what U.S. real estate agents and buyers who want to use a Mac with the various MLS systems go through. I know quite a few who gave up and either went the virtual/emulator route. Or just got a PC with Windows, after realizing that the MLS systems were not going to ever handle anything that wasn't IE.

True, Snooks works in the U.K., not the U.S., and one company is hardly indicative of an immanent sea change. But the fact that someone in Snooks' position is seriously considering both Linux and Mac OS X is not good news for Microsoft.

The second article is more specific and comes with a bit of baggage. The baggage is that a few years ago, the CIO in question, Dale Frantz, of Auto Warehousing Co., had a Microsoft engagement manager attempt to threaten and fear-monger him into hiring a Microsoft consultant to "manage" their software licensing, even though he had detailed records and no doubts whatsoever that he was legal. So up front, Dale Frantz is not a Microsoft fan.

However, looking at how Frantz and AWC are going about this, it's obvious that this is not a personal vendetta."This is not a vengeance case," Frantz is quoted, referring to his 2006 tangle with Microsoft over threatening letters from the vendor that made allegedly false accusations about unlicensed software.

Instead, states the article, "AWC's new strategic enterprise technology plan is the direct result of proof-of-concept testing that indicates that the company can cut costs, increase system reliability and security, and provide expanded IT support services by porting a major portion of its IT infrastructure to Apple. Extricating itself from its exclusive dependence on Microsoft is simply the cherry on top." Frantz and AWC started by evaluating Linux, and while the Linux community was quite helpful, its response was "Hey cool, so how much work can you do coding to make this work for you?" which simply wasn't something that AWC was able to do in their environment. It wasn't that Linux was bad, it just wasn't right for them. So they tested Mac OS X, and realized that it was a good fit.

They decided to leave certain backend systems running Windows Server and SQL Server, because there was no business case to change that. The client software is being moved to Java (which would indicate that there were other issues with Linux beyond Java), and while that porting effort is happening, they can run the old client in Windows under Parallels.

AWC is, quite sensibly, ensuring that both general user and IT training are taken care of, so that the transition is as smooth as possible, something that trips up a lot of migrations of every stripe.

At the end of the day, AWC simply did not see a significant advantage to staying with Microsoft on the desktop or as the sole server platform. They feel, and evidently their testing bears this out, that they are going to not only not lose anything in this transition, but due to the greater flexibility of Apple hardware and Mac OS X, that they'll gain functionality that they could not get from a Windows world.

Now, both of these cases are interesting for a number of reasons, but for me, the biggest reasons are perhaps what you aren't seeing. There's nothing about how pretty or how cool things are. These are two companies looking at business cases and ROI, the two things that Microsoft has used to push Windows into everything but your toilet paper dispenser, and saying "Microsoft loses." They're not completely abandoning Microsoft, but they're also looking at, or actively moving in AWC's case, into a heterogeneous posture.

Did Apple woo them? In AWC's case, no: "We began down this road independent of Apple," Frantz emphasizes in the article. "We bought some Apple gear and began to try to make it work on our own." Apple didn't actively do anything to start this, (although I bet they got involved once the decision was made), beyond their hardware and OS. They didn't PR blitz AWC, heck, AWC's not in a market segment that Apple has any active marketing in, at least to my knowledge.

So What Happened?

Nothing. At least not in the sense of Apple actively doing anything to market to the automotive industry IT segments. It was simply the solid course that Apple has taken under Steve Jobs, with the solid hardware and software that has come from it, that created this opportunity. With all the PR and programs Microsoft has to induce companies in AWC's market segment to live in a Windows world, Apple's action without form created and won that opportunity. WIthout a massive influx of roadmaps, consultants and certification courses, heck, probably without actively doing a lot of anything, Apple was able to win another SMB company over to its fold.

That, I think, is how Apple is going to become a force in the SMB market. Not by creating lock-in, and complex licensing, and PR blitzes. But by creating solid product that helps you spend less time with the monkeywork, and more time making money. By taking open standards from the old world of arcana, and moving them into the world of "it just works, and you don't have to lose functionality to lose lock-in." That is the significance of this. Not that Apple won mind- and marketshare from two mid-sized companies. Again, this is not a hint of some massive exodus. But rather that even though they consistently don't do the things that all wise IT pundits insist you must do to win in the business arena, Apple keeps picking up new customers. A few hundred here, a few hundred there, pretty soon, you're talking real marketshare.

And they're doing it with a miniscule percentage of the wooing dollars that Microsoft spends. That, more than anything, should be attracting Microsoft's notice. Not that it happened, but that it happened the way it did.

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