Apple Snaps Up Enterprise Customers At BlackBerry’s Expense

by Trefis Team
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After emerging as the darling of retail customers over the past few years, Apple (NASDAQ:AAPL) seems to be hard at work wooing enterprises as well as government bodies. The company recently announced two important wins at Home Depot and the New Zealand government, both of which have come at the expense of BlackBerry (NASDAQ:BBRY). While Home Depot is reportedly replacing 10,000 BlackBerry smartphones with iOS devices, the New Zealand police force plans to arm 6,000 officers with iPhones and about two-third of them with iPads over the next three months. Other notable agencies that have recently announced their BlackBerry to iOS migrations include the U.S. Immigrations and Customs Enforcement Agency, the National Transportation Safety Board and Australia’s Treasury Department.

See our complete analysis for Apple here

Apple diversifying into the enterprise

The growing number of enterprises and government bodies making the switch to iOS is not only a sign of BlackBerry’s waning popularity among consumers but also Apple’s growing efforts to capitalize on the same to increase its presence within the safer and more stable non-retail sector. While the retail market is open to the vagaries of high competition and eventual commoditization of the market, enterprises generally enter into multi-year contracts and are therefore less prone to changing vendors as often as retail buyers do. It is due to this stability that corporate customers offer that BlackBerry has managed to generate cash in the last few quarters despite seeing its handset revenues fall by nearly half in the past year. As Apple’s overall margins potentially slip in the coming years due to greater competition and a more focused foray into the emerging markets, sales to enterprises should serve to mitigate that impact to an extent.

It is therefore a good sign that while Android commands a big chunk (almost 70%) of the retail market, the situation is quite opposite in the enterprise space. According to recent Citrix Zenprise data, the iOS accounts for more than 55% of corporate customers in all the geographies that the vendor tracks. A big reason for Apple’s dominance in the corporate world is also due to its superiority in tablets, which comprised about 57% of enterprise iOS devices. [1]

BlackBerry direly needs BB10 to work out

According to another market research firm, IDC, more iPhones and Android smartphones were sold in the enterprise market than BlackBerries last year. Within the enterprise market, while Android was more popular among employees, Apple had a clear lead when it came to employer purchases – implying an increased comfort level of enterprises with the iOS. Among the phones supplied by employers in 2012, about 31 million were iPhones, more than double the number of Android smartphones. With BlackBerry waning in popularity and the BYOD trend catching on, the tight security and the robust app ecosystem of the iOS should continue to help Apple take a bigger share of the enterprise market going forward.

As for BlackBerry, the loss of enterprise customers is a matter of grave concern. The Push Email division, which includes BlackBerry services such as push e-mail and BBM and is dependent on enterprise patronage, is BlackBerry’s most valuable division currently, accounting for almost 35% of our $12 price estimate for the stock. We estimate that the enterprise service ARPUs will decline steadily to about $2 by the end of our forecast period as BlackBerry slashes service prices or brings in lower-priced tiers to retain customers. If the launch of BB10 and the new BES upgrade doesn’t stem the decline in corporate loyalty, the repercussions could be bigger.

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Notes:
  1. Android, Apple iOS flip consumer, corporate market share, ZDNet, February 13th, 2013 []
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