Summary: The Kindle Fire, iPhone, and Samsung S4 show how upstarts have outpaced and out thought the dinosaurs of enterprise tech. The big question now is whether there can be any way back.
It’s no secret that the PC market is in a tailspin — worldwide shipments are expected to drop 10 percent this year.
And it’s hard to see how things are going to get much better, as the old PC players are consistently outmanoeuvred by rivals with a totally different business model, and better designed, cheaper devices — and who, having dominated the consumer market, now want to sweep up the enterprise market too.
This battle came out of the shadows when Amazon revealed it is adding enterprise management capabilities to its Kindle Fire tablets because they are increasingly being used for work as well as for play. That a tablet designed for watching Netflix and reading books is now a credible business device shows how rapidly the enterprise technology world has changed — and how the old guard of tech giants missed the boat.
Tesco takes on Kindle and iPad with Jelly Bean Android tablet Hudl
Tesco takes on Kindle and iPad with Jelly Bean Android tablet Hudl
Apple’s iPad, Samsung’s Galaxy and Amazon’s Kindle Fire are the top tablets used in business across the US, Canada, UK, France, and Germany — 53 percent, 18 percent and nine percent respectively (in the US the Galaxy and the Kindle Fire tied for second place).
And it’s not just tablets, of course. The iPhone, once dismissed as a touchscreen toy, is now the de facto standard for enterprise smartphones. What these devices all have in common is that they were built for consumers first, and then retrofitted with management software to make them more business-friendly when their makers realised they had enterprise appeal too.
For example Apple has added plenty of business enhancements to iOS 7 and, although Samsung’s S4 is very much a consumer handset, by adding tougher security via its Knox software the company has made it more attractive to business users. This is how consumer tech companies are remaking the market for personal devices — winning in the consumer space and then tailoring for business later.
What went wrong?
For too long the old guard of hardware vendors relied on old designs and old assumptions about technology, and about who buys it and why. Now not only are they struggling to compete in terms of innovation but even if they can come up with a decent product (which is rare) the margins on it are much lower than before — and the business model has changed.
When it comes to smartphones, tablets, and laptops, it’s no longer relevant to talk about the needs of the ‘business customer’ first any more. That market still exists, but it’s shrinking and changing as bring your own device becomes an everyday part of business tech usage. Lower cost hardware means the consumer market is the mass market — and the business-only device is becoming the niche.
The (four year plus) enterprise hardware refresh cycle means that businesses users, if they depend only on the hardware dished out by their IT department, will lag consumers. The innovation in hardware is happening in the consumer market in cheap hardware and then feeding back into the business world — the opposite of a decade back. But there are still plenty of big tech companies that haven’t got the message.
The business model around personal devices is changing too: if you can control the hardware, you can channel customers through to your integrated digital services.
That’s exactly why Amazon started selling its Kindles at cost price; it has no interest in making money on hardware but plenty of desire to make money out of streaming video and ecommerce.
It’s the same reason why UK supermarket giant Tesco has started selling its own seven-inch Android tablet; not because it wants to make money on tablets, but because it wants to sell the online banking products, TV and shopping service that come as standard on the device.
Tech’s giants are slowly understanding the problem; the hardware is improving but they’re late to build the ecosystem play. How they rethink their business models over the next year will be critical to their future survival.
ZDNet’s Monday Morning Opener is our opening salvo for the week in tech. As a global site, this editorial publishes on Monday at 8.00am in Sydney, Australia, which is 6.00pm Eastern Time on Sunday in the US. It is written by a member of ZDNet’s Global Editorial Board, which is comprised of our lead editors across Asia, Australia, Europe, and the United States.
Further reading
- Amazon’s Kindle Fire HDX: A potential BYOD keeper
- Amazon’s Kindle Fire HDX is serious competition for Apple’s iPad mini
- iPhone and innovation: Is hardware the only place Apple can go to keep up the buzz?
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