Enterprise Tablets Will Not Sell Themselves
By Mark Sochan
On the heels of Apple's success with the iPad, it seems every other device manufacturer now wants a piece of the tablet action. From Avaya and Cisco to RIM and Motorola, traditional enterprise companies are planning to jump into the market with their own version of a tablet PC. However, many of these companies' tablets are -- unlike the consumer-friendly iPad -- aimed at the enterprise market.
According to market research and analysis firm IDC, tablet growth will reach 46 million units by 2014. If we estimate that more than 10% of those devices will be for the business user with an average price of a tablet to be $700, the enterprise tablet market will be worth more than $3.2 billion just four years from now. And if each of those tablets consists of $1,000 worth of business and user productivity applications, that's an additional $4.6 billion of revenue for the enterprise tablet market.
While the profit potential may be reason enough for a company to enter the tablet market, winning is another story. As we all know, devices don't sell themselves. Apple demonstrated with the iPhone and the iPad that application solutions are the key. However, sometimes having applications in and of themselves is not enough either.
What was unique about the way Apple went to market was that the company provided customers with an easy-to-use, one-stop shop (i.e. The App Store) of value-added applications designed for their devices. It was not only a simple way for customers to buy applications, but perhaps more importantly it was a ready go-to-market channel for developers to recoup their investments. After all, the main reason that developers adopt a platform is to make money.
Apple was a single-source supplier for both the platform and the device and had significant market and developer mindshare. However, many of the new tablet entrants will need to create a developer community from scratch, or at least convince their current ecosystem to adopt a new platform or device. Furthermore, many of them are competing for the same pool of developers (e.g. Android developers) and need to convince these app creators to optimize for their specific tablet devices. As a result, the traditional approach to recruiting developers and motivating them through training and toolkits will be insufficient to gain significant market share.
What will make a major difference are those vendors who also provide these same developers with an immediate go-to-market channel (i.e. app store for the enterprise) to market and sell the applications they've built.
There's no doubt that the success of enterprise tablets will depend on providing customers with easy access to a rich community of applications, and as such, having an app store strategy for business customers is paramount. However, this strategy does not need to be all about costs. The value with an enterprise app store strategy is that companies can significantly increase sales and capture new revenue through application revenue share with their partners.
When selling to business customers, lead capture is just as important as online transaction processing since not all applications are simple commodities that a business customer purchases online. So a properly implemented solution would entail the ability to transact and fulfill application solutions online, as well as a mechanism that captures a customer inquiry in the form of a lead, which is tracked and managed throughout the sales cycle. In terms of application revenue share, most developers don't have a strong marketing and sales channel, so they would welcome a ready-to-go channel to market and sell their applications even if it means sharing in the revenue. At a revenue share example of 30% to the vendor and 70% to the developer, it doesn't take long before the revenue generated by the app store can offset its maintenance costs.
So therein lies the lesson for the myriad vendors that have announced plans for a tablet PC for the enterprise: not only will they need to provide customers with an easy source to procure business applications, but they also need to motivate developers to adopt their platform through a go-to-market strategy that allows developers to monetize their investments.