Is Apple Turning Its Back on the Enterprise?

There's been another round of churning in news about Apple. First, Valleywag reports a layoff of 50 salespeople from the enterprise group. Then Apple denied the rumors. Yesterday, Tom Krazit at CNET said that additional sources had confirmed the layoffs, despite Apple's public statement to the contrary. The immediate reaction has been speculation on whether Apple might be lying and what, if anything, this could mean about its business. I think the real question is whether Apple is performing one of its periodic strategic adjustments that in this case will essentially write off interest in corporate sales and continue its move toward becoming a virtually pure-play consumer electronics company.

As CNET noted, there has been some belief that Mac sales are not immune to the general financial climate:

Although Apple has been considered one of the more resilient companies in tech after posting strong earnings in January, the continued economic decline is believed to be affecting Mac sales and has prompted some analysts to reduce their expectations for Apple's current quarter. Perhaps the company felt that anything that might be perceived as bad news could hurt its stock price, and since it didn't have to report the layoffs to the Securities and Exchange Commission because they made up a small fraction of Apple's workforce, it didn't have to acknowledge them, period.

Things get even more interesting when looking at net dollar sales. Overall, Mac sales were flat, with portable Mac net sales up by 23 percent and desktop net sales down by 31 percent -- an even bigger drop. Add it up, and it suggests the following:

• Mac buyers are shifting to portables instead of desktop machines.
• Even Apple, famous for its ability to sell at premium margin, can't maintain the same income for desktop Macs, whose net sales are plummeting faster than units.
• Apple also is unable to maintain margin on the portables, as the rise in unit sales was not matched by a rise in net. In fact, if anything, you'd expect higher volume to enable bigger component and manufacturing purchase discounts, so the fall of premium price is probably happening even faster.

1. Macs are increasingly selling through distribution and not through Apple's own stores, because direct sales would help maintain margins.
2. Given the profile of big corporate Mac users as those who create media and need the beefiest (read as desktop) machines possible, the uptick has been among consumers, not business users. (From personal experience, I can vouch that you want as much RAM, hard drive space, and processor power as you can get with the cooling to dissipate the heat generated.)
3. Given that the word being done in Apple's home of corporate creative work seems to increase, companies might be turning to lower-priced Windows-based systems.

I doubt that Apple would completely phase out its personal computers. One reason is that they provide a marketing cache -- or at least they did. But even that is diminishing, as I'm betting that the iPhone and iPod are becoming the products most identified with the company. So, sure, it could still produce laptops for consumers and specialty machines for such people as graphics designers and photographers.

But that means that the remaining buyers are going to be inclined to head to retail stores (remember that direct sales by Apple would have kept margins aloft) or will be people who perceive themselves as needing a Mac, and so won't need selling. Yup, margins will be lower going through distribution, and distributors and even retailers don't sell the same way as salespeople do. But if you're not targeting those enterprise customers, that doesn't matter much, as you don't have salespeople calling on individual buyers.

Apples image via Flickr user esc861, CC 2.0.