Why enterprise tablets might flopNovember 22, 2010: 12:34 PM ET
The iPad has the affection of consumers, but most IT departments aren't rushing to integrate the new Apple tablet -- or any other, for that matter.
Apple's (AAPL) iPad may be at the top of your holiday wish list, but don't go asking your IT department for one.
Why? Tablets are small and lightweight, and they have the computing power to accommodate enterprise-class applications. But they're also expensive, and can't do some of the things a smart phone can (like make calls and fit in your pocket). What's more tablets have yet to prove their return on investment in the workplace.
That's why an estimated 60% to 70% of people who bring iPads to work pay for them out of their own pockets. It's also why companies like Cisco (CSCO) and Research in Motion (RIMM)—both of which will soon come out with tablets for the enterprise market—could have a tough time selling to CIOs already overwhelmed with a constantly evolving (and pricey) lineup of gadgets.
"More and more companies are saying they can't afford to buy all of these devices," says Ken Dulaney, an analyst at Gartner Research. "Try telling an iPad user they have to keep it for four years in order to justify payment."
Dulaney says some IT departments are starting to support tablets that are brought in by employees (enabling the device with a thin client so they can access business applications, for example). But that doesn't mean they're willing to cut into their own budgets and buy tablets for an entire workforce. While that may not pose much of a dilemma for the iPad—which has widespread consumer appeal—it doesn't bode well for the Cisco Cius, RIM PlayBook, and whatever tablet Hewlett-Packard (HPQ) has up its sleeve.
"We have no interest in being a consumer product, this is designed for the enterprise," says Tom Puorro, director of product management at Cisco. But unless the Cius can replace a laptop (which Puorro says is possible for certain types of employees, including salespeople and medical professionals), it's unlikely to gain significant traction with IT decision makers.
Don't get me wrong—there's big opportunity in tablets. Gartner expects 19.5 million units will be sold this year, and projects that number will rise to 208 million by 2014. But most of those sales are expected to come from consumers, not IT departments. And, at least in 2010, most of those profits will go to one company—Apple. Why? Because most of the other manufacturers have yet to launch their tablets.
I'll admit, Apple has made some headway with enterprise customers. In September it was reported that business software maker SAP (SAP) would arm 17,000 employees with iPads. But at a meeting at the company's Palo Alto, Calif.-based offices earlier this week, CIO Oliver Bussmann told Fortune that the company would deploy "thousands" (not 17,000) of tablets, and not just iPads. So far, about 2,000 of them have been handed out to employees (SAP has nearly 50,000 workers).
Bussmann said that he is "device agnostic" and plans to roll out other tablets like the RIM PlayBook. Tablets made for the enterprise market will have some advantages for corporate users, like built-in collaboration and videoconferencing capabilities and security features. But is that enough to convince tight-fisted CIOs to buy a third device for employees? I don't think so.
Perhaps a better strategy for companies hoping to get their tablets into the hands of corporate users is to go straight for consumers, not IT departments. Because, let's face it, a shiny new tablet—whether made by Apple, Cisco, RIM or any other brand—is not a "must-have" for most companies. It's more like a cool gadget you add to your wish list.