Monday, October 29, 2007

Apple and the federal market

Apple and the Enterprise
On the other hand, Apple's Federal and Enterprise sales teams get very little support from the mother ship now that Steve is back at the helm, so to an extent I can understand his frustration. Personally though as an investor (long AAPL), a consumer, and a software geek, I think it's nit-picking.

Apple's turnaround under Steve's guidance has been one of the remarkable in the history of the computer business. Apple continues to astound the world with revolutionary products like the iPhone, its profit margins are the highest in the industry, and the company is making money hand over fist.

I think that part of the reason for Apple's revival is the very thing that Mr. Sabotta complains so angrily about. Unlike its competitors, Apple has studiously avoided the Enterprise space, which features razor-thin margins, and large, powerful customers who want a hand in determining technical product direction. The latter leads to a design-by-committee approach to technology platforms that at the end of the day serves no one well, especially the poor users.

The federal market certainly features razor thin margins. Not only that, the sales cycles are measured in years rather than days; so not only are the margins thin, the cost of selling is high. However, the federal market is stable. In recession years your federal sales will keep you alive. It is well worth cultivating.

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