With iPad Pro, Apple bets on tablets beating PCs in the workplace

Apple Inc. is known for a consumer-first strategy that has reared years of must-have retail products, but the company made clear at Wednesday’s product event that it is now targeting a whole new set of customers.

With the iPad Pro, a larger tablet with a screen that measures 12.9 inches diagonally, Apple   has made its first major hardware push into the enterprise market with its mobile devices and pumped up a burgeoning attempt to overrun the enterprise market, where personal computers have long maintained a stronghold.

“Apple has made clear that it sees the enterprise as another opportunity,” said Pat Moorhead, principal analyst at Moor Insights & Strategy.

The push comes after six straight quarters of decelerating iPad sales, which the company has been trying to stem by encouraging more industry-specific uses for the tablet. Apple touts the iPad Pro as being faster than 80% of portable PCs shipped in the last 12 months, one of the reasons it sees vulnerability of PC dominance. PCs have been on the decline, with Gartner this summer predicting a 4.4% decline in shipments in 2015.

Apple has been eyeing the enterprise market for a few years, but its focus previously centered on the creation of enterprise-grade apps, through a partnership with IBM Corp. and software improvements, through a recent deal with Cisco Systems Inc. to boost sales of its existing mobile devices.

The iPad Pro, on the other hand, was designed specifically with businesses in mind. Apple went through painstaking efforts to show how the device can be adapted for professional use at its product event in San Francisco on Wednesday, including ceding the stage for a Microsoft Corp.   executive who showcased Office on iOS, and again for an Adobe Systems Inc.   executive who displayed how easy it is to Photoshop on the iPad.

“The Microsoft and enterprise echo was more than oblique,” Nomura analyst Jeffrey Kvaal said in a note to clients.

The iPad comes “with nifty touches that fit for business,” Kvaal noted, such as Apple Pencil, a $99 stylus that comes with pressure sensors that measure varying levels of force and can be used to draft blueprints, as well as a $169 “smart keyboard.”

Apple’s foray into the enterprise market comes as companies undergo technological transformations to adapt to a more mobile work environment. In July, industry tracker IDC reported “a large and increasing share of tablets” deployed across U.K., French and German companies, and a big increase in the number of companies using tablets as their only work device.

“As digitalization transforms business processes and tablets are optimized for business functions, we can only expect an increase in the share of standalone tablets,” IDC senior research analyst Marta Fiorentini said.

This is a market Microsoft has also targeted with the Surface Pro, and Moorhead predicted that the debut of iPad Pro signals the start of “a long, protracted war” between the two company’s ecosystems in the workplace.

The new iPad is still priced below Surface Pro 3, which has a starting retail price of $1,299, but the gap is not wide if you want all the fixings. The lowest-tier iPad Pro will start at $799, though that price goes up to $1,079 for extra storage and cellular connectivity, and grows higher still when Apple’s stylus and keyboard are included.

The iPad Pro comes with an A9 chip, making it Apple’s most powerful tablet. It has battery life of up to 10 hours thanks to new technology that adjusts the display’s refresh rate depending on the on-screen content, as well as a 5.6 million pixel display that is better than the 15-inch MacBook Pro with Retina display. Its split-screen functionality and multi-application work-flow enable multi-tasking, which Apple said makes the iPad Pro its most productive mobile device.

Analysts at Macquarie said the expanded functionality of iPad Pro will drive usage in the enterprise and that the higher price point will increase overall iPad revenue and average selling prices. Other analysts said they see the iPad Pro fitting in well in certain business verticals, such as architecture, development, design and fashion.

To that tune, industry tracker Forrester Research predicted that 20% of the total tablet market would be comprised of business customers by 2018, compared with just 14% this year.

Its new features and accessories “set a new bar for a creative, high-end personal device, and will blur the line between tablet and laptop,” Forrester analyst Frank Gillett said.

Shares of Apple closed with a 2.2% gain at $112.57 Thursday. The stock is down more than 12.5% from three months ago, versus a 9.3% decline for the broader Dow Jones Industrial Average.