Last week, Apple announced a new service called Apple Business Essentials. From the press release:
Apple today announced Apple Business Essentials, an all-new service that brings together device management, 24/7 Apple Support, and iCloud storage into flexible subscription plans for small businesses with up to 500 employees. The company also unveiled a new Apple Business Essentials app that enables employees to install apps for work and request support.
Apple Business Essentials is a complete solution that makes employee onboarding simple, allowing a small business to easily configure, deploy, and manage Apple products from anywhere.
Within Apple Business Essentials, Collections enable IT personnel to configure settings and apps for individual users, groups, or devices. When employees sign in to their corporate or personally owned device with their work credentials, Collections automatically push settings such as VPN configurations and Wi-Fi passwords. In addition, Collections will install the new Apple Business Essentials app on each employee’s home screen, where they can download corporate apps assigned to them, such as Cisco Webex or Microsoft Word.
I am very excited about this new service. Apple has been a consumer brand first and foremost. Even though there were some efforts to go into the commercial space in the past, I don’t think that there has been any similar success nor that there is as concrete a step as Apple Business Essentials. This announcement signals that Apple feels ready to be a major player in the corporate computing world. If the management team didn’t feel that they had something concrete to offer, they wouldn’t say anything.
Apple has been putting the pieces together. Last year, it bought Fleetsmith, whose technology presumably powers the new Essentials service. The introduction of M1 makes Macbook Air and iPad perfect devices for office use. Unless your workloads are really GPU intensive such as video editing, you can do essentially everything else on a Macbook Air or an iPad and have a great experience with all-day battery, baffling speed and no heated hardware. How many office workers are frustrated by bulky, ugly-looking and hot-running Windows-based company laptops? How many would consider a Macbook Air a great perk to have? When a small business owner takes into account the benefit of increased productivity, the price difference between a Windows-based laptop and a Macbook Air, and the cost of hiring and retaining talent, they will see that Apple has an interesting offer here.
Back in September 2021, Apple unveiled a slew of (overdue) updates to its iWork suite, including Keynote, Numbers and Pages, Apple’s equivalent to Microsoft’s famous PowerPoint, Excel and Word. Starting iOS15, Apple users can now create a Facetime meeting and send an invite to a non-Apple user, a Zoom-like functionality. Obviously, these Apple-native features are not as good as the specialized alternatives on the market. However, for all small business owners, they are free tools that are sufficient to their needs.
Apple Business Essentials subscriptions come in 3 flavors: $2.99 per user/month for a single device & 50 GB, $6.99 per user/month for multiple devices & 200 GB in storage, and $12.99 per user/month for multiple devices with up to 2 TB in storage. According to the U.S Small Business Administration, there are about 31.7 million SMBs in the US, of which 6 million have paid employees and the average number of employees per firm is about 22. Let’s assume that 12 months from now, there will be around 60,000 subscribing SMBs for this service at the average revenue per user of $7 and there are 22 employees in each SMB. How much would Apple expect to make?
Given those assumptions above, I estimate that Apple would make $51 million in subscription revenue in the first 12 months of launch. However, it’s important to remember:
- Hardware serving isn’t included. Apple said pricing for AppleCare+ would be announced later
- The assumptions and estimates above are for the U.S only. If Apple decides to roll it out globally, the figures will be even higher
I find Apple’s pricing tiers interesting, compared to Jamf, arguably the market leader in this category. Jamf’s basic plan, Jamf Now, doesn’t charge customers for the first 3 devices. Starting from the 4th device, it’s $2 per device per month without storage and without the ability to deploy in-house or third party app. If a business wants to deliver 3rd-party apps like Apple Business Essentials does, it has to use the more expensive Jampf Now Plus at $4 per device per month. Let’s look at a few scenarios to see how Apple and Jamf are stacked against each other.
As you can see from Figure, when we compare Jamf Now and Apple Business Essentials, Jamf Now is more affordable if there are fewer than 7 devices. From the 7th device onwards, the scale tips in favor of Apple Business Essentials. Like I mentioned above, Jamf Now doesn’t allow a company to push 3rd party app or in-house apps; which will be a critical use case for SMBs. To take that use case into consideration, let’s compare Jamf Now Plus and Apple Business Essentials.
In this case, any device after the 4th would incur more expenses for small businesses with Jamf Now Plus and Google Drive. If we talk about Device Management and Storage only, Apple Business Essentials should be more attractive. However, Jamf Now Plus includes priority phone support that is only available at an additional charge with Apple. This can tip the scale back in favor of Jamf as technical support can be the deal breakers for business owners or IT professionals.
What if each user only has one device? How would the comparison look for Jamf Now Plus and Apple Business Essentials? As you can see in Figure, Apple’s offering is more competitive as more devices are needed. Nonetheless, the lack of phone support at the moment may put the advantage to Jamf.
In short, I am excited about this initiative from Apple. We often see Apple take a measured and patient approach when it comes to new services or geography expansion. That same applies to this case. Going after small businesses, defined as having fewer than and up to 500 employees, with the fundamental services first is the right step. Even a giant like Apple needs to take time to build its capabilities in a new category. I am confident that more functionalities will be added later on to make the subscriptions more appealing. We’ll know more about how competitive Apple can be against Jamf once the details of Apple Care+ are revealed. The estimated revenue numbers look paltry considering that Apple generates north of $250 billion in annual revenue. However, we know how good the company is at scaling up new segments such as Apple Watch or Airpods. Give it 4-5 years and we may come back to this announcement as the start of a new great chapter in the Apple book.
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