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Enterprise becomes the next tablet frontier as Apple and Microsoft eye productivity

While the iPad is still the reigning tablet leader, Apple revealed sales of its tablets continue to decline in an earnings call late Tuesday.

Last Updated: Jul 22, 2015, 02.12 PM IST|Original: Jul 22, 2015, 02.01 PM IST
By Chuong Nguyen

Apple and Microsoft's tablet ambitions have taken on diverging paths. While the iPad is still the reigning tablet leader, Apple revealed sales of its tablets continue to decline in an earnings call late Tuesday. On the other hand, Microsoft touts a growing Surface business in financial numbers released on the same day.

With sales at stake, productivity may be a key feature that Microsoft and Apple will target with their tablet plans. The numbers released are in line with analysts' forecasts for the state of the tablet market, but they also add color ahead of some anticipated and important product announcements.

Microsoft will release a major upgrade to its Windows operating system on July 29, and the company is rumored to unveil its Surface Pro 4 flagship later this year. Apple will follow in the fall with the debut of its iOS 9 operating system. There is also heavy anticipation for an iPad Pro tablet that will appease business users with a larger 12.9-inch display and rumored support for an active digitizing pen.

The earnings

Microsoft revealed that Surface sales increased by 117%. The Microsoft-branded tablet business brought in $888 million for the quarter. If this momentum sustains, Surface represents a $3.5 billion annual business for Microsoft.

Microsoft's Surface line currently consists of the Windows 8.1-powered Surface 3 and Surface Pro 3. Users will be able to upgrade both tablets to Windows 10 for free if they act within the first year of the operating system's release. An LTE version of the Surface 3 will be available this Friday, and Microsoft is also expanding the Surface business to include the new Surface Hub.

On the other hand, Apple's tablet sales shrank by 18%. Apple CEO Tim Cook and CFO Luca Maestri reported that 10.9 million iPads were sold in the most recently ended quarter. Revenue for the iPad is down 23% compared to the same quarter last year. Conversely, Apple's Mac business is growing, with sales up 9%.

Apple's most current tablet models include the iPad mini 3 and iPad Air 2. The company continues to sell the original iPad Air and older iPad mini 2 at a lower price.

Despite the decline in iPad adoption, CEO Tim Cook said he is still bullish about the tablet market, noting that the experience is "unbelievably great." Cook points out that the iPad will get better with new features this fall, such as simultaneous multitasking capabilities and picture-in-picture video viewing.

Is productivity the killer tablet app?

Productivity may be the biggest battleground for the tablet market in 2015. Apple announced during its WWDC 2015 keynote that iOS 9 will bring more productivity features to the iPad, including better support for Bluetooth keyboards, keyboard shortcuts, a new QuickType keyboard for easy text selection and multitasking windows.

Microsoft announced that as a part of Windows 10, tablets, like the Surface 3 and Surface Pro 3, will gain more multitasking options through Snap. A new feature called Continuum allows tablet owners to connect a keyboard, for example, and have the user interface change to a desktop experience. Remove the keyboard, and the UI adapts with bigger icons for finger-friendly touch input.

Apps, which traditionally played a large part in device adoption, may become less significant. Standardized technology like HTML 5, better browsers, more robust internet connectivity and larger screens mean that tablet owners need to rely less on apps.

Take Google Docs and Microsoft Office 365, for example. Even though you can download Google Docs, Google Sheets, Google Slides, Microsoft Word, Microsoft Excel and Microsoft PowerPoint as apps onto your tablets, you can also easily work within the browser.

On tablets with larger screens, the focus is more similar to the desktop, and users are more concerned about performing tasks simultaneously. This means doing research in the browser while working in a Word document at the same time.

Single-tasking is more important on smartphones, which come with smaller displays. Screen sizes on tablets rival display sizes on notebooks, and users are wondering why they can't have the same level of productivity that they can achieve on a laptop.

Windows versatility

Windows also provides for a more versatile computing environment. Recent numbers released by Canalys show that even though the overall tablet market is in decline, there is still a bright spot as hybrid notebooks continue to grow. These systems allow consumers to have the versatility of a laptop and a tablet in a single device.

The Surface Pro 3 is one option. The optional removable Type Cover keyboard case allows the tablet to be used a laptop. Engage the kickstand, snap on the keyboard cover and Windows runs apps and programs as it does on a traditional notebook or desktop. Another type of device in this category are convertible notebooks, like the Lenovo Yoga 3 Pro or the HP Spectre x360. These devices are primarily used in laptop mode, but if you need to switch to a tablet, the 360-degree hinge allows the keyboard to fold back behind the display.

Even though users can connect a Bluetooth keyboard to an iPad, iOS doesn't support a Bluetooth mouse yet. For iPad owners who attach a keyboard, the experience isn't as fluid as on the Surface Type Cover, which comes with a keyboard and touchpad.

With Windows, you can run all your legacy desktop programs. For businesses, this could result in large savings as programs can run just as they would on a regular desktop PC without requiring additional coding.

End users save cost, time and weight when traveling with a hybrid Windows system. Rather than having to buy a $1,000 notebook and a separate $500 tablet, you can get a two-in-one device for the price of just the notebook. There are even more affordable two-in-one devices that run on a less powerful Intel Atom processor.

With a single device, you'll save time managing files, data and apps. Instead of having to buy the Microsoft Office suite for both your tablet and your laptop, you'll only need one copy of the software. When it comes to files, you don't have to worry about transferring files between two separate systems.

Finally, for business travelers, students and road warriors, having a two-in-device saves you space in your travel bag. You'll have to carry one device instead of two.

Enterprise adoption

Unlike smartphones that get upgraded every year or two, tablets have a longer life cycle. Consumers may hold onto a tablet for a few years, and upgrade cycles may be closer to that of the traditional PC or notebook.

A key area for growth is enterprise adoption. Even though Apple claims that 98% of Fortune 500 and 93% of Global 500 companies have adopted iPad, there's still a lot of room for growth in the enterprise market.

Microsoft's strength in the enterprise segment is that its operating system is used by close to 90% of the PCs globally, and IT managers are familiar with the OS. Additionally, some Windows tablets are designed to survive use in harsh environments, like the Dell Latitude 12 Rugged Tablet and the Panasonic ToughPad. Windows benefits with security features, like Smart Card access, TPM 1.2 and biometric support.

To strengthen its position in enterprise, Apple has added security features like Touch ID, remote wipe and a tracking feature to locate lost tablets. Apple also joined forces with IBM to build more enterprise-focused apps for businesses.

iOS will need to scale up to match Windows's features, and Windows developers will need to simplify the UI and experience of their apps and programs to match the ease of use on iOS.

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