Apple seeks more federal business, but its strategy remains a mystery
- By Michael Arnone
- Jun 12, 2005
Apple Computer made two moves recently that could bode well for its sales to the U.S. government. But don't ask Apple officials what either move means for their overall federal strategy. It's still a secret.
First, the company hired Ron Police, a 17-year sales veteran at Oracle, to be its new vice president for federal sales. It also released the latest version of its operating system, Mac OS X 10.4 Tiger, which received generally positive reviews in April. Like its OS X brethren, this edition is based on Unix, one of the government's favored platforms, especially for supercomputing.
Apple wants to move more aggressively into the federal market, said Susan Prescott, the company's vice president for worldwide pro markets. But she declined to discuss strategy or plans, citing Apple policy.
For the same reason, she also declined to give sales figures for federal contracts. She recommended looking at Apple's past to determine where the company might be headed.
That could prove difficult. Along with Bigfoot and the Bermuda Triangle, Apple's federal sales strategy is elusive and, some believe, mythical. When asked about it, Charlie Wolf, an analyst with Needham and Co., a New York investment bank, said, "Whoa! That's a nonstarter."
Wolf and other analysts agree that Apple's entire federal sales would look like rounding errors on a balance sheet from Microsoft or most Unix firms.
"Apple is just not a player in the federal market," Wolf said. "And they should be because they have some great stuff."
Apple may have missed its best chance to take a stronger role in government, Wolf said. By now, agencies have essentially standardized their operations on the Microsoft Windows platform, leaving little room for rivals.
"It's probably just a terribly difficult nut to crack," he said.
But even when Apple releases products such as Tiger and the iMac G5 computer, which would appeal to federal procurement officials, the company doesn't follow through with closing large sales, Wolf said. "It's just not a priority for them," he said.
Gordon Haff, a senior analyst at Illuminata in Nashua, N.H., told Federal Computer Week last July that "Apple's core strategic direction over time is still very much in the [desktop computer] and increasingly into consumer entertainment."
But Prescott disputed the analysts' take, saying Apple has made decisions specifically to encourage federal government sales. The company is extending into the government from its success in its core markets of creative design, science and education, she said. It has had many successful small implementations with customers, including NASA, the National Institutes of Health, Los Alamos National Laboratory and the Defense Department.
In 2001, Apple decided to base OS X and subsequent versions on Unix to take advantage of the government's disproportionate use of that operating system, she said. Tiger fulfills Common Criteria certification requirements needed for DOD contracts without middleware, she said.
Apple has many ways to sell to the government, Prescott said. The company has had a direct federal sales staff for several years, and its online store accepts the federal SmartPay card for purchases, she said. The company also works with authorized federal resellers, she added.
But most government buyers still have a negative impression of Apple's products, said Jon McKnight, principal forensic engineer in the Computer Forensic and Intrusion Analysis Group at ManTech, an integrator that works with federal intelligence agencies and the military.
In the 1990s, Apple's products cost twice as much and worked half as fast as Windows or Unix machines, and they communicated with neither, McKnight said. Now, Apple's storage is one-tenth the cost of Windows, its processors are twice as fast, and it works well with both, he said.
Although Apple's server and supercomputing products are excellent, they still only represent a fraction of ManTech's overall procurement solutions, McKnight said, adding that he would be surprised if another integrator offered Apple products.
Apple is working to change the government's perception of its products and trying to become an approved vendor for government contracts, McKnight said.
Macs can run most of the bread-and-butter applications, such as Microsoft Office and Oracle software, that the federal government uses. Macs' stability, security, performance and cost match and sometimes outperform their Windows and Unix rivals.
Is this enough to inspire the same loyalty in government procurers as it does in Apple's core markets? Apple officials won't say. Only hindsight will tell.