Corporate Purchasing and the War for Smart Phone Domination

Could purchasing habits at corporations serve as a leading indicator of any upcoming tipping points in the war for smart phone domination?

This is the lofty question I’ve set to answer in the post you’ve just started reading.

Much has already been said and written about Apple’s mind-boggling push for the heights of corporate stardom, driven in huge part by the relentless success of the iPhone. As competitors release new models, skeptics announce the pending demise of the iPhone… only to be repeatedly put to shame, come earnings release time, when Apple consistently keeps announcing record-breaking financial results (click here for the latest example from yesterday).

Many people subconsciously understand that Apple’s domination cannot continue to reign undisputed for too long — examples from the past remind us that the Apple bubble (like any other bubble) will eventually burst. The big, unanswered question is when this will happen. Could a simple look at the purchasing habits of corporate IT departments serve as the warning flag for this much anticipated tipping point?

Being a realist who remembers the ups and downs of many big players in the corporate world, I have no doubts that the iPhone/iPad fad will eventually fizzle. Nevertheless, it has been hard for me (and for many others, I am sure) to predict when this fizzling will eventually take place. Fads start and end in an elusive manner — which is why they are fads in the first place. As I’ve been thinking about this quandary, however, an interesting hypothesis has started to grow on me. What if we look at what mobile devices Corporate IT departments purchase? After all, it was Corporate IT’s embrace of everything Windows related in the late 1980s and throughout the 1990s that made Microsoft such a behemoth. So shouldn’t that be the case in the mobile world too?

My logic is really simple:

Most of the naughts decade was dictated by the Blackberry. Corporate IT departments were buying the bulky, QWERTY keyboard-enabled devices by the scores — mostly because of their email reliability and security features. That made the Blackberry the undisputed ruler of the corporate mobile world. The more interesting, and often neglected, corollary is that at least some of the drive for the Blackberry’s corporate omnipresence was also due to employees’ growing desire for those devices. Employees saw their peers toting Blackberries and wanted to have the same accomplished professional look. Blackberries, thus, quickly became the status symbol in the corporate world.

Then, 2007 marked the first-generation iPhone’s debut on the market. That created a big wave on the consumer side but had its ripple effect in the corporate purchasing world, as well. This time, however, it was more of a game of “pull” rather than “push.” The iPhone had become an overnight sensation with consumers. As time passed, more and more employees started craving the device, while IT folks started realizing that it would not be such a big deal if they replaced the Blackberries with iPhones.

Once the IT departments’ gates were opened, it was only a matter of time for the iPhone to flood the corporate space. Many employees were eligible for phone upgrades after having used their Blackberries for two years,  and most of those opted for an iPhone. Similarly, as the labor market in the United States picked up, corporations started on-boarding new employees and most new hires got shiny iPhones on their start days. Blackberry was thrown out into oblivion, and legions of corporate employees flocked to the new king, the iPhone. As the old French adage goes: “Le Roi est mort, vive le Roi!” (“The King is dead, long live the King!”)

While this change in the corporate mobile install base went largely neglected by the mainstream media, it was a fact of life in most companies and organizations in North America and Western Europe. It was surely not the sole factor contributing to the iPhone’s/iPad’s strong growth over the past year or so, but it would be foolish to dismiss its significance.

Assuming that my logic makes sense (and it certainly makes sense to me), I am starting to see some very early warning flags about the pending tipping point. This past week, I saw two executives in my company upgrade their iPhones to the Samsung Galaxy Note. As the Galaxy Note’s larger screen makes that phone a cross between a smart phone and a tablet, those same two executives no longer seem to carry their iPads to meetings either. Of course, it is still too early — we are talking about only two observations. But the word is out now throughout the organization — the Samsung Galaxy Note has gotten on the approved device list. More defections from the iPhone to the Galaxy Note will certainly follow in the upcoming months.

Given that my company’s IT department is not at the forefront of new product adoption, I am sure that similar trends have already started at many other corporations. Hence, the early warning flag that I mentioned earlier.

Of course, this is pure speculation on my part but it is nonetheless an interesting hypothesis.

Do you see similar adoption of Samsung Galaxy Note (or the sizzling hot, new Windows-based Nokia Lumia 900) at your organizations?

What are your thoughts on my main premise that a look at corporate purchasing can give out hints on a potential tipping point in the war for smart phone domination?

Alternatively, are you an Apple fanboy who believes that the iPhone/iPad will take over the world completely and dominate it forever?

Drop me a line in the Comments section and let me know your point of view.

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