Apple Stock Predictions: It’s True, Apple Will Never Crush Microsoft With Business Customers

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Apple Stock Predictions

  • Office 365 and Microsoft Office 2016 are inherently superior to any Apple-made productivity software.
  • Even with IBM’s help, Apple will never crush Microsoft’s hold on enterprise software.
  • Dividend Growth investors will continue to favor Microsoft over Apple. Microsoft has a better platform-agnostic approach toward monetizing enterprise users.
  • Apple’s MacBook and iPad for the enterprise business could suffer from Microsoft’s ambitious Surface Pro 4 and Surface Book campaign.
  • Apple needs a better productivity software product than iWork.

It’s been more than year since Contributor (now Seeking Alpha Editor) Rocco Pendola claimed that Apple (AAPL) will allegedly crush Microsoft (MSFT) with business customers. Pendola argued for many years that Apple was clearly going after the enterprise or business customers of Microsoft’s Office software. Unfortunately for him, like it was in 2012, 2013, and 2014, this year again proved his theory wrong.

As per the latest Microsoft earnings report, overall software sales to enterprise clients remains a robust growth opportunity. Mr. Pendola argued that workers themselves determine want they want to use as their main office productivity suites. However, he should try reading the article that said Office 365 is now the leading cloud-based productivity suite among enterprise users. Business customers continue to trust Microsoft Office and Office 365 over any other competing products.

It gives me extreme pleasure to say that there’s still not many office workers that are telling their managers or bosses to discontinue their Office 365 subscriptions, or replace their Mac OS X Office 2011 with iWork. Pages, Apple’s $19.99 answer to Microsoft Word has a horrible average 2.5-star rating among 9.5k Mac users. Business users is unlikely to consider Pages as a replacement for Word when it is clearly an inferior product.

Why It Matters

Apple urgently needs to hire more software developers to help it create better productivity apps to attract consumers and business users. The chart below told me that employees long-accustomed to the desktop version of Office still continue to adhere to Microsoft’s Office software. Nobody can dare say now that Apple could compete with Microsoft with business customers when clearly the current market trends continue to tell us that Apple’s iWork software suite is a non-factor in the enterprise software industry.

apple stock predictions

(Source: Cirrus Insight)

On a long-term outlook Apple is unlikely to crush or even create a tiny dent in Microsoft’s almost-monopoly position among business software users. Apple has to pour resources and manpower to develop iWork or its cloud version to be competent enough for employees to seriously consider it as a replacement for Office 365 or Microsoft Office 2013/2016.

Alphabet (GOOGL) tried with its cheaper Google Apps For Work product but it never won the support of many die-hard desktop users of Microsoft Office like me. The reality is that Microsoft is crushing Alphabet and everybody else when it comes to enterprise business software.

apple stock predictions


My Takeaway

Current enterprise market trends proved that Mr. Pendola’s claim that Apple could not yet compete with Microsoft in enterprise productivity software. I’m also dismissing his other claim that the partnership with IBM (IBM) would help Apple improve its chance in crushing Microsoft in the enterprise. More than a year after the IBM partnership was announced, Apple has yet to announce any major win from the IBM deal.

On the contrary, Motley Fool Contributor Jamal Carnette discussed just how Apple’s IBM-helped enterprise-centric products are actually posting declining sales.  I hate to say this, but Tim Cook and Mr. Pendola did not seem to consider that IBM might be a poor choice for Apple to partner up with. A little history lesson should tell us that it was Microsoft that killed IBM/Lotus in the office productivity software business.

Unless Apple itself works harder to create a 1:1 replica version of Office 365 or Microsoft Office, there is really almost zero chance that business users will consider iWork as a serious office software tool. The reality now is that the iPhone/iPad-using business user is likely subscribed to Office 365 and not using iWork.

In spite of my misgivings about Apple’s current inability to compete with Microsoft, I Know First has a very loud 1-year Buy signal for AAPL. I attribute this bullish forecast to the still strong cash flow from iPhone sales. If only Apple employees are as good in creating software like they are with smartphones, AAPL might just hit the $150 price target of many analysts soon.

apple stock predictions

My own longs-term speculation now is that Apple’s hardware products for the corporate sector could likely suffer from Microsoft’s new Surface Book and Surface Pro 4 products. The latest iPads remain expensive media-consumption gadgets that are not yet compatible with most x86 platform-based native enterprise productivity software.

I dare predict that one year from now, ARM-based and iOS-only iPads could become almost obsolete or niche-limited products in the enterprise market. This is precisely because of the presence of Windows 10 tablet/notebook products like the Surface Pro 4. One year from now, not many business users will also consider using the current version of iWork as their main tool for daily tasks.

One year from now, I might be long on again Microsoft but not on Apple. Unlike Apple, Microsoft is a terrific and consistent dividend-paying company that also tout captured-customer-base advantage on the enterprise and consumer sectors. Looking at the chart below, any Dividend Growth Investor will also prefer Microsoft over Apple. In spite of its over $200 million cash hoard and record quarterly profits, Apple is not known for its dividend payments. AAPL’s attractiveness would really improve if shareholders get decent regular dividend payments.


apple stock predictions


Unlike Apple, Microsoft’s new CEO also believe in a platform-agnostic approach toward monetizing mobile users. Going forward, I do not think Apple’s non-hardware products like iWork or Final Cut Pro will grow in sales if they remain exclusive to Apple’s OS platforms.

Apple will have to go platform-agnostic if it really wants to make an impact in the enterprise software market.