Apple's new licensing for apps gives it a huge enterprise advantage

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One of the biggest iOS 7 advances for enterprise environments is Apple's new volume licensing model. The new model is a massive step forward and arguably is the most significant enterprise advance that Apple has made in iOS 7. It also has the potential to be a huge competitive advantage over Android in business environments.

Purchasing apps for enterprise users has long been a sore point for companies looking to support BYOD users. Apple's iOS App Store and Google Play were both developed as consumer marketplaces. Purchasing or downloading an app requires a user account with either company and ties purchases to that account, operating under the assumption that the person buying/downloading the app will be the user. That model has its roots in other forms of consumer-oriented digital content that both companies also sell like ebooks and music.

The problem with that approach is that it doesn't support a way for a company to purchase apps on behalf of users. Apple attempted to address this issue with its Volume Purchase Programs (VPP) for both businesses and schools by allowing an organization to purchase a series of redemption codes that could be distributed to users. The big problem with the VPP codes has been that they still rely on a user's personal account (known as an Apple ID) and when a user redeems one of the codes, they become the owner of the app.

If employees leave the company, they take the ownership of those apps with them. If their replacements need the same app, the company has to buy another copy that will again be tied to each user and this second investment will be lost if they leave the company. Apple did offer administrators using its Apple Configurator solution a way to assign apps to devices rather than to users, but the approach is rather cumbersome and can only effectively be used with company- or school-owned devices such as those shared among a pool of users.

Merging a consumer-centric store with enterprise licensing needs

The core problem here is that apps are treated as products to be purchased rather than software to be licensed. Apple's new licensing mechanism brings the traditional enterprise licensing paradigm to iOS devices and apps.

Although administrators select and purchase apps through the VPP version of the App Store, apps are no longer distributed using redemption codes. Instead, the VPP store records the apps (and quantities) purchased by an organization. MDM APIs allow mobile management solutions to invite users to enroll their devices into the licensing program. As they do, administrators gain the ability to assign apps to enrolled user devices or to allow users to select apps through an enterprise app store. An administrator can then purchase additional licenses if needed.

When the apps are loaded on employee devices they also become part of the user's personal App Store purchase history, allowing users to install them on other devices that are tied to their Apple ID. Essentially they behave the way App Store purchases have always behaved. When a user leaves the company, the mobile management solution can use those same APIs to revoke the license from that user. This doesn't immediately delete the app, however. Apple will send a notification to the user saying the app has been revoked and give them a grace period to decide whether they want to purchase the app on their own.

Much of the heavy lifting in the system is accomplished by Apple and VPP App Store. Although apps are assigned using the Apple IDs of employees, Apple has developed a system in which IT administrators don't actually need to know those Apple IDs. This is most likely to preserve user privacy and security as Apple IDs are the central gateway to just about every Apple service - App Store and iTunes Store purchases, iTunes Home Sharing, iCloud, iOS device activation, iOS 7's Activation Lock, and Find My iPhone/iPad/iPod/Mac.

From an administrator's perspective, the new model works very similar to what's been around for decades - single source software licensing coupled with network-based deployment tools. From a user perspective, it's extremely similar to the consumer App Store system.

A potential goldmine of savings

Cost savings and return on app investment is the single biggest advantage that this new model offers. The potential savings could be massive for a large enterprise.

Imagine your company has 10,000 BYOD workers. Each one uses a $10 productivity app that the company pays for and delivers to their devices. That initial outlay adds up to $100,000. Now imagine 1,000 of those employees leave and an equal number are hired to replace them. Purchasing that app for those new users costs another $10,000. Imagine that 1,500 more leave and replacements are hired over the next couple of years. That's another $15,000. Now imagine scaling those numbers up to include multiple apps at different price points and hundreds of thousands of users. At that volume, which is realistic in many large companies, the lost investment under that model becomes massive over the course of a few years.

The cost savings that Apple's new model is poised to deliver are large enough that the impact is almost certainly going to be noticed well beyond the confines of the IT department. They're certainly noticeable by the finance or accounting department, but finance isn't alone. The entire senior management may see this savings as a truly strategic advantage. Division or department managers that are expected to budget for some or all of their technology needs - including apps specific to their line of business tasks - are going to notice. If the move enables a company to provide apps rather than asking employees to take on the cost of buying them, HR is going to notice because that could be a perk that wins over potential hires. The numbers might even attract active interest from a company's board as well as its internal leadership.

Those are some pretty important advantages over Apple's biggest competition. The arguments over platform security or the challenges of fragmentation related to Android hold sway with IT leaders when it comes to considering support or preference for the platform. They are, however, generally IT-specific concerns that might also get the attention of risk management folks but not the overall senior leadership of an organization (and the most recent versions of Android as well as Samsung's SAFE and KNOX programs are stemming those arguments). Arguments about major cost savings, however, are not IT-specific.

As MobileIron's ?Vice President of Strategy Ojas Rege put it to me during a recent conversation about iOS 7, this is a "huge competitive advantage" that Apple is building into the iOS ecosystem. It is something that moves the goal posts in the battle for enterprise mobility even if it doesn't seem immediately obvious compared to the other advances iOS 7 includes for enterprises.

Preferring iOS 7 vs. banning Android in a BYOD world

The biggest rebuttal to this new licensing model delivering a major leg up for Apple is that in a BYOD world, enterprise mobility is about what users want not what IT or accounting or HR or anyone else wants. There's some merit to that argument. IT did spend a few years fighting to keep the iPhone out of the office and it was the BYOD trend that changed the status quo (though you can argue that the trend also coincided with Apple beginning to deliver enterprise integration and security in iOS).

It's true that some users will want to bring Android devices into work instead of an iPhone or iPad. If a company says that they're an iOS-only shop, some users will still bring in Galaxy Notes or Nexus tablets and use them and just not let IT or senior management know about it. That's the nature of BYOD and it's the new normal for IT.

This isn't, however, about dictating a platform. It's about preferring a platform, which is a very different concept.

Many organizations already have policies where only certain devices or platforms are officially supported, though most will allow other devices. Many also use graduated levels of access, allowing a ranking of devices based on hardware, security capabilities, or mobile OS version. Those that are more preferred, mostly based on support for specific security options, are granted greater access to network resources.

Access, however, isn't the only way that companies express preference for a platform or a device. Cost sharing is another. Some organizations offer to kick in more money towards the costs of a user pays up front when buying a devices or the monthly bill if a user selects a preferred device. Some only offer cost sharing options on preferred devices.

Cost sharing could take an even more basic form in that a company could decide to license iOS apps for users, knowing they'll keep that investment even if the user leaves the company, but not cover the cost of purchasing the same app for Android users. You could call this discrimination, but it's something that could be logically championed as a cost-saving mechanism simply because the company doesn't have to buy the same app again and again as turnovers in staff occur. In that situation, there's a very obvious perk to choosing an iPhone or iPad over other options.

It's also important to note that while Android has the most marketshare in the consumer space, Apple has managed to hold onto a significant majority of the enterprise and business markets. This new model may actually increase Apple's advantage for two reasons, one of which is the direct cost savings. The other is mindshare of enterprise IT leaders. This move is truly illustrating that Apple understands and is willing to meet the needs of its enterprise customers.

Google could level the playing field

Apple may have built a competitive advantage with its new licensing model, but there's nothing stopping Google from creating a similar solution. At Google I/O in May, the company unveiled Google Play for Education, a service similar to Apple's VPP for education that allows schools to buy apps in bulk and distribute them to teachers and students. Last year, Google created an enterprise app store feature called Google Play Private Channels for Google Apps customers that can be used to distribute internal Android apps to employees and that supports user feedback and ratings although the service doesn't support third-party apps from the main Google Play store.

The question isn't really whether or not can Google use these as stepping stones to a similar licensing program. The company clearly has the resources and is known for introducing feature limited or beta services and then iterating them into more full featured solutions. The question is whether Google sees enough value in proposition to pursue it.

In theory, Google isn't the only company that could take on this challenge. Mobile management companies, wireless carriers, Android manufacturers, and companies that offer alternative app marketplaces for Android users could create a similar program without Google's help.

Again the question isn't whether any of these players could replicate a similar solution, because it's certainly feasible to see some of them - Amazon and Samsung being two major examples - doing so. The question here, however, is how broad a market can they address. If Google developed a solution, it would almost certainly be available to all Android users (or at least all users with devices running a specific Android version and above). In the case of manufacturers or carriers building out a similar store and licensing solution, however, the market would be much more limited. It would probably share one of the biggest criticism of Samsung's KNOX platform: that it is limited to a very small pool of Android devices.

That said, a success centered around a specific manufacturer could give that company the same competitive advantage as Apple over other Android manufacturers. If multiple companies try to create their own proprietary volume licensing schemes, however, the result will more likely be more fragmentation and confusion around Android in the enterprise than there is today.

Google isn't the only competition

Although Android and iOS are the dominant platforms both in the consumer and enterprise markets, they aren't the only platforms out there. This type of model is actually baked into the corporate DNA of Microsoft (and BlackBerry, though it's hard to see BlackBerry being able to leverage it at this point). Many IT pros were actually hoping that Microsoft would be able to establish a dominance in enterprise mobility because of issues like licensing and device management, but so far Microsoft hasn't been able to build the mindshare needed to break through in a consumerized world.

Amazon could also be a competitor. The company recently announced business features and mobile management and encryption capabilities are coming to its Kindle Fire line of tablets and it already has its own established app store that it could leverage for a volume licensing model. Amazon also has some established programs for enterprise and education customers for deploying apps and content. Amazon can also compete very well on price. If the company really wants to cash in on the BYOD trend, this is a perfect way to do it. Like Microsoft, however, the challenge is building enough mindshare among users and enterprise companies.

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