iPads in the enterprise: 5 price negotiation tactics
- 21 July, 2011 06:09
The iPad enterprise adoption craze is underway, are you armed with the knowledge and resources you need to negotiate a deal for iPads in bulk?
Once again, Apple played up the iPad in the enterprise during its really big quarterly earnings call earlier this week: 86 per cent of Fortune 500 are deploying or testing iPads (along with nearly half of the Global 500), up from 75 per cent last quarter. Companies include Boston Scientific, Xerox, Salesforce.com, Alaska and American Airlines.
A major New York law firm, Proskauer, also began rolling out iPads. Apple's iconic device has gained an early foothold among hospitals. Apple says iPads are on the rise in the K-12 education market, as well as in colleges. And they've been showing up to work in the strangest places.
"To be this far into the enterprise with a product that's only been shipping for 15 months in the case of iPad is incredible because enterprise is usually a lot more conservative," says Apple COO Tim Cook.
A Forrester report indicates that tablet makers are specifically targeting industries such as healthcare, manufacturing and logistics, education and real estate because tablets have the potential to revolutionize traditional business processes. The report goes on to predict that more than 24 million tablets will be sold to U.S. consumers this year, up from 10.3 million in 2010.
But iPad enterprise adoption is far from easy. "There's just a hundred decisions that have to be made along the way," Steven Kayman, senior litigation partner and chair of the technology committee at Proskauer, told CIO.com.
Whenever iPad in business came up during Apple's earnings call, management software vendors and service providers reportedly tweeted pitches to help companies behind on the iPad adoption curve.
Now Forrester Research offers five negotiation tactics for sourcing iPads and other tablets:
1. Stick to basic tenets for sourcing hardware. For tablets other than the iPad, you'll want to publish an RFx (request for X) with viable technology vendors. These vendors are desperate to build critical mass quickly for their first-gen products, which should give corporate buyers an advantage.
Crafting an RFx also will help you build a business case for tablets, establish criteria and help you decide if the tablet must be an iPad or not.
2. Work the business-to-business channel for best pricing and options, not the consumer ones. Apple channel managers--yes, they exist--target strategic accounts in important industries by creating special programs that spur iOS adoption. You may be one of those accounts, so put your sourcing managers to work.
"Best-and-final-offer stage negotiations end up with the decision-makers at the table," writes Forrester analyst Clarence Villanueva in the report. "By being aware of the back-channel reach, you can mitigate the risk of the sourcing process and control the flow of information so it doesn't shift in favor of the supplier."
3. Buying is best when the vendor is at its most desperate. This means awarding business when a tablet maker is ready to close the books on its fiscal year or quarter. They will be more inclined to "do something special to help close deals during these periods," Villanueva writes.
If the timing isn't up to your liking, you can always negotiate a tiered delivery of tablets that spread out the business over quarterly ends. Of course, Apple probably doesn't need your business at the end of a quarter; Apple posted a record $28.6 billion in revenue last quarter, which included 9.2 million iPads sold compared to 3.3 million in the same quarter last year.
4. There are some Apple-specific data points that can help your sourcing managers--many of whom have little experience with Apple products--better negotiate for the iPad.
Did you know that Apple dealers gain a bonus margin point on all purchases with a minimum of 1,000 iPads? Savvy negotiators can get that point back, says Forrester. Moreover, if you're willing to commit to a $250,000-per-year purchase of Apple products, you'll be rewarded with better pricing and discounts from resellers under Apple's volume pricing program.
5. You may not need the iPad 2, so get original iPads on the cheap. There are fewer original iPads everyday, but you might be able to find some from a reseller whose existing clients welched on an order. One company's iPad upgrade strategy was to buy iPad 2s for executives who, in turn, handed down their original iPads to new employees.
Ready to negotiate for iPads?
Smaller corporate buyers best be forewarned, Villanueva writes: "In conversations with large account resellers, Apple's iPads are 'flying off the shelves.' As a result of this healthy demand, organizations are forced to endure purchasing through a rigid discount structure for quantities of less than 1,000 for all authorized Apple resellers."
Tom Kaneshige covers Apple and Networking for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Tom at firstname.lastname@example.org