The surprising reason why Apple was so gung-ho about its 5G iPhone

Verizon and Apple are teaming up on another sales pitch for the 5G iPhone 12 — and this time, they're aiming at business...

Posted: Nov 21, 2020 10:29 AM

Verizon and Apple are teaming up on another sales pitch for the 5G iPhone 12 — and this time, they're aiming at business customers.

The two companies held an event Thursday to showcase several ways businesses could benefit by using the iPhone 12 with 5G. 5G has higher bandwidth than existing networks, making it possible to have many more wireless devices performing data-intensive activities, like video streaming, in one small area such as a factory floor.

The firms also announced an aggressive discount for companies that swap their entire "fleet" of mobile devices and switch to iPhone 12s on Verizon 5G, waiving all upfront costs, and charging no monthly fees for iPhone 12 minis.

The announcement highlights the importance of business-to-business sales for device makers and network operators. Apple's October event unveiling the iPhone 12 was focused heavily on consumer applications.

"This makes it simple, it makes it easy, it makes it affordable for enterprises to accelerate their transformation because of the power of 5G from Verizon and the device from Apple," Tami Erwin, CEO of Verizon Business, said in an interview ahead of Thursday's event.

For Apple, the partnership could provide a boost to the enterprise side of its business — a growth area for the company in recent years. iPhone features such as its "Secure Enclave" security system could have a particular appeal to businesses seeking to protect critical data.

"With iPhone, we set out to rethink how mobile can change people's lives for the better, including at work," Susan Prescott, vice president of Apple's Markets, Apps and Services, told CNN Business in a statement. "We've added features for enterprise with every major software release. Today, virtually all of the Fortune 500 companies use iPhone, iPad and Mac, and momentum in business is growing."

Apple doesn't break out enterprise sales — the last revenue number it provided for the enterprise business was $25 billion in 2015. Wedbush analyst Dan Ives estimates that enterprise iPhone sales currently account for around 4% to 5% of total iPhone sales, which translates to roughly $5.5 billion to $6.9 billion annually.

Strong sales of the iPhone 12 to enterprise customers could also help Apple during a year when individual consumers may be hesitant to upgrade amid the economic downturn and the limited consumer uses of 5G currently available.

On Thursday, the two companies demonstrated how iPhones can be used in a workplace with 5G infrastructure. For example, an iPhone 12 can be positioned with its camera monitoring a production line in a factory. Using an IBM app called Maximo Visual Inspection, the iPhone 12 can automatically detect if there is a defect with a product on the line.

Verizon and Apple are betting that getting more 5G devices into the hands of companies will give developers greater incentive to create apps that use the new network technology, and potentially lead to even wider adoption.

"What we love about this is that you create an ecosystem, and they will build and they will innovate and they will accelerate the rate of transformation," Erwin said.

For Verizon, the partnership also provides an opportunity to clinch potentially lucrative enterprise customers for its 5G network.

The major wireless carriers have spent tens of billions of dollars building out their 5G networks, and competition is heating up to secure market share. Many expect commercial use of 5G to drive more incremental revenue than consumer applications.

Verizon on Thursday teased several 5G options for businesses aside from relying solely on the public network. Companies can also have private and indoor 5G networks installed, which may provide greater functionality — given how 5G technology works — as well as increased security.

Honeywell and General Motors are working with Verizon to build 5G networks in their facilities, Verizon said. GM is installing the technology inside its "Factory Zero" at the Detroit-Hamtramck Assembly Center, where it builds electric vehicles.

"If I think about 5G and what we've done over the last 18-months, we've gone rapidly from a PowerPoint concept to really proof of concept to, now, commercial availability," Erwin said.

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