Apple's iPhone revenue declined in the first quarter 2020, but a big jump in services revenue and more than $10 billion from its wearables category highlight newer sources of growth. The Covid-19 pandemic hurt the quarterly earnings overall, but Apple CEO Tim Cook indicated that more recent sales numbers provide reason for optimism, and at least one Apple business expects the coronavirus to accelerate rather than hinder its near-term success.
It's an Apple business most people don't know much about, if they know it at all: Claris, which sells the low-code application development software called FileMaker.
"There is a massive opportunity for low code to help in the Covid-19 situation," said Claris CEO Brad Freitag, who took the reins at the company last year and rebranded what had long been known as FileMaker under the Claris name.
That's particularly true in some of the sectors with the most immediate need to quickly develop new and unexpected solutions as a result of the pandemic, including government, health care, education and nonprofits.
"Software is not eating the world now," says Freitag, referencing a famous 2011 quote from venture capital Marc Andreessen. "It is helping to heal the world, and the low-code category awareness for nonprofits, government, health care and education is up, and it can have an immediate impact, a profound impact."
Claris has worked with health-care providers to develop apps in as short as one day, including one for a hospital in Europe that became critical to make real-time medical decisions for Covid-19 patients.
"They had a decision tree map drawn on paper for triage of Covid patients," Freitag explained. "Walking into some central room in ICU and going through a decision tree to determine next steps ... but the challenge with that sheet of paper in treatment is changing in real time."
A mobile app that took a day to build could outline a decision tree and, as new information surfaced, create a dynamic way to modify the decision tree.
"Government, health care and education jump out for a variety of reasons," Freitag said. "Teachers working on distance-learning efforts which could not be supported economically before but is now practical; governments struggling to get stimulus checks out using antiquated systems; and just everyone working from home, knowledge workers able to work remotely and be productive but need new systems for collaboration."
He said remote work is one change that will become permanent and will require many more software solutions never thought about before by organizations.
"You never wish for a crisis to support your sector, but I think it will grow even more than forecast, partly because we will head into a downturn and that will put more cost pressure on organizations solving complex digital problems," the Claris CEO said. "In a strong market, they could solve it with a bigger budget and industrial-strength solutions, but we are going to see a more pragmatic approach."
There are concerns that a prolonged economic slump will lead to a greater focus from IT managers on cost-cutting in software, which has grown to represent 50% of the enterprise since the financial crisis, when it was IT hardware that saw the steep cuts.
"Right now we're substantially in investment mode for R&D talent and think there will be significant hiring opportunities in the post-pandemic economy," Freitag said.
"In a recession, people have to get creative on value justification. We'll be happy to go up against big vendors in terms of business case justification," said the Claris CEO, who worked at Oracle for more than a decade.
Freitag is not alone in seeing a major opportunity now.
John Rymer, a cloud analyst at Forrester Research who coined the term low code, tells CNBC, "We think this will have a profound impact too on the move to low code."
But Rymer stressed that the case is more logical than proven at this point. "What we are seeing is companies that are already in the game, already working with a low code vendor, we're seeing them expand utilization, but we have not seen as many new companies coming into the market," he said.
"I think we are being reminded once again that there are lots of people who are not aware of low code or sold on it, or in the market for it yet. But I am waiting for it, waiting for the pain to become so great that new customers start to recognize it and come in," Rymer said.
Rymer noted a report he recently reviewed about a hospital taking weeks to build a visitor tracking app during the Covid-19 outbreak, which could be developed in low code in a day, as a logical use case for an organization that should soon see the logic of the low code approach. "We see the potential for a big moment," Rymer said. "In health care, government and education there are unending new use cases," he added.
Claris says it has seen a spike in inbound inquiries amid the crisis, including both ongoing tech support and new customers, with big spikes in health care, education and the logistics sector. "Logistics was new to me, but it makes sense ... trucking, shipping parcels. It makes perfect sense given how much happens at small and mid-sized companies and not just Amazon," Freitag said.
Starting from March 1, before Covid-19 was a major issue across the U.S., through the peak period of the crisis, the spike has been as high as 50%, he said.
"We've been doing this for several decades. This is our heritage, extracting away complexity," Freitag said.
The Claris CEO cited a reason for increased interest in low code that also has been cited by Alphabet's Google Cloud and Microsoft, which are placing greater focus on low-code solutions for enterprise clients to capitalize on the need among companies for less complex coding solutions that can lead to faster project completion across more business functions.
That reason is the scarcity of comp sci grads to staff roles. Microsoft expects 500 million new apps to be built in the next half decade, which is more than all the apps built in the last 40 years. "If that's true, 450 million have to be built with a low-code tool," Charles Lamanna, corporate vice president of the citizen applications platform at Microsoft, recently told CNBC. "There are not enough humans to code fast enough to build that many."
"Recruiting was hyper-competitive before, and that will favor low code, more broad emphasis on reskilling and upskilling talent that want to pick up technical skills. Prosperity will be created by individuals who get these low-code skills," Freitag said.
Claris current works with Amazon Web Services, but as the competition between the big cloud platforms becomes more intense, Claris will probably expand with Microsoft Azure and Google Cloud, Freitag said, even though the Apple subsidiary has not partnered with them previously. Like many low-code companies, "we're agnostic by philosophy," Freitag said.
Rymer said it makes sense for Claris to move to a multi-cloud approach to evolve from its history, too, which has focused more on what is referred to as on-premise service. "They have tons of customers running 'on prem,' but the future is in the cloud, and that is where new demand is," said the Forrester cloud analyst.
"On-prem software will exist for long term," Freitag said, but he added, "the cloud is about affordability and rapid up-time and scale."
Apple's enterprise business has focused more on selling computers than software. Apple does not disclose FileMaker sales, but Claris is profitable — and has been for more 20 years, Freitag told CNBC at the time of a rebranding under the Claris name last summer.
"For any company coming under cost pressure, and with IT a cost center, they will know that they can't give a marketer a Java stack, but they can give them reasonable governance about a low-code stack and that gives them more job security too," Freitag said, explaining that low code provides staff outside of core IT a way to upskill themselves.
Unlike parent company Apple, which is seeing big growth from its services business and newer areas like subscriptions to TV and music streaming, Claris has no goal to go directly to consumers. The low code company has over 50,000 business customers and millions of FileMaker downloads, with a sweet spot among small to medium-sized businesses with between 100 to 1,000 employees across many industries and business units. And it is not a U.S.-centric business, with 58% of its customers overseas and 42% in the U.S., a business mix Freitag does not expect to change soon.
The company has most recently launched its Claris Connect enterprise product which enables users to connect and integrate services like Slack and Dropbox with their FileMaker apps. "We are a workplace platform, and what I look for is lots of developers on the platform making money. Their prosperity means incremental prosperity for me. That's what I want to build."
In all, FileMaker is integrated with over 70 different cloud services.
"Businesses across sectors will be hard hit and there are tons of ways to make them more efficient, companies as small as 25 to 50 people with a $25,000 investment," Freitag said.