How Apple-IBM Deal Can Boost Mobile Enterprise

by CXOtoday News Desk    Oct 21, 2014

mobile apps

The landmark Apple-IBM deal that was announced in July this year, has started to ripen, as the first batch of apps and software from the partnership will roll out next month. According to some analysts, the partnership of the two one-time rivals can be a boon for the iPad market, where sales continue to shrink in recent times.

While it is undoubtedly a win-win deal that will bring both the companies into the limelight, it “could change the way businesses function,” as Apple CEO Tim Cook hinted at a recent analyst call.

Experts believe that the partnership aims to address key industry mobility challenges and spark true mobile-led business change. CFO Luca Maestri told Reuters that Apple and IBM have already signed up about 50 initial corporate clients for software solutions and apps developed jointly under their recently forged strategic alliance.

Their alliance can help Apple delve more deeply into the business of serving corporate clients, a business now dominated by IBM, Hewlett Packard and Microsoft Corp. In a July interview, Apple’s chief executive Tim Cook said, “For the first time ever, we’re putting IBM’s renowned big data analytics at iOS users’ fingertips, which opens up a large market opportunity for Apple.”

Ginni Rometty, IBM chairman, president and CEO, too said the alliance “will build on our momentum in bringing these innovations to our clients globally. Apple is looking for growth in the business community for their devices like iPhone, iPad and iCloud services. IBM is the company who can help Apple do just that.”

As hardware unit continues to slump, IBM attempted to shift its focus to software and services especially mobile and cloud. After a string of mobile software acquisitions, the company hopes software sales will contribute half of its total profit by 2015 and this is just a step in that direction.

At the same time, Apple is looking to boost growth amid a global onslaught of smartphones and tablets using the Google Android operating system. While Apple is popular among many consumers, its appeal to corporate users has been more limited. Research firm IDC said it expects Android smartphones to remain ahead of the pack with an 80.4 percent market share in 2014. Apple, meanwhile, saw the iPad sales slump and its market share tumbled in the last two quarters.

IBM will benefit strongly from the deal, especially after its shares dropped close to 8 percent in early-morning trading and will bank on Apple, the market leader and innovator of the year. However, the combined force can bring tremendous gain for IBM as well, just as it would to the business community.

Jefferies analysts predict the partnership could bring in 42 million new users for Apple. In other words, sales of iPhone and iPad in the enterprise will shoot up in the coming month. The companies earlier mentioned that they will build more than 100 custom-built enterprise apps for Apple’s iPad and iPhone customers in retail, healthcare, and other vertical industries.

Roger Kay, principal analyst at Endpoint Technologies Associates believes Apple hasn’t had great luck with enterprises, while IBM is trying to expand its mobile footprint.

IBM will leverage its cloud services — such as device management, security and analytics to create apps for iPhone and iPad, making these phones more customized and secure. As Kay mentions in his blog, IBM is a bit more refined at hand-holding and customizing products for enterprise customers than Apple, which makes products for the mass market.

 The partnership will therefore give it a clear opportunity for the market leaders to get into the pulse of the unexplored enterprise market that is increasingly relying on mobility to grow and innovate.