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Opinion: Seven reasons why the IBM partnership could be a pretty big deal for Apple

Wall Street seemed pretty unmoved by Apple’s announcement of its partnership with IBM, the pre-market share price barely twitching, and analysts pointing to the high level of existing iOS usage in the enterprise sector, suggesting that only trivial gains would result.

Part of the reason for that impression is the hype Apple has given to the penetration level of  iOS devices in enterprise. Back in January, Tim Cook described the numbers as “unbelieveable,” stating that the iPhone is used in 97 percent and of Fortune 500 companies and the iPad in 98 percent.

It doesn’t sound from these impressive figures that there’s much room for growth. But I think the reality is somewhat different … 

First, the metric ‘used in X percent of companies’ isn’t a very meaningful one in isolation. Technically, if a company buys a couple of iPads, Apple can say that iPads are used in that company. We often have no idea whether those Fortune 500 companies have been buying iOS devices in the hundreds, thousands or tens of thousands.

If it turns out that iPads are used only by a handful of senior execs, for example, there could still be massive potential in rolling them out to an entire sales force.

Second, while BlackBerry may be effectively dead in the consumer market, it still has a significant grip on enterprise. Inertia and familiarity mean many large companies have stuck with the dying smartphone platform, but that is unlikely to be the case forever. Pushing iPhones with business apps and proper enterprise-level systems support could, over the course of the next few years, have a huge impact.

Third, while there are markets where iOS is dominant in the business sector, there are others where there is still huge potential for growth. Business Insider pointed us to Citrix data showing that while Apple dominates the Asia Pacific region, it holds less than half the market in EMEA (Europe, Middle East and Africa) – and even in North America, a third of the market remains up for grabs.

(Note that these numbers are for a particular segment of Citrix customers, so are indicative rather than definitive.)

Fourth, as Fortune‘s Elmer-DeWitt observes, while Apple’s previous partnerships with IBM have been less than lasting (PowerPC, abandoned in favor of Intel; Taligent, a joint programming language later abandoned by both companies; and OpenDoc, killed by Steve Jobs as one of his first acts on returning to Apple in 1997), this one is very different in nature, playing to the strengths of each.

Apple is brilliant at developing devices and platforms. IBM is excellent at building and supporting enterprise-scale systems. Put the two together and you have a proposition that is likely to have substantial appeal.

Fifth, expanding iOS usage doesn’t just help sell iPhones and iPads, it also extends the reach of the Apple ecosystem within corporations. The overwhelming majority of the enterprise sector currently uses Windows PCs – and just as iPhones act as a gateway drug for consumers, leading to the later purchase of iPads and Macs, that same potential exists in companies.

I’m not, of course, suggesting this would happen overnight, nor on a massive scale. There are way too many Windows-dependent systems in use in large companies to make a wholesale switch to OS X a practical proposition – not to mention the investment in software. But it does provide Apple with a foot in the door, at least. Over time, it’s likely to have a positive impact.

Sixth, while iOS may be beating Android in the enterprise sector so far, businesses are showing increasing interest in Google Apps as a cost-effective and popular form of collaborative working. Penetration might be limited so far, but Google is pushing hard – and that has the potential to start hooking businesses into the Android ecosystem. Apple needs to defend itself against that threat.

Finally, consumer decisions are often based on familiarity. Many Android smartphone and tablet owners stick with the platform because they know how to use it, and there’s a hassle factor in learning something new. Exposure to iOS in the workplace could well help drive consumer migration to iOS.

The announcement may have sounded rather dry and unimportant in the grand scheme of things, but I think, over time, we might find that it turns out to have been rather more important than many currently imagine.

(Top image credit: TechCrunch Japan)

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Comments

  1. Google Apps is great for startups and tech sector folks, but O365 works better for those who are in a sector that leans heavily on Office and in my experiencing administering each O365 is less prone to needing hacks or workarounds that regular users won’t put up with. I had a company bail last year when GA support repeatedly told us it was literally impossible for them to support Office 2013 and more generally any Office SKU using Click-to-Run installers for months and months after release with Google Apps Sync for Outlook. Suddenly they reversed course after im guessing enough threats of migration or actual migrations off the platform. O365 has better documentation, a faster rate of improvement and better mobile and desktop support. Exchange just works and intersperses well. Sorry, feeling ranty… My iOS users are much happier on O365 and Exchange.

    • Ben Lovejoy - 10 years ago

      Yep, it’s not yet serious competition, but better for Apple to try to nip it in the bud than wait until it’s become better established.

    • Edison Wrzosek - 10 years ago

      Just wanted to chime in onto this praise of Office 365…

      I recently switched my SMB from Google Apps (which we started with initially) to Office 365 after we discovered Google was in violation of the BC Privacy Act because their ToS stated they mined data from confidential company emails and attached files.

      Unfortunately, after switching to Office 365, we discovered Microsoft doesn’t allow the access and use of Shared Mailboxes on iOS or Android devices, which we use for support, sales, and billing accounts. While workarounds exist, none are officially supported, and have hit and miss functionality.

      My experience with Office 365 tech support has been nothing short of a hair-pulling, blood-boiling disaster! We submitted a VERY detailed ticket to O365, explaining the situation, and requesting to speak to someone in at least L2 support or higher, so we can discover why some users report positive functionality and others don’t, in the hopes of enabling the support for us.

      The initial response took 48+ hours to be received, and was essentially a “we don’t know of any work around, this is not supported, goodbye” type of message, even though I had referenced the other support threads from Office 365 Forums where Microsoft MVP’s had proposed and demonstrated the workarounds.

      When I responded to this, again, 36+ hours turn around for a response, to someone apologizing, but still telling us to either go buy an additional license, use the horrendous OWA for iOS and Android apps (a complete JOKE of an app BTW), or take a hike.

      At this point, another response requesting to speak to an Exchange engineer, and then 72+ hours to receive a response, which basically is again from a L1 idiot saying we can’t help, goodbye.

      Another response, this time requesting a full refund, minus any time already used, due to lack of disclosure on their feature comparison matrix at time of purchase, and horrendous support, and now, NO RESPONSE.

      And BTW, their ENTIRE Office 365 team is in INDIA, and ALL the emails literally seemed completely scripted, as if no one there can think for themselves.

      I can see Office 365 working in SOME scenarios, but buyer be warned… If you need something even REMOTELY off the beaten path and need some support, you’re better off dealing with Samsung then the Office 365 team, THEY ARE WORTHLESS MONKEYS!

      My next stop will be either a Kerio hosted solution, or setup our own MDaemon system. I’m done with Microsoft!

  2. Taste_of_Apple - 10 years ago

    Reblogged this on Taste of Apple and commented:
    There are some smart points made here. I think at this point, the deal seems like a pretty big win for Apple already. They have just cut off several other companies from achieving much success in the space now. Blackberry and Samsung are both losing out with this deal.

  3. FJA (@FredAswad) - 10 years ago

    Why the focus on iOS only? Does the partnership not include laptops/desktops as well? The vast majority of enterprises have adopted Windows, with Mac OS/hardware seeing very little penetration. A partnership with IBM could address this.

    • Ben Lovejoy - 10 years ago

      IBM very much has a mobile focus, and initially at least the potential for OS X based systems is going to be limited. That will likely change somewhat over time, but iOS definitely makes sense as the starting point.

    • Mr. Grey (@mister_grey) - 10 years ago

      Most businesses, moving forward are emphasising mobile first, cloud second, and desktops third.

      Whether or not Apple makes desktop gains in the enterprise or whether Microsoft continues it’s hold, makes very little difference. It’s a dying market and currently seen by those at the forefront of things as predominantly irrelevant.

    • Eric Brodeur - 10 years ago

      Its an interesting point. But we replaced all desktops with Vmware VDI here, so its possible the desktop will die in most major enterprises soon.

      • Ben Lovejoy - 10 years ago

        Interesting times ahead, for sure!

      • Eric Brodeur - 10 years ago

        What would be interesting is Apple striking a deal to run OS-X in VMware VDI. On the hardware side, we still need a monitor with this so Apple could design a line of monitors. There is a need on the server side too, all those Vm’s run on servers.

  4. Jared (@GunningGunny) - 10 years ago

    I honestly think that most small businesses and other startups will not opt in for an Apple IBM solution simply because of the cost. Not to say that enterprise services aren’t expensive, I just think that Apple being Apple they will turn many off when a company wants to purchase 10 iMacs or MacBooks and then receives the bill. Whereas Windows would be more easier to chew as far as the bottom line is concerned.

  5. Laughing_Boy48 - 10 years ago

    Wall Street is definitely trivializing this Apple/IBM alliance. The claim is that it won’t boost iPhone or iPad sales enough to move the needle. This is how it always goes. Apple can’t do anything to move the revenue needle to boost the share price significantly. This deal would seem to guarantee that Apple is building a strong future with ties to the enterprise. Wall Street says it’s no big deal and Apple is still doomed. Go figure.

    • Ben Lovejoy - 10 years ago

      Though perhaps it’s Wall Street’s short-term view at play – this is a move for the medium to long term.

      • Eric Brodeur - 10 years ago

        Wall street is often clueless about IT, they understand consumer side a lot easier than IT needs. So they are pretty much clueless about this, because they know nothing about it.

    • jrox16 - 10 years ago

      Wall Street is full of morons. The past 15 or so years of all the Wall Street “genius” proves that. Short sighted, overly emotional, and technically ignorant. This partnership with IBM is a great thing and proves how serious of a company Apple is. While Amazon releases a DOA phone and talks nonsense about drone delivery which won’t ever happen, and Google plays with hobby projects that also will likely never happen (a modular smartphone, really guys?), Apple is building a rock solid future in very realistic ways. The stock drops…. meanwhile Microsoft’s stock gets a bump on news its laying thousands of people off. I hate the stock market.

  6. chrisl84 - 10 years ago

    If your business deals with anything confidential you’d be a fool to use Google Apps

  7. towamp - 10 years ago

    I also think Siri could take advantage of the Watsons technology.

    • Ben Lovejoy - 10 years ago

      Indeed, Seth had the same thought. It will be interesting to see how deep a partnership evolves from this.

      • jrox16 - 10 years ago

        Dare I say a “deep blue” partnership? (British aristocratic laugh)

  8. reichel0110 - 10 years ago

    This partnership could lead to an App 2.0 era, apps powered by IBM analytical capabilities e.g. Big Insight, Watson supporting business processes anywhere, anytime

    • Ben Lovejoy - 10 years ago

      Absolutely: IBM’s backend stuff with Apple’s front-end could get very interesting indeed!

  9. ricardogomez297167426 - 10 years ago

    Apple’s Achilles Heal has always been enterprise. Macs have always been difficult to administer on a large network and “it’s just not there” in so many ways.

    Maybe because IBM isn’t sexy as it was 30 years ago. And maybe standing next to Google, it’s not. But it’s THE large-systems integrator in the world. All the huge events and companies in the world are powered by IBM. And for better integration and exposure into the Enterprise, you can’t do much better than IBM.

    This is definitely a longer-term and Wall Street doesn’t see it as a get-rich-quick deal like so many other tech deals these days. But IBM & Apple are making the smart move which will provide themselves long-term growth and revenue. More for mobility than computing systems. Both should benefit.

    Total Win-Win.

    • Eric Brodeur - 10 years ago

      I discuss this with other IT workers and we think this will have a huge impacts on iDevices sales in the next few years. Even I you dont worked with IBM, IT will favor Apple devices knowing IBM apps and services are “exclusive” to iOS. Apple devices will be a “safer” choice, and there is nothing IT likes more than “safer” choices…

  10. stu99 (@stu99) - 10 years ago

    Anybody remember 3270 emulators, Citrix etc…

    • Eric Brodeur - 10 years ago

      I ma using one right now :-) Its called rumba. I have one on my ipad too but its not really usable without a physical keyboard: I used Apple wireless keyboard when I log with the ipad.

  11. drtyrell969 - 10 years ago

    Taligent 2.0. Destine for greatness. Just like before.

  12. John Darcey - 10 years ago

    A few side shot complaints about Microsofts support for office 365. There are many ICT companies that offer custom support with SLAs and I would think any serious company would have embarked on this path while understanding Microsoft’s support is most likely… L1.

    Now i’m excited for Apple. I’m excited for IBM. I really hope they deliver something special.
    Office 365 Fan. Apple Fan. Windows Fan.

  13. Rich Steinberg - 10 years ago

    Is there any reason why this partnership isn’t also about the rumored Apple/iOS payment system? With hundreds of millions of credit cards on file within the iTunes store, maybe Apple is looking for the years of expertise IBM has with their point-of-sales hardware & software. IBM has supplied and supported point-of-sales equipment to many large retail chains over the years and now Apple, the iPhone and iOS will allow IBM to take it mobile and Apple can use their knowledge to help implement it.

  14. This whole thing is an IBM publicity stunt. The financial analyst community is pretty unanimous that this pact will have very little impact on either company’s sales.

    It also defies common sense.

    1) The shift to BYOD is a reflection of enterprises not wanting to pay for mobile phones for employees. This announcement is the exact opposite of BYOD.

    2) If you accept the shift to BYOD (which means employees are bringing in both iOS and Android devices), then the idea that IBM is going to push iOS exclusive apps doesn’t work either.

    3) MDM solutions on the market are doing very well accommodating enterprise IT.

    • Ben Lovejoy - 10 years ago

      If it’s an IBM publicity stunt, why do you think Apple signed on the dotted line?.

      • Apple has nothing to lose and they get the bonus of demonstrating how serious they are in the enterprise. Really, what did Apple commit to here? The burden of this is all on IBM.

      • Ben Lovejoy - 10 years ago

        It’s certainly true that Apple has little to lose, but it is the company that says no to a thousand things … It doesn’t take decisions lightly. I suspect this is a very deliberate, considered decision.

    • Habip Kenan Üsküdar - 10 years ago

      Then the financial analyst community knows bleep about IT or it is filled with idiots who can’t read the writing on the wall.

      IBM+Apple partnership with Apple’s hastened efforts on the iWork suit along with their newer efforts handling their e-mail system is a clear threat to Microsoft’s dominance in enterprise.

  15. Computer_Whiz123 - 10 years ago

    That’s it!!! I’m buying apple stock…

Author

Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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