Apple and IBM are now partners. Having once defined the opposing sides of the personal computer coin, the two American giants are now uniting in a wide-ranging partnership to transform the business world. Playing to their strengths, one will provide iPhones, iPads, and excellent customer support, while the other will help craft "made-for-business" apps and add device management, security, and analytics for enterprise clients. It’s an overt assault on BlackBerry’s last bastion of strength, the phone in every suit pocket, and should strike fear into the hearts of other mobile contenders like Samsung, Google, and Microsoft. The scariest thing about this deal, though, is how simple and obvious it is. Enterprise is notoriously complicated, whereas this move rectifies one of Apple's most enduring weaknesses in a straightforward way.
"Mobile devices have transformed our personal lives. And soon, they’ll transform the way we work."
Apple is not a company with too many problems. CEO Tim Cook will happily recite the stratospheric revenues and profits generated by his company on a daily basis, however there’s no hiding from the inevitable slowdown in growth as the market for tablets and smartphones matures. That trend has manifested itself in a 16 percent drop in iPad sales over the last quarter and Apple must look to new sales avenues and a new customer base if it is to maintain its appeal with growth-hungry investors. The obvious answer of targeting developing markets is partially addressed by the cheaper iPhone 5C and discounts on older iOS devices, however none of Apple’s current iPad models are particularly suited to an entry-level market. So what the company needs is to appeal to a deep-pocketed demographic that can buy its products in volume. Hello, enterprise.
IBM’s reasons for entering this partnership are slightly more prosaic. The former PC maker has morphed into a leviathan software and services company that furnishes corporate IT clients with big-data analytics, project planning and consultancy, and the hardware infrastructure and maintenance required to run massive server farms. IBM continues to do well financially, but the hardware component of the business has proven to be a drag on its profits and it most recently agreed to sell part of its server operations to Lenovo for $2.3 billion. As it moves away from selling hardware itself, IBM remains conscious of the need to ensure it remains the predominant service provider for enterprise clients, which means playing nice with those who will be selling the next wave of mobile hardware upgrades. Hello, Apple.
Floating big business into the mobile cloud
Both Apple and IBM appear convinced that the future of business computing mirrors our present use of personal technology: mobile devices plugging into a cloud of supporting services on the web. "Mobile and the cloud" is also the mantra underpinning Microsoft CEO Satya Nadella’s new strategy, though the Apple-IBM tie-up isn’t an immediate threat to what Microsoft is doing, if only because Microsoft has had so little success in the mobile market.
All the corporate clients that are finally coming around to upgrading their Windows XP machines to the latest Microsoft software will do so irrespective of what Apple does. In fact, Apple’s new enterprise initiative is as much post-Mac as it is post-PC. In a press release spanning over 600 words and a separate splashy website dedicated to the new partnership, there isn’t a single mention of OS X or the Mac. The business desktop machine is a battleground Apple long ago conceded to Microsoft, but now the Mac maker is setting the foundations to genuinely compete in the next phase of innovation, which is the shift toward mobile devices as the primary computing platform.
The Windows experience has been gradually moving closer to that of a portable device like the iPad — laptops are booting faster, come with touchscreens, and can often turn into tablets themselves — and now iOS is meeting that challenge from the other side by growing more enterprise-friendly. It’s hard to overstate the value of IBM’s deep expertise and high reputation among corporate clients. Like most business decisions, the acquisition of new IT equipment is a risk-averse affair where making the best choice is less important than making a justifiable one that won’t get you fired.
IBM’s name will help scrub away some of the reluctance to embrace iOS for business purposes, and further reassurance comes from the lucid and comprehensive plan that the two partnering companies have announced. Whereas Microsoft’s vision for the future seems obfuscated in a fog of war and platitudes, Apple’s proposal to businesses is clear-eyed and focused. Apple and Microsoft are two of the companies best positioned to replace BlackBerry as the standard bearer around which most enterprises rally for their mobile needs, but as has been the case in the past, Apple is communicating that premise in a much more compelling fashion.
Crafting apps for industry will pose a challenge of fragmentation that Apple hasn’t yet faced
The challenge of completing the project envisioned by Apple and IBM should not be underestimated. In spite of habitually citing the fact that over 97 percent of Fortune 500 companies use iOS devices, Tim Cook concedes that "the penetration of these businesses, and in commercial in general for mobility is still low." Yes, a few execs might carry an iPhone or an iPad in almost every business on the planet, but Apple still only has a limited number of big clients that actually run thousands as part of their IT systems. To make them more compelling, Tim Cook and his close ally in this deal, IBM CEO Ginni Rometty, propose to tailor apps and services for every industry. But the specific app required by a Bank of America employee will have to address different needs to those of a Citigroup professional, meaning the truly compelling service would have to be customized on a per-customer as well as per-industry basis. And that’s just banking. Consider the fantastic fragmentation of US healthcare providers for an even better sense of the scale of the task faced.
Apple knows how to write iOS apps better than anyone else, it builds wonderfully tactile hardware and delivers consistently great customer service. IBM is the preeminent provider of analytics, consultancy, and system support for corporate clients. Ginni Rometty describes the pair as the gold standards of their respective fields while Tim Cook considers their combination "profound, landmarked, and historic." "There's no overlap, there's no competition, they're totally complementary," says the Apple boss in describing just how different the Apple-IBM relationship is today relative to 30 years ago.
For once, the dramatic language of a big new announcement is not exaggerated. The world’s most popular personal devices can become its most relied-upon business computers as well. Apple has turned what was a trickle of business-oriented additions to iOS into a comprehensive strategy for storming the walls of big enterprise. In seeking to address their few weaknesses, Apple and IBM could be setting the agenda for how we all do business for years to come.