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Apple, IBM Ink 'Landmark' Enterprise Mobility Pact

• By Jeffrey Schwartz
• July 16, 2014

In what the two companies are calling a "landmark partnership," Apple and IBM have announced a deal aimed at outfitting iPads and iPhones with enterprise-grade apps and solutions.

The agreement, announced late Tuesday, entails the two companies building 100 industry-specific, enterprise-grade iOS apps, as well as developing services specifically for iPads and iPhones, such as cloud-connected security, analytics and mobile integration solutions. The pact also calls for the two companies to provide AppleCare support for enterprises, while IBM will supply, activate and manage the devices.

Terms of the deal were not disclosed, though the companies described it as exclusive.

The partnership provides significant opportunities for both companies. It will help IBM advance its cloud and mobility management ambitions, and propel Apple in its largest advance into the enterprise to date.

"This alliance with Apple will build on our momentum in bringing these innovations to our clients globally," said IBM Chairman, President and CEO Ginni Rometty in a statement.

"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," added Apple CEO Tim Cook. "This is a radical step for enterprise and something that only Apple and IBM can deliver."

While the deal will certainly give IBM more credibility with its customers, its benefit to Apple appears marginal; the company's stock barely budged at the news on Tuesday night.

"We do not expect the partnership to have a measurable impact on the model given that Apple has already achieved 98 percent iOS penetration with Fortune 500 companies and 92 percent penetration with Global 500 companies," said Piper Jaffray analyst and known Apple bull Gene Munster in a research note. "While we believe that the partnership could strengthen these existing relationships, we believe continued success with the consumer is the most important factor to Apple's model."

Also, while the deal certainly won't help Microsoft's efforts to maintain Windows' foothold, which is already slipping, it may be a larger threat to Android given Android's much larger installed base of user-owned tablets. Even if the number of combined tablets and PCs running Windows drops to 30 percent by 2017, as Forrester Research is forecasting, enterprises will likely still plan to use Windows for business functions because of its ability to join Active Directory domains, as well as its ties to Windows Server, SharePoint, Office and the cloud (including OneDrive and Azure).

"It makes it more challenging for Windows Phone to gain ground in the enterprise, because IBM bolsters Apple's hardware in the enterprise, for both sales/support and enterprise apps," said Forrester analyst Frank Gillett. "And that indirectly makes it harder for Windows PCs to stay strong also, but that's incremental."

However, Pund-IT analyst Charles King sees this deal as having a more grim effect on Microsoft. "Microsoft is in the most dangerous position since the company is clearly focusing its nascent mobile efforts on the same organizations and users as IBM and Apple," he said in a research note.

The partnership was announced at an unfortunate time for Microsoft, whose Worldwide Partner Conference (WPC) is taking place this week. Microsoft has spent the conference rallying its partners around Windows and talking up its commitment to advance Windows into a common platform for devices of all sizes, from phones to large-screen TVs.

"The goal for us is to have them [end users] take our digital work-life experiences and have them shine," said Microsoft CEO Satya Nadella during his keynote address at WPC on Wednesday.