What’s the deal with the IBM/Apple deal?

So, unless you’ve been hiding under a rock this week, you’ve definitely heard about a historical global partnership deal forged between IBM and Apple this Tuesday. The whole Internet’s been abuzz for the last few days, discussing what long-term benefits the partnership will bring to both parties, as well as guessing who will be the competitors that will suffer the most from it.

Different publications would name Microsoft, Google, Oracle, SAP, Salesforce and even Blackberry as the companies that the deal was primary targeted against. Well, at least for BlackBerry this could indeed be one of the last nails in the coffin, as their shares have plummeted after the announcement and the trend seems to be long-term. IBM’s and Apple’s shares rose unsurprisingly, however, financial analysts don’t seem to be too impressed (in fact, some recommend selling IBM stocks). This is, however, not the point of my post.

Apple and IBM have a history of bitter rivalry. 30 years ago, when Apple unveiled their legendary Big Brother commercial, it was a tiny contender against IBM’s domination on the PC market. How times have changed! Apple has since grown into the largest player on mobile device market with market capitalization several times larger than IBM’s. IBM has sold their PC hardware business to Lenovo years ago and is currently concentrated on enterprise software, cloud infrastructure and big data analytics and consulting businesses. So, they are no competitors anymore, but can we really consider them equal partners? Apple’s cash reserves continue to grow, and IBM’s revenues have been declining over the last two years. After losing a $600M contract with US government to AWS last year, a partnership with Apple is a welcome change for them.

So, what’s in this deal, anyway? In short, it includes the following:

• IBM introduces its enterprise software and services platform, as well as a set of over 100 industry-specific enterprise apps specifically designed and optimized for Apple devices. The newly announced MobileFirst platform is technically based on IBM’s existing MaaS360 mobile device management platform and BlueMix, a service development platform for IBM cloud, but newly packaged and optimized specifically for iOS 8.
• With IBM’s help, Apple’s existing customer support service AppleCare will be extended to the enterprise customers. IBM will take over the support services for their Apple-tailored enterprise solutions, as well as provide on-site support for iOS and Mac devices.
• IBM will become Apple’s first worldwide distributor and reseller, offering procurement and reselling of devices, security and activation, and other managed services.

For Apple, this deal marks their renewed attempt to get a better hold of the enterprise market. It’s well known that Apple has never been successful in this, and whether it was because of ignoring enterprise needs or simply because of inability to develop the necessary services in-house, can be debated. This time, however, Apple is bringing a partner with a lot of experience and a large portfolio of existing enterprise services (notorious, however for their consistently bad user experience). Could an exclusive combination of a new shiny mobile UI with a proven third party backend finally change the market situation in Apple’s favor? Personally, I’m somewhat skeptical: although a better user experience does increase productivity and would be a welcome change for many enterprises, we’re still far away from a mobile-only world, and UI consistency across mobile and desktop platforms is a more important factor than a shiny design. In any case, the biggest thing that matters for Apple is the possibility to sell more devices.

For IBM the deal looks even less transparent. Granted, we do not know the financial details, but judging by how vehemently their announcement stated that they are “not just a channel partner for Apple”, many analysts do suspect that reselling Apple devices could be a substantial part of IBM’s profit from the partnership. Another important point is, of course, that IBM cannot afford to maintain a truly exclusive iOS-only platform. Sure, iOS is still a dominant platform on the market, but its share is far from 100%. Actually, it is already decreasing and will probably continue to decrease in the future, as other platforms will gain their market shares. Android’s been growing steadily during the last year, and it’s definitely too early to dismiss Windows Phone (remember how people were trying to dismiss Xbox years ago?). So, IBM must continue to support all other platforms with their products such as MaaS360 and can only rely on additional services to support the notion of iOS exclusivity. In any case, the partnership will definitely bring new revenue from consulting, support and cloud services, however it’s not easy to say how much Apple will actually contribute to that.

So, what about the competitors? One thing that at least several publications seem to ignore is that those companies that are supposed to suffer from the new partnership are operating on several completely different markets and comparing them to each other is like comparing apples to oranges.

For example, Apple does not need IBM’s assistance to trump BlackBerry as a rival mobile device vendor. But applying the same logic to Microsoft’s Windows phone platform would be a big mistake. Surely, their current share in the mobile hardware market is quite small (not on every market, by the way: in Germany they have over 10% and growing), but to claim that Apple/IBM will drive Microsoft out of enterprise service business is simply ridiculous. In fact, Microsoft is a dominant player there with products like Office 365 and Azure Active Directory and it’s not going anywhere yet.

Apparently, SAP CEO Bill McDermott isn’t too worried about the deal as well. SAP is already offering 300 enterprise apps for iOS Platform and claims to be years ahead of its competitors in the area of analytics software.

As for Google – well, they do not make money from selling mobile devices. Everything Google does is designed to lure more users into their online ecosystem, and although Android is an important part of their strategy, it’s by no means the only one. Google services are just as readily available on Apple devices, after all.

Anyway, the most important question we should ask isn’t about Apple’s or IBM’s, but about our own strategies. Does the new IBM/Apple partnership has enough impact to make an organization reconsider its current MDM, BYOD or security strategy? And the answer is obviously “no”. BYOD is by definition heterogeneous and any solution deployed by an organization for managing mobile devices (and more importantly, access to corporate information from those devices) that’s locked on a single platform is simply not a viable option. Good design may be good business, but it is not the most important factor when the business is primarily about enterprise information management.