On Tuesday afternoon, Apple announced a "landmark partnership" with International Business Machines Corp. (NYSE: IBM). Together, the two companies aim to gain foothold in segments of the corporate world like healthcare, retail, and transportation. And they intend to use mobile to do it.
This is a deviation from Apple's traditional focus on solely the individual consumer. In the past, businesses have typically experienced difficulty integrating Apple products - a cause of frustration to IT staff.
"If IBM can come in and say, 'We'll make sure this Apple stuff works well with the other stuff you've got already,' it will make the IT guy feel a lot better," Endpoint Technologies analyst Roger Kay said to ITWorld.
Apple Chief Executive Officer Tim Cook stated yesterday that the IBM partnership "opens a large market opportunity for Apple."
"This is a radical step for enterprise and something that only Apple and IBM can deliver," Cook said.
IBM CEO Virginia Rometty said the end goal of the collaboration is to "reimagine how work is done" and "unlock value, remake professions, and transform companies."
Money Morning Chief Investment Strategist Keith Fitz-Gerald called the collaboration "a marriage of convenience for IBM, and of passion for Apple."
"Microsoft had better watch out," Fitz-Gerald said.
Today's Apple Stock News: An IBM-AAPL Blitzkrieg on Corporate IT Market
The two companies will attempt to gain corporate IT market share by using mobile business.
First, here's what IBM will do to accomplish the goal:
- IBM will develop apps for iOS (an operating system used for mobile devices manufactured by Apple).
- Then IBM will sell iOS devices to its corporate clientele, preloaded with Apple-IBM designed software.
- The company will also make its cloud services applicable for iOS. This includes the capability for iOS device activation, supply, and management to customers, and the ability to lease rather than buy Apple hardware, according to PCWorld.
Fitz-Gerald pointed out an interesting take on IBM's real role here...
"What the public doesn't realize is that IBM is nothing more than a conduit here. Apple has everything to gain and could become a major player in the business computing market," Fitz-Gerald said.
Second, here's what Apple will do:
- Apple will lend its true genius - its "elegant user experience" - on the iPhone and iPad to the corporate world.
- Apple will provide warranty services ("AppleCare") for business customers. This will be a 24-hour service that includes on-site support.
Both companies promise "a new category of mobile apps" that will specifically address industry needs in "retail, healthcare, banking, travel, telecommunications, and insurance."
And we can expect Apple-IBM exclusivity here - in fact, the word "exclusive" was used four times in the statement announcing the collaboration.
"We are saying these [apps and services] will be specifically for the iPhone and iPad," a spokeswoman for IBM said. "They are the best mobile devices in the world, from our view."
The companies said that the around 100 or so apps will be introduced starting this fall.
With IBM's entryway into business sales and corporate credibility, and Apple's smooth devices (that are already used by more than 92% of the Fortune Global 500 companies), the deal poses a definite threat to corporate tech competitors like Microsoft (Nasdaq: MSFT).
"This is de facto proof that Apple is becoming a serious business tool and overwhelming evidence that the classic Microsoft-IBM dominance model is broken," Fitz-Gerald said. "No doubt there are tech people in corporate America who are thrashing around for having 'failed' to protect their domain."
It also poses a potential boost for both Apple stock and IBM stock.
"I think this alliance makes a lot of sense and is one of the reasons I'm bullish on Apple stock for the long haul," Money Morning Defense & Tech Specialist Michael A. Robinson said this afternoon. "The iPad remains the de facto enterprise class tablet computer, and IBM has a great corporate sales channel. Both firms are taking advantage of the BYOD movement, meaning bring your own device to work. But this elevates that to make the iPhone the new corporate standard. It's another reason why I think Apple will continue to beat Android-focused Samsung in terms of cash flow and profits in the mobile arena.
As of noon EDT, IBM stock was up 2.39% to $193.01 per share; Apple stock was up 1.11% to $96.38 per share. We encourage you to stay tuned to Money Morning for our continuing coverage of the latest Apple stock news.
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