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You may remember the famous "1984" commercial introducing Macintosh personal computers. In the ad, "Apple" is an iconoclastic young heroine who hurls a hammer at a giant screen broadcasting "Big Brother" (IBM) lecturing to a legion of followers.
But instead of David battling Goliath to the death, the two are now joining forces in a bold new pact.
It's a good deal for both companies… And today I'll reveal which stock will end up as the better buy – and make it a great deal for you…
Why IBM Is "Back"
At the time of "1984" – and of the 1981 newspaper ad in which Apple "welcomed" IBM to the PC marketplace – Big Blue was the "Goliath" of the computer industry, a global giant that had already been around for decades. It catered to Fortune 500 companies and government agencies that needed industrial-strength computing.
"David" was a brash Silicon Valley startup whose PC breakthroughs appealed to individuals and small companies. It was the go-to company for creative types like graphic designers and photographers.
The tech world has changed in innumerable ways since the 1980s – we no longer talk about IBM "clones" anymore, for one thing – and both of these companies are now true corporate titans.
In fact, by market value, Apple is the largest company in the world.
And while IBM has since sold off its PC business to Lenovo Group Ltd. (OTCMKTS ADR: LNVGY), it remains a major force, especially in the so-called "enterprise" market. Its huge corporate and government clients – including 80% of the Fortune 500 – pay dearly for IBM's high-performance computing services.
IBM counts some 1,000 universities and 2,215 companies as business partners. Its list of global customers runs dozens of pages and includes some of the world's largest organizations.
In recent years, IBM has invested more than $24 billion to bolster its offerings of Big Data analytics; you likely know about its marquee Big Data computer, the "Jeopardy!"-winning Watson. It's also spent roughly $7 billion on cloud-computing initiatives.
And it boasts what may be the world's largest suite of software and services operations. Just in this year's first quarter, IBM's sales of software and services totaled some $15 billion.
Add it all up and you have a sprawling worldwide company that is involved in virtually every aspect of corporate computing.
But one area in which it has a glaring weakness is the fast-moving mobile world. IBM is a virtual no-show in smartphones and tablets.
And that's where this historic agreement comes in. Instead of launching its own mobile division, IBM has found a new best friend in the mobile world's clear technology leader.
Completing the Puzzle
Through the partnership, which was announced last month, IBM will use its highly capable sales force to sell iPhones and iPads to its corporate customers. IBM will also develop cloud services for Apple's iOS mobile operating system.
For its part, Apple will be developing and selling business apps on its App Store. It will also be offering tech support for its mobile devices through a special corporate AppleCare program.
It's a deal that addresses both companies' weaknesses: IBM's deficit in mobile solutions and Apple's lackluster performance in the corporate sector.
Apple, of course, turned the mobile industry on its ear back in 2007 with the launch of the iPhone.
Smartphones had existed for years. But the iPhone was so innovative – it played music, searched the Web, took photos and video, and served up hundreds of apps – that its release can be considered the device's birth.
And Apple's success in this area shows no sign of slowing down. In the first half of fiscal 2014, Apple sold nearly 94.75 million iPhones; compare that to the 85.22 million sold in the first half of 2013.
In the meantime, the company makes the only true enterprise-class tablet computer, the iPad. That means the device is sophisticated and tough enough to pass the rigorous requirements of Fortune 500 companies, top universities, and federal agencies.
In the last two quarters, Apple sold nearly 40 million iPads. That's an impressive number, but iPad sales are slowing; they were off 9% in the most recent quarter.
That's one of the reasons I think the recent Apple-IBM partnership is such a great deal for both of them. What we have here is the world's best enterprise sales channel throwing its weight behind the top enterprise tablet.
But that's not the only thing that makes this deal so intriguing…
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.