Apple + IBM: Sugar and spice or oil and vinegar?

Apple + IBM: Sugar and spice or oil and vinegar?

Yesterday's formal announcement of a partnership between two computing giants, Apple and IBM, came as a big surprise to most industry observers. We hadn't seen any leaks on the subject, and it wasn't something I can recall being the topic of any predictions articles or other "this makes sense" style of article. On the surface, however, there are numerous reasons why it definitely does make sense.

Apple makes the best mobile hardware and most user-friendly operating system, iOS, that runs on its iPhones and iPad. But aside from tons of enterprise employees using Apple devices for work purposes, Apple has been largely disconnected from the enterprise market. Other companies, like BlackBerry, Mobile Iron or Good, have build device management platforms, and application developers have created business apps to run on iOS.

IBM, on the other hand, is a software and services giant that used to have huge exposure to the Wintel ecosystem, but exited the PC market through by divesting the business unit to China's Lenovo.

Apple and IBM are enormous companies coming together to create what they feel is a much-needed set of enterprise solutions combining IBM's software and services expertise with Apple's devices. It's an exclusive deal, so it looks like both companies are committed, together, to clobbering everyone else in the space including Google and Microsoft.

If this works, Apple and IBM are going to convince a lot of companies to exclusively use Apple iOS devices when it comes to their mobile worker requirements. And if that happens, it wouldn't surprise me to see Apple's Macintosh computers start to work their way deeper into the enterprise. Why not? The enterprise apps can all be ported to MacOS, and those who want to keep using Microsoft apps (like Office) can do so via the cloud right from their browser. The mobile OS may start to drive desktop / laptop purchase decisions in time.

But is there a cultural fit between Big Blue and Team Cupertino? I doubt it somehow … but this isn't a merger so I'm not sure it really matters. IBM's sales force just needs to do what it already knows how to do .. that is to sell software and tie hardware to it. The engineers just need to code good software, but this time using Apple's tools to do it. And the Apple folks? They don't really need to do anything different. They will setup an AppleCare unit for enterprise, but all of the on-site support will be handled by IBM. It looks like both companies get to, in theory, play to their strengths, benefit from their partner's strengths, and largely side step any culture clash risks.

I'd say it seems to be more of a sugar and spice deal rather than oil and vinegar. But that's just my guess. We aren't going to see results from this for the better part of the next 12 months. And in that time it will be really interesting to see how the competition responds. Will Microsoft or Google buy BlackBerry? If Apple attempts to use the IBM exclusivity deal to lock up the enterprise market with iOS hardware, will one of them put together a highly credible long term combination of assets that goes after the multi-platform world?

It wouldn't surprise me if this news is enough to send Apple stock north of $100, setting a new all-time high.

Disclosure: I own Apple shares, lots of Apple products, and occasionally eat Apples.

Chris Umiastowski

Chris was a sell side financial analyst covering the tech sector for over 10 years. He left the industry to enjoy a change in lifestyle as an entrepreneur, consultant, and technology writer.

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Apple + IBM: Sugar and spice or oil and vinegar?

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If this works well for Apple, I wonder if they could do the same thing with other companies in this space.
Citrix, Cisco, Oracle, to name a few.

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It might sound dumb, but I think Apple could swoop in and buy up what's left of Blackberry right now to lock everyone else out of enterprise period. Blackberry is on the ropes right now but they still have a few gems in the way of services and security built into their devices. It would surely kill what's left of the handset side but the what it takes off the table for the rest of the players is huge.

I know this is contemporary business thinking in today's marketplace, but it's unhealthy business thinking for everyone. It's what got Microsoft in trouble in the first place, owning everything isn't winning in a competitive marketplace. Self-maintaining healthy competition, voluntarily, on the developer/corporate side, and on the consumer side, is what promotes healthy competition and better product, and longevity for the manufacturer.

You covered how it is not dumb for the consumer but not how its dumb for Apple. If you're in business, don't you want to own it all. Pretty sure that's the nature of competition.

Awww chucks, yah think?! What are you? Ten years old?

As a result of surviving and thriving over the long haul (as opposed to simply buying out potential competition and throwing it away), companies can learn what works best for them, and what works best for them is what I decide works best for me.

I don't think Apple believes it exists to own everything, I think Apple exists to perpetually demonstrate, to consumers and to competitors, the difference between high quality, (quality as an ideal brought to fruition in computing hardware and software manufacturing and development), and cheap crap. And I think this speaks for itself when you look at what Apple has been through to get where they are, and what they are choosing to do now with their considerable wealth and influence in the high-tech market place.

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If apple bought blackberry they would be a direct competitor with IBM. It would likely kill any deals they have.

So first it was BYOD. Now it's Apple wants everything? Yay. I can't stand Apple. I personally don't think their products, hardware or software, are the best but so often I hear it. It's limitations and shortcomings are looked over like they aren't needed or are over exaggerated. Then when they implement it, genius! Works brilliantly! Just like iTunes right? Works so perfect right? After all these years they can't get THAT right yet. We don't need one or two large companies -Apple, Google, etc.- telling everyone what they think you or I need to do or what to use and buying up everything in their path to get it. We need the competition. We need more players and diversity or we'll lose choice and with that comes less competition and ingenuity and innovation. Apple doesn't have great phones they have great apps. That is all. The ONLY thing Apple has is the ability to get people to support the crap out of it, and act like they did it all on their own. Apple is not a very good messaging platform for enterprise. The integration between apps and the OS is still behind other platforms and still is 'the best'. Apple can't play in a world where open standards are used because they won't win. That's what it seems like to me. They just need everything. It's never enough. Imagine a world where you had only Google and Apple phones and tablets etc. Do you want to own a Chevy? Or a Dodge? There are no other choices. No more configurations. Only what they choose for you. All the while they're charging you Mercedes prices.

"I can't stand Apple."

So why would you think any of your reactionary biases would be of any interest or considered the least bit credible on this site?!

Egocentrism?!

You have a choice as do everyone.

Apple with IBM is a business decision that may or may not favours them so why tie your panties in a bunch just because you don't like Apple.

Don't single out those words. I'm not just saying Apple. But bin this instance yes. Google as well and so on. Microsoft was hounded and hated for years for their 'Monopoly' and now it's heading that way again. At best as Duopoly. But not just in one segment anymore, it could be all of mobile and desktop and enterprise computing. I poorly phrased it and maybe I should have said it can't stand how Apple runs it's business. And how mobile/computing/enterprise is probably going to function if they get their way. Only apple products supported, only Apple OS supported, only proprietary hardware supported. At least in Windows case, they were Software only and supported all makes of hardware. Even now they have opened up Office to many platforms. BlackBerry was "archaic" and "foolish" to think that they could do the same in enterprise and consumer mobile according to many and fell behind in the time of revolution and choice. Yet Apple is doing the same and people eat it up like candy. Say what you want, it your opinion. And this is mine. But one can't deny some of the facts here.

Apple did not say they want everything, it is the author that is suggesting they can secure more market share in the enterprise world. Increasing market share, sales, profits is what any company is basically in business for. That's what the company I work for does and I want them to keep doing that so they can keep paying me and everyone else that works there.

I don't suppose you believe Google is some kind of charity, do you? Google is every bit as interested in dominating the market as anybody else.

Frankly, I think there is too much choice for the market to support it long term. Don't get me wrong, I want choice as a consumer just like anybody else, but I think the market will correct itself in the long run. Right now, at least in the US, there are 4 basic mobile platforms, 2 major (iOS and Android) and 2 smaller (Windows and Blackberry). Windows is gaining a little and Blackberry appears to be dying off, which will leave 3, which I still think is too many.

Eventually I think mobile and desktop will merge when the technology can support it. If Google can build Chrome OS enough to support what Windows can do, there could certainly be a market share shift. However, I also think their biggest strength could be their biggest weakness in enterprise and that is open source OS. I'm no security expert, so maybe it's not an issue, but how secure is it?

I would be happy to see more Macs in business, but I doubt that will happen based on cost alone.

I wouldn't get all worked up about Apple dominating the world. Microsoft owned it for the better part of 3 decades (outside the creative professions) and Google is certainly a threat to be next.

Hey, maybe it will be Apple, what do I know? But I really think they are going to struggle on the desktop side cost wise.

Anyways, I'm excited to see what the IBM partnership can bring to the market.

Thinking out-of-the-box a little bit, I hope that if Apple plans on gaining a real footprint in enterprise, that they begin to think about splitting themselves into consumer and enterprise development sections rather than trying to do everything for everybody. I personally have little patience left for apples dabbling in the Enterprise marketplace. They make great stuff at a good price point and then abandon it. Please don't do that anymore, Apple.

I don't get the oil & water/sugar & spice metaphors. This is not a situation where the companies involved are forming a joint venture and need to manage it. This is an agreement where IBM is bringing what it currently does best to Apple and Apple gets to sell more devices in a space where it had been lacking. For IBM, the get to be relevant in mobility without requiring a device and leverage their $1 Billion investment in mobility services (they already make apps for enterprise only you see them branded by their client). IBM will also mine the mobile data for their customers and extend their reach from IT to marketing because mobile apps are what they call 'systems of engagement'. Finally, they provide support for enterprise to get them the devices they need when they need them - a corporate Apple Store so to speak.

All of the above leverage strengths in product offerings. Their cultures still are polar opposites but under this scenario it is an agreement that should benefit both sides.

Perfectly stated. In a partnership, the parties work together to benefit from each others' strengths. IBM's greatest strength is in enterprise IT. Apple's greatest strength is its tightly integrated mobile hardware / software / ecosystem / infrastructure. Combining those strengths will benefit both companies, and it will also benefit their enterprise IT clients. Without any destructive takeovers or mergers.

Compare that with Microsoft's ham-fisted attempts to break into new markets. They destroyed competition with preliminary FUD attacks followed up by sub-par product releases (e.g. Excel killing off VisiCalc). Or they would destroy competition through hostile takeovers (e.g. the Danger acquisition and immolation). And there are doubtless other smaller companies we never heard of that were killed off by MS-FUD and corporate IT fear of change and/or contractual lock-in. Shrewd, aggressive marketing moves by Microsoft. Mindless knee-jerk reactions by helpless corporate IT managers.

IBM has plenty of influence in corporate IT now. But far less than they used to, in large part to Microsoft. Apple never had much influence in corporate IT, but their post-PC devices and infrastructure lead the world. Together, they'll be able to *attract* corporate clients. They can't *force* anybody to do anything. Huge difference. They'll be in the same boat as other companies like BlackBerry and Good and Mobile Iron, as Chris says. We'll see who grows fastest.