Why Apple is cosying up to former rival IBM

Jul 16, 2014

Apple and IBM's plan to co-produce apps will trouble rivals Microsoft, Google and Blackberry, say analysts

Ken Ishii/Getty Images

Apple and IBM's new partnership to co-produce business-oriented apps for iPhones and iPads is a shrewd move that will likely cause consternation among their rivals, say analysts.

The deal – dubbed IBM MobileFirst for iOS – will see the two firms create more than 100 enterprise apps exclusively for the iPhone and iPad. The target markets for the apps will include retail, healthcare, banking, travel and transportation, telecoms and insurance.

The two companies were fierce rivals throughout the 1980s and 1990s – as illustrated by the famous Ridley Scott-directed Apple advertisement portraying IBM users as soulless drones – so what is behind their new collaboration?

"The deal makes sense on many fronts," says CNET's Larry Dignan. Industry-specific apps will serve to "lock down" Apple's enterprise market share. IBM, meanwhile, gets to trade on Apple's "cool factor" and become a near-exclusive supplier of business apps to one of the world's most dominant mobile manufacturers.

In announcing the deal, Apple CEO Tim Cook said: "We're putting IBM's renowned big data analytics at iOS users' fingertips, which opens up a large market opportunity for Apple. This is a radical step for enterprise and something that only Apple and IBM can deliver."

Dignan says that Cook's market opportunity reference is critical to understanding the significance of the partnership. "Apple has been knocked for lack of an iTV or iWatch (at least for now), but if it mines the enterprise better it'll keep the cash cow going for years," he says.

Using basketball parlance, Techworld says Apple and IBM are "putting a full-court press" on the mobile business market, which could have lasting ramifications for rivals Google, Microsoft and BlackBerry.

The deal is significant because it will make Apple devices more popular with large corporations' 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," analyst Roger Kay of Endpoint Technologies told TechWorld.

Kay says that until recently Apple had paid little attention to how businesses cope with the influx of iOS devices into the workplace. This deal will allow Apple to focus on making iPhones and iPads work the way IT managers actually want.

The deal could sound even the death knell for former business favourite Blackberry, says BBC business editor Kamal Ahmed. "Business users - managers still wedded to their 'Crackberries' despite all the problems the Canadian company has faced - and security obsessed governments could have their heads turned by bespoke apps and business services on iPads and iPhones backed by IBM's famed big data and analytics expertise."

The market also seems to approve of the partnership. Following the announcement, Apple's shares rose by about 1.5 per cent in after-hours trade, and IBM's stock was up 1.8 per cent.

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