IBM and Apple


IBM and Apple

We all know that picture of Steve Jobs giving the iconic technology company a piece of his mind back in the early days of Apple. Once the recent mobile partnership between Apple and IBM was announced, it was a picture passed around the Internet with great glee and irony. But the message was clear, the times they are a-changin’ but certainly not in a direction most were expecting.

There was really no surprise with the announcement. In a way that never happened for its desktop computer line, Apple tablets and smartphones have overtaken the enterprise. It was not so long along we were addicted to our Crackberries and banging out emails on our tiny physical keyboards. No business executive was without the device and nothing surpassed it for sheer productivity when on the road (or vacation as often happened). Then Apple stormed the gates with better hardware, significantly better apps, a superior user experience, and a cache that Blackberry could not match. Most of those same executives were sporting iPhones shortly afterwards.

How great is the domination of Apple in the enterprise? Apple tablets alone now account for over 90% of all tablet devices in the enterprise and over 70% of enterprise activations are iOS devices. In an earnings call earlier in the year, Apple started that the iPhone is used in 97% of the Fortune 500, and 91% of the Global 500, and iPad is used in 98% of the Fortune 500 and 93% of the Global 500. GE and Deloitte have over 50,000 iPhones used for corporate purposes. Medtronic, Nestle, and NASA have thousands of employees using iOS devices for business purposes. Apple is inexplicably king of the enterprise.

So why bring all this up? Because while the alliance between IBM and Apple is newsworthy and intriguing, it may not be the huge win either company might be expecting. If anything, Apple seems to be giving IBM the finger yet again. Tim came bearing gifts of joy and smiles, but Steve Jobs is still lurking underneath this move. How so? For Apple, they get a much needed enterprise publicity boost while IBM might just net a few more opportunities to sell cloud services, if that.

While Apple is the king of the enterprise mobile platform for now, that position is tenuous. So is it Google that is poised to finally make a run at the enterprise and rattle Apple? Nope, the real up and comer is that old, crusty standby Microsoft. With a new breath of life in Nadella and the combination of Azure, Office365, several enterprise business apps like Dynamic, and their mobile platform, Microsoft makes for a compelling solution for most companies. Since Microsoft is already a known entity and firmly entrenched in the enterprise, this is the safe move for IT departments and corporate executives. And as Microsoft has shown in the past, they are not afraid of giving away the product to build market share. Anecdotally people are hearing of real Microsoft tablet deployments in the enterprise.

Sp linking up with IBM gives Apple that much needed stamp of enterprise approval. The biggest question marks about Apple regarding security and ROI get addressed by IBM offering a cloud infrastructure optimized for iOS and a whole slew of business oriented mobile apps. Even though the evidence shows that a mobile enabled workforce is more productive, there is still healthy skepticism from executives about the value of mobile, especially with the paucity of enterprise grade business apps.

As for IBM, they are still a distant contender in the cloud infrastructure space. In fact, they were the lowest ranked vendor on Gartner’s IaaS Magic Quadrant last year. The leaders? AWS, CSC, Rackspace, and Microsoft. In fact, if not for the SoftLayer acquisition, IBM might not have even made it on the chart. What has been interesting to see in the past year however is strong uptake of SoftLayer with existing clients and significant investment by IBM into the business, from data center expansion to deploying cutting edge technology ahead of the industry leaders. But does the Apple alliance really get them anything that they have not already been able to achieve? Maybe it makes IBM look a bit more hip, but not much more than that.

And what of those 100 industry enterprise business apps that got touted? While IBM has a credible software footprint, especially with many of their recent cloud software acquisitions, the business apps are more smoke and mirrors than a real opportunity. If there is something I have learned in the enterprise apps space is that customizable solutions win the day and “industry” apps garner little weight outside of very specific business flows around compliance or regulatory needs. For example, one of my customers GE has widely varying requirements for supporting the sales teams across the different groups. Plugging in a one size fits all approach for their sales team would have been a disaster.

The movement in enterprise business software is towards mass customization by users and groups. That means business owners own and configure the functional layer of the software while IT takes care of the infrastructure layer which in the cloud era means data security and integration. The reason is that businesses need to move faster than the ability for IT to implement changes in the typical enterprise software package. I wager that IBM will however release a bunch of apps that hew towards the older mode of software customization and ultimately create 100 really neat looking demos for their Global Services team to then implement for a good chunk of change.

Ultimately what the alliance sets in place are the teams competing in the mobile space for the next five years. Everyone is looking to build their stacks from apps to infrastructure to the hardware in employees’ hands. So the teams are set; you have Microsoft in one corner, Google looking a bit shabby in the other corner, and a fresh faced Apple/IBM tag team duo. The enterprise app players, mobile deployment managers, and IaaS vendors are all watching the spectacle taking bets. If anything, it should present some good theater as the battle begins.


Reprinted with permission.

Image credit: CC by Gerben Wierda

About the author: Mark Birch

Mark is an early stage technology investor and entrepreneur based in NYC. Through Birch Ventures, he works with a portfolio of early stage B2B SaaS technology startups providing both capital and guidance in the areas of marketing, sales, strategic planning and funding.

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