The Huge Implications Behind Apple, Inc.'s New Partnership

Who would have ever guessed Apple and this old competitor would someday forge a strategic partnership? But sure enough, the day has come.

Jul 16, 2014 at 2:00PM

Who would have ever guessed Apple (NASDAQ:AAPL) and Big Blue would someday forge a strategic partnership to build a solution for millions of people? But sure enough, it just happened. Overnight, Apple just acquired a massive ally.

Equipped with its 15,000 analytics consultants, 4,000 analytics patents, 6,000 industry solution business partners, and 400 mathematicians, IBM (NYSE:IBM) has forged a partnership with Apple to "transform enterprise mobility." The implications for both companies are huge.

Ibm Apple Partnership

IBM CEO Virginia Rometty and Apple CEO Tim Cook. Image source: IBM

The intention in this new partnership is to take the strengths of both companies to offer an unparalleled mobile enterprise solution. The partnership is packed with substance. Consider some of these key initiatives to the new partnership.

Tapping into Apple's iPhone and iPad, IBM is developing "a new class of more than 100 industry-specific enterprise solutions including native apps, developed exclusively from the ground up, for iPhone and iPad." The partnership will also introduce iOS optimized IBM cloud solutions, an enterprise-specific AppleCare service, and a new system that makes it easier for IBM to activate, supply, and manage iOS devices for enterprise clients.

It's a win/win
For IBM, the biggest advantage in this partnership is in going all out on the solution that Fortune companies were already using for mobile needs. Of the Fortune 500, 98% are already using iOS in their business. Ninety two percent of the Global 500 use iOS devices. Building a better enterprise mobile solution customized for iOS devices, therefore, will give IBM a distinct advantage over its corporate analytic solutions competitors by tapping into Apple's unprecedented and growing mobile enterprise user base.

Apple gains two major advantages.

First and foremost, this gives Apple an advantage over Google's Android and other mobile operating systems as an enterprise solution for large companies. IBM is a leader in enterprise analytics, cloud, software, and services -- the best ally Apple could have in its efforts to building enterprise solutions. Together, the two companies will be able to offer a more complete solution than competing mobile operating systems.

Second, Apple has just tapped into key distribution for its iPhone and iPads, the tech giant's two largest segments. Perhaps the most important line in Apple's press release announcing the deal was this: "As part of the exclusive IBM MobileFirst for iOS agreement, IBM will also sell iPhones and iPads with the industry-specific solutions to business clients worldwide." IBM will be able to sell, activate, and supply iOS devices directly to clients. Given the scale of IBM's reach in the corporate world, this is among the largest iOS device distribution channel Apple has ever tapped into.


iPhone 5s. Image source: Apple

Best of all, the advantages gained for both companies have more than near-term implications. IBM will be able to better meet the needs of its business clients and deepen relationships with them by finally tapping into the mobile operating system the enterprise world has became so attached to: iOS. Apple will become more entrenched in the corporate environment where the switching costs related to jumping from one OS to another are high.

This small company may win big on Apple's next big product launch
Apple's so-called iWatch will almost undoubtedly shake up an entire industry. But one small company may benefit from the likely enormous adoption of these smart wearable devices more than Apple. Even better, its small stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, just click here!

Daniel Sparks owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), and International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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