BlackBerry (NYSE:BB) shares fell more than 8% on Wednesday following the announcement of a partnership between Apple (NASDAQ:AAPL) and IBM (NYSE:IBM). Shares of Apple and IBM rose about 1% and 2%, respectively, on the deal. Both firms were outperforming the broader market; the Dow Jones Industrial Average (DJINDICES:^DJI) was up a modest 45 points as of 11:30 a.m. EDT.
IBM partners with Apple to take on enterprise
IBM and Apple announced a major partnership on Tuesday afternoon -- one that could benefit both companies. Going forward, IBM will work with Apple to sell Apple's mobile devices (iPhones and iPads) to its enterprise clients. IBM will develop and deploy mobile and cloud-based iOS apps for business while providing on-site support for Apple's products.
The deal could lead to increased sales of Apple's products. Businesses may have wanted to deploy Apple's mobile products in the past but hesitated due to a lack of enterprise support. At the same time, IBM's sales force could drum up additional interest in Apple's devices. Although Apple is a premiere consumer brand, it isn't as dominant in the business world.
However, analysts are skeptical. Piper Jaffray's Gene Munster, a longtime Apple bull, noted that many businesses are already deploying Apple's products in some capacity -- some 97% of Fortune 500 companies, for example, use the iPhone, and 98% use the iPad -- and that additional sales, should they come, will not have a meaningful effect on Apple's financials.
For its part, IBM could benefit more by signing lucrative service contracts. In recent years, the company has steadily shifted its focus from hardware to cloud-based software and services, and this deal with Apple reinforces that vision.
Interested investors should look to IBM's earnings report for additional guidance and color on the deal. IBM will report its earnings on Thursday, and management may provide further guidance on its deal with Apple during its earnings call.
BlackBerry could be pressured by the deal
BlackBerry's sell-off on Wednesday was hardly surprising, as Apple's deal with IBM could exert significant competitive pressure on the Canadian handset-maker.
Although most consumers in the Western world abandoned BlackBerry's smartphones long ago, many businesses continue to deploy them in some capacity. And even if they don't use BlackBerry's hardware, they may still rely on its mobile business services, including its device management software. In its deal with Apple, IBM is aiming to fulfill that role, which could cost BlackBerry business.
With no major enterprise deals yet announced, the sell-off in BlackBerry shares may be overdone. Yet BlackBerry shareholders should be accustomed to such volatility, as BlackBerry has experienced wild moves over the last year, swinging from a high of $12.18 to a low of just $5.44.
BlackBerry officially downplayed Apple's deal with IBM, noting that it only underscores the need for secure enterprise mobility offerings. Yet it's hard to see how this deal benefits the Canadian tech firm; although it may not devastate BlackBerry, it certainly won't help.