The war for the enterprise market is heating up. Apple (NASDAQ:AAPL) is about to take its efforts toward enterprise domination to the next level, through a partnership with International Business Machines (NYSE:IBM).
The new collaboration is a major step for Apple and a huge opportunity. Apple has predominantly been known for its focus on consumer devices. Businesses have been reluctant to use Apple's devices, but that's starting to change. Apple's presence in businesses is steadily increasing, and the partnership with IBM should keep the momentum going.
But there's a clear loser here, too. The deal between Apple and IBM represents a shot across the bow at BlackBerry Limited (NYSE:BB). BlackBerry had been holding on to its presence in enterprise mobile, after years of losing badly to Apple at the consumer level. Now, BlackBerry's enterprise position looks shaky too.
There were hopes that BlackBerry's turnaround was gaining traction after the company posted better-than-expected results last quarter. But now that Apple and IBM have teamed up to bring a suite of business applications to the iPhone and iPad, Blackberry looks caught between a rock and a hard place.
Great news for IBM and Apple
IBM and Apple will join forces, in an agreement that has the potential to make Apple a major player in the business market. Here's why the deal is a great one for both companies.
IBM will create more than 100 business applications to be utilized specifically on the iPhone and iPad and run on Apple's iOS operating system. Apple will receive the benefit of IBM's huge sales force pitching iPhones and iPads to its network of business customers.
In turn, IBM will have the ability to sell Apple's products, which will be loaded with IBM's industry-specific apps, to its clients across the globe. The applications will feature many of IBM's tools that it sells to its own customers, including IBM's MobileFirst platform which includes several productivity tools. IBM will also offer cloud-computing services including storage, and device setup and management.
Apple will provide support for devices sold through a program called AppleCare, which is designed specifically for companies that buy Apple gadgets in bulk. It will include a slew of benefits such as 24-hour assistance.
Apple will expand on its enterprise position, which is looking stronger with each passing quarter. During the company's fiscal second-quarter conference call with analysts, Chief Executive Officer Tim Cook stated that 98% of Fortune 500 companies use the iPad. Moreover, he pointed to a report from industry watch dog Good Technology that 91% of all tablet activations last quarter were iPads.
In that conference call, Cook said that his biggest priority as far as the enterprise is concerned was to focus on penetration. Clearly, he's keeping that promise, and it means placing BlackBerry squarely in his cross-hairs.
BlackBerry gets cornered
The big loser here is BlackBerry, which is quickly seeing its available avenues narrow. Its problems on the consumer level have been well-documented. BlackBerry's once dominant position in consumer devices has slowly and steadily eroded as popularity of the iPhone and iPad surged.
BlackBerry's hardware presence is shrinking rapidly, particularly at the consumer level. Technology tracking firm IDC expects that the Android and iOS operating systems will collectively control 95% of operating system market share this year. Clearly, Samsung and Apple are the major vendors contributing to this. By contrast, IDC projects BlackBerry's market share to be below 1%, at just 0.8%. And, by 2018, IDC estimates BlackBerry's share will dwindle further, to just 0.3%.
The Foolish takeaway
There was hope that BlackBerry could retain a presence at the enterprise level, but the partnership between Apple and IBM now represents a major threat. Companies reluctant to use iPhones and iPads previously because of security issues will likely be comforted by IBM's pledge to provide better security through its unique cloud services optimized for iOS.
Apple and IBM have announced a strategic partnership to combine their respective capabilities to take on the enterprise market. Apple will be able to bring its dreams of enterprise domination one step closer to reality. For its part, IBM will be able to attach a suite of its packaged offerings on the iPhone and iPad.
But the agreement also represents a significant threat to BlackBerry. Its market share is nearly non-existent at the consumer level, and its position among business customers is in serious doubt. Just as BlackBerry's turnaround was starting to take off, it's in real danger from Apple and IBM.
Bob Ciura owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple 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.