Rapid iPhone sales growth has been an undeniable driver behind Apple's (NASDAQ:AAPL) soaring revenue, swelling net income, and rising stock price over the past couple years. The success of the tech giant's iPhone 6, in particular, put this growth on steroids during the last three quarters. And the segment has served up strong comps recently, with the company posting a whopping 59% year-over-year increase in iPhone revenue. This success has, in some ways, masked Apple's struggling second-largest product segment: iPads. But Apple may have a plan to at least stabilize the iPad's downward trend.
On Aug. 31, Apple and Cisco announced a strategic partnership to "create a fast lane for iOS business users by optimizing Cisco networks for iOS devices and apps," Apple said in a press release. Further, the partnership will seek to integrate iPhone with Cisco's enterprise customers and provide "unique collaboration on iPhone and iPad."
What exactly does this mean?
A partnership with Cisco means Apple will likely be giving special attention to making its Cisco products and services -- which range from networking gear and video conferencing to Wi-Fi equipment and collaboration applications -- all mostly aimed at businesses.
"Through this engineering and go-to-market partnership, we're offering our joint customers the ability to seamlessly extend that awesome Cisco environment to their favorite iOS devices," said Cisco chairman John Chambers in Apple's press release. "Together, we're going to help teams achieve higher levels of productivity and effectiveness," he added.
Broadly, the importance of the deal is Apple's continued emphasis on winning over the business place with iPad. Cisco has a strong relationship with a huge customer base of some of the world's largest businesses, and Apple is getting in on it. Cisco counts 95% of Fortune 500 companies among its customers.
Apple's partnership with Cisco is akin to the company's IBM partnership announced last July. By working closely with both IBM and Cisco -- two companies with very different products and services from each other, Apple is approaching large businesses from different angles at the same time.
Apple's ability to get its foot in the door with these important business-serving organizations speaks volumes about the company's increasing importance in the business world. While much of Apple's clout in the business world is related to the robust use of iOS, it is also due to how easy it is for iOS users to update software to the latest versions. Unlike Android, Apple iOS updates for the latest version are available for all iPhones and iPads released within the last three years.
"We're not going to do this with anyone else," Cisco senior VP and general manager of the company's collaboration technology group told Re/Code during an interview.
We'll continue to work with the other platforms, but if we had wanted to do a deal like this around Android, the first question we'd have to ask is which Android? There's so much fragmentation on that platform, there's no clear place to start
A pre-iPad Pro push?
The timing of Apple's partnership with Cisco is intriguing, considering Apple will allegedly unveil the much-anticipated iPad Pro at its press event on Sept. 9. If speculation regarding the iPad Pro pans out, the Apple tablet will sport a 12.9-inch display, larger than the iPad Air 2's 9.7-inch size. With a larger size and more powerful processor, the iPad Pro will undoubtedly be aimed at power users and, you guessed it, enterprises.
Sure, enterprises have been a key driver for iPad sales for some time, but if Apple can turn the tablet into a device an increasing number of large businesses want for each and every office employee, this could be a meaningful catalyst for iPad sales.
In Apple's most recent quarter, iPad units shipped were down 13% from the year-ago quarter. IPad revenue was down 16% during the same period. Will a push in enterprise paired with a product aimed at blurring the lines between laptops and tablets help Apple turn the segment around?