Apps & Software

Can Apple Save IBM?

IBM logoThe tables have been turned over time. Decades ago, Apple Inc. (NASDAQ: AAPL) could not get businesses to buy its Macs. They were relegated to classrooms and individual buyers. After Apple added the iPhone and iPad, corporations took notice. Not only were the devices fine replacements for BlackBerry devices and PCs, employees favored them over other devices — often. Against that backdrop, Apple has cut a deal with International Business Machines Corp. (NYSE: IBM) for the computing giant to sell Apple products and produce apps for a number of industries. IBM, its growth stagnant at best, needs the deal more than Apple does.

A new partnership between Apple and IBM helps the consumer electronics firm around the edges. It does not have IBM’s army of consultants and salespeople who work with big corporations. Having this access to corporations may help it accelerate purchases of its hardware and use of its iOS, but the adoption of these is only a matter of time, based on Apple’s current progress.

Apple already claims that its iPhone and iPad are home to thousands of business apps. App developers have seen the corporate market as a favorable way to make money. And Apple has upgraded the two devices for corporate sales. The 64-bit iPad is aimed squarely at corporate buyers.

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IBM, on the other hand, which relies almost completely on corporate and government sales, has suffered from a sales decline. Revenue in the first quarter fell from $23.4 billion in the year-ago period to $22.5 billion. The drop in profits was even worse, from $3.0 billion to $2.4 billion. The only division of IBM that had significant growth was its financial arm. Sales collapsed in the Systems and Technology division, mostly because of a drop in demand for its massive System z computers. Part of IBM’s server business was recently sold to Lenovo.

When IBM announced its first-quarter numbers, Ginni Rometty, IBM chair, president and chief executive officer, said:

In the first quarter, we continued to take actions to transform parts of the business and to shift aggressively to our strategic growth areas including cloud, big data analytics, social, mobile and security.

IBM’s forecast for the balance of 2014 indicated the evolution would be slow.

IBM will get to ride the coattails of the new iPhone 6 and what is likely to be an upcoming upgrade of the iPad. As usual, the release of these products will cause a frenzy of sales, both to individuals and corporations.

When announcing the new partnership, the public relations offices of the two companies said:

By bringing together the analytics and enterprise-scale computing of IBM with the elegant user experience of iPhone and iPad, this partnership will deliver a new level of value for businesses.

It is the iPhone and iPad that will drive the sales. The IBM contribution of mobile apps and expertise by industry is window dressing.

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