Yesterday, Apple and IBM announced a strategic partnership whereby IBM will sell iPhones and iPads to its business customers, and will develop cloud services optimised for Apple’s iOS. Apple will provide hardware support for devices through a dedicated large-enterprise AppleCare programme.John Delaney, associate vice-president: mobility at IDC, comments on the deal: “Apple’s need to develop the enterprise market for iPhones is imperative – and the same applies to iPads, albeit to a lesser extent. The consumer market for these devices mainly comprises affluent people in developed economies, and that is now a mature and highly competitive smartphone market.
“In search of additional markets, Apple cannot look to developing economies, or to the mass-market in developed economies, without making mid-price and low-price iPhones. This is a move that Apple has resisted so far, and that
would run counter to its very successful product strategy. Therefore, for future iPhone sales growth, Apple will rely increasingly on enterprise customers.”
Delaney adds that strong inroads to the enterprise have already been made by Apple, initially in combination with solutions for mobile device management (MDM) to make the devices sufficiently secure and manageable for enterprise adoption.
“More recently, iPhones have become more inherently enterprise-friendly, through the security and management capabilities that were built into the platform with the release of iOS7. Doubtless there will be more of that to come, with upcoming new releases of the product and platform.
“But the market for mobile enterprise management (MEM) is evolving, as IT departments move into a more mature phase in their approach to mobility. Rather than the heavily device-centric approaches that have predominated so far, enterprises’ mobility developments are becoming increasingly application-centric. The fundamental reason for this is that as their attitudes mature, enterprises increasingly seek to use mobility to build competitive advantage.
“Devices themselves are not a source of sustainable competitive advantage, because the same devices that are available to an enterprise are also available to its competitors. Instead, competitive advantage stems from the things that an enterprise does with its devices; that is, from applications.”
In this more mature phase, Delaney says, enterprises need to integrate mobile devices and applications with existing enterprise applications, software infrastructure and back-end systems. This leads to an increasing importance, as indicated by IDC’s enterprise research, of IT service companies as preferred sources of supply for MEM solutions.
“Therefore, to continue its strong progress in selling iPhones and iPads to enterprises, Apple will rely on channel partners who can offer enterprises the “heavy lifting” that will increasingly be required in areas such as mobile application development, lifecycle management and systems integration.”
In IBM, Apple has forged a relationship with one of the strongest such partners around, he says. “As well as its cast-iron credentials as an enterprise IT brand, IBM brings to the partnership an increasingly mature set of capabilities in the area of enterprise mobility.
IBM’s capability in mobile application development is founded on Worklight, which it acquired in early 2012; and its more recent acquisition of Fibrelink adds MEM to the mobility toolset that IBM has at its disposal.
“The combination of IBM’s mobility competencies, and the large investments in marketing that IBM is making in its ‘Mobile First’ practice, will provide Apple with a solid platform upon which to build and extend its enterprise business.”
So what does IBM get out of the deal, Delaney asks? “Most of all: huge end-user pull. This is an increasingly important asset when pitching to the enterprise, partly because bring-your-own-device (BYOD) has, in effect, devolved some of the selection and procurement of devices to end users.
“But even in enterprises that have not embraced BYOD, IDC’s research indicates that IT departments place increasing weight on end-user preferences in their mobile selection and procurement processes. There are two main reasons for this.
“Firstly, if end users do not like the mobile tools their employer gives them, they have a lot of ways at their disposal to work around them. Secondly, rollout and adoption of mobile systems is more likely to be successful if the systems use devices and applications that end users like, and with which they are familiar.”
The Apple/IBM deal may itself have an impact on BYOD trends, Delaney points out. Already, in Europe, IDC’s enterprise research indicates that interest in BYOD may have reached a plateau.
“In our most recent Enterprise Mobility Survey, the percentage of enterprises saying that they have not adopted BYOD, and do not intend to, is almost the same as in the survey that we conducted a year previously (at just over 40%). This deal between Apple and IBM may further attenuate future demand for BYOD, both in Europe and elsewhere.
“One of the main drivers of interest in BYOD is that end users want to use iPhones and iPads for their work. If your employer gives you an iPhone and/or an iPad, as a result of a joint sale from Apple and IBM, why would you want to bring your own?
“It is likely that Apple will seek partnerships with additional IT services players, perhaps looking next at some of the systems integrators that are developing mobility practices. But with this IBM partnership, Apple has made a very strong start in evolving its go-to-market strategy in alignment with the current, more mature phase of mobility adoption in the enterprise.”
Professor Mark Skilton from the Warwick Business School comments: “The challenge for IBM and Apple will be in the marriage of two masters, one in consumer mobile and one in enterprise systems, and if they coexist to seamlessly work for customers.
“IBM has strengths in their SoftLayer acquisition for enterprise data, service orchestration and integration to their cloud services, having divested in areas such as the PC and selected hardware as they recognise the shift towards a data and services centric universe.
“What they don’t have is their own mobile platform and device market, so the alliance with Apple is a return to the strategic co-competitors we have seen in the past with these two companies with the Mac and PC.
“Apple has their mobile device and app market, but lacks the industrial enterprise business model for large scale enterprise solutions. Apple will benefit from faster enterprise level services through their devices and IBM will benefit from the superlative user experience that Apple excels in.”
“The alliance makes good sense as the Google Android platform, with its ubiquity in the consumer and enterprise market, would be an alternative partner for IBM, but would also represent a more strategically difficult alliance as Google has cloud and enterprise apps services that could have taken data traffic away from IBM’s cloud data centres.
“This partnership could mean trouble for Microsoft with its Azure and Nokia strategy. While attempting to play in both mobile and cloud camps, Microsoft may not be able to be master of both in consumer and enterprise markets.
“Amazon has recently attempted to launch their own mobile device as well as reader devices but like the failed Facebook mobile the issue for these companies is in being able to create quality services and content for the enterprise and consumer markets.
“A recent Cisco study found global mobile data traffic grew 81% in 2013, representing 13% of the total Internet traffic, while the connection of mobile use and apps will see 25 billion connected devices by 2020 and one in three people on the planet will be using social media. With statistics like these the technology and business service vendors who are playing in this space have much to gain and loose if they are not well positioned to maximise investment.
“The big game is in what some describe as SMAC – social, mobile, analytics and cloud – plus the Internet of things. The big opportunity and challenge is in connectivity between mobile devices, cloud computing and the data drivers of social media and analytics through this mobile infrastructure over the Internet.”