What Impact Will the Apple-IBM Mobility Pact Have on Windows?

In what Apple and IBM describe as a "landmark" partnership, the two companies have forged a deal to bring 100 industry specific, enterprise-grade iOS apps and provide cloud services such as security, analytics and mobile integration for iPads and iPhones. The pact also calls for the two companies to offer AppleCare support for enterprises and IBM will offer device activation, supply and management of devices.

This broad partnership is a significant arrangement for both companies in that it will help IBM advance its cloud and mobility management ambitions and Apple will gain its largest foothold to date into the enterprise. It bears noting, Apple rarely forms such partnerships, preferring to go it alone. At the same time, the buzz generated by this partnership, though noteworthy, may be overstating the impact it will have. The harm it will have on Android and Windows also appears marginal.

To date, Apple has benefited by the BYOD movement of the past few years and that's predominantly why so many iPads and Android-based tablets and smartphones are used by employees. While there's no shortage of enterprise mobile device management platforms to administer the proliferation of user-owned devices, Apple is hoping IBM's foothold in the enterprise, its strong bench of developer tools and its growing cloud infrastructure will lead to more native apps and software-as-a-service offerings.

"This alliance with Apple will build on our momentum in bringing these innovations to our clients globally," said Ginni Rometty, IBM chairman, president and CEO, in a statement. "For the first time ever we're putting IBM's renowned big data analytics at iOS users' fingertips, which opens up a large market opportunity for Apple," added Apple CEO Tim Cook. "This is a radical step for enterprise and something that only Apple and IBM can deliver."

While the pact certainly will give IBM more credibility with its customers, its benefit to Apple appears marginal, which is why the company's stock barely budged on the news last night. "We do not expect the partnership to have a measurable impact on the model given that Apple has already achieved 98 percent iOS penetration with Fortune 500 companies and 92 percent penetration with Global 500 companies," said Piper Jaffray Analyst and known Apple bull Gene Munster in a research note. "While we believe that the partnership could strength these existing relationships, we believe continued success with the consumer is the most important factor to Apple's model."

The Apple-IBM partnership certainly won't help Microsoft's efforts to keep its Windows foothold intact, which is already under siege. On the other hand, it's a larger threat to Android than to Windows. The obvious reason is that Android has more to lose with a much larger installed base of user-owned tablets. Even if the number of combined tablets and PCs running Windows drops to 30 percent by 2017, as Forrester Research is forecasting, enterprises still plan to use Windows for business functions because of its ability to join Active Directory domains and its ties to Windows Server, SharePoint, Office and the cloud (including OneDrive and Azure).

"It makes it more challenging for Windows Phone to gain ground in the enterprise, because IBM bolster's Apple's hardware in the enterprise, for both sales/support and enterprise apps," said Forrester analyst Frank Gillett. "And that indirectly makes it harder for Windows PCs to stay strong also, but that's incremental."

Pund-IT Analyst Charles King sees this deal having a more grim effect on Microsoft. "Microsoft is in the most dangerous position since the company is clearly focusing its nascent mobile efforts on the same organizations and users as IBM and Apple," he said in a research note. The partnership was announced at an unfortuitous time for Microsoft -- the company is rallying its partners around Windows, among other things, at its Worldwide Partner Conference in Washington, D.C. where Microsoft has talked up its commitment to advance Windows into a common platform for devices of all sizes, from phones to large-screen TVs. "The goal for us is to have them take our digital work-life experiences and have them shine," Microsoft CEO Satya Nadella said in the keynote address at WPC today.

While Apple and IBM described the partnership as exclusive, terms were not disclosed. Therefore it's not clear what exclusive means. Does that mean Apple can't work with other IT players? Can IBM work with Google and/or Microsoft in a similar way? At its Pulse conference in Las Vegas back in February, IBM said it would offer device management for Windows Phone devices through its recently acquired MaaS360 mobile device management platform.

Also while Apple may have broken new ground with its IBM partnership, Microsoft has made a number of arrangements with providers of enterprise and vertical applications to advance the modern Windows platform. Among them are Citrix, Epic, SAP, Autodesk and Salesforce.com (with Salesforce One being available for Windows apps this fall).

Munster predicted if half the Fortune 500 companies were to buy 2,000 iPhones and 1,000 iPads above what they were planning to purchase from this deal, it would translate to half of one percent of revenue in the 2015 calendar year. In addition, he believes IBM will offer similar solutions for Android. Even if Munster is underestimating the impact this deal will have on Apple, there's little reason to believe this pact will move the needle significantly, if at all, for Windows. The fate of Windows is in Microsoft's hands.

Posted by Jeffrey Schwartz on 07/16/2014 at 12:35 PM