Apple's Big Blue Dilemma
Aug 5, 2014 2:18 PM PT
Apple reportedly is gearing up to do what it does best -- introduce a new gadget or two. Word is the company will hold a spellbinding iPhone event come Sept. 9.
With the dust not quite settled over Apple's recently announced liaison with IBM, it will be interesting to see whether there are any new corporate nuances in the upcoming presentation. Will Apple maintain its strong consumer focus, or will enterprise interests begin to seep in and threaten to vaporize the company's cool factor?
The shift -- if there is any -- is not likely to be dramatic or immediate. However, at some point, the need for enterprise security might outweigh the value of adding a cool new feature, for example, and Apple might go that route, risking consumer disfavor for greater acceptance in the enterprise.
From Apple's perspective, it's highly unlikely that the team-up is viewed as a trade-off. Instead, it adds another string to Apple's bow. IBM will develop custom apps in industry verticals and sell iPhones and iPads to the enterprise. What's not to like?
Even from the enterprise perspective, it arguably would be foolish for Apple to divert its attention from the consumer. It was broad consumer acceptance that led to the iPad's penetration of the enterprise, after all. Remember the stories a few years ago of C-level executives bringing iPads in to work and demanding IT find a way to get them into the corporate network infrastructure?
Any potential freeze, if not shrinkage, of Apple's consumer base also would impact its earnings in other ways. Advertisers would be turned off by the smaller potential market if consumers were to turn away from Apple. IT would hardly be likely to allow ads on corporate iDevices.
That would translate to fewer purchases of music, apps and publications from the iTunes App Store, which in turn would reduce Apple's cut of the developers' take.
All You Need Is Love
So, will Apple's partnership with IBM blur its focus on the consumer?
"No way!" snorted Ezra Gottheil, a principal analyst at Technology Business Research.
"Apple's entire business and its culture are based on focusing constantly on the end user and the end user's experience," he told the E-Commerce Times.
Apple has a history of accommodating what organizations want -- both in education and in corporate America -- so long as that doesn't impinge on the user experience, Gottheil pointed out.
"This is what the company is -- not what the company does," he said. "This approach also leads to enormous business success."
Shifting its focus to the enterprise "would be the destruction of Apple as it is now, and the creation of a new and different company with the same name," Gottheil maintained.
Indeed, "we love our users, we love them," the late Apple CEO Steve Jobs said during a 2010 press conference.
The Business of America Is Business
On the other hand, current CEO Tim Cook is "more of an enterprise guy" than Jobs was, Rob Enderle, principal analyst at the Enderle Group, told the E-Commerce Times. "There is a tendency to change the company to match your skillset if you're a CEO, and not the other way around."
Cook's and Apple CFO Peter Oppenheimer's focus at the company's Q1 2014 earnings call may be taken as an indicator: They told analysts that the iPhone is used in 97 percent of the Fortune 500 and 91 percent of the Global 500; the iPad is used in 98 percent of the Fortune 500 and 93 percent of the Global 500.
Enterprise revenue "is a massive incentive, and Cook is more focused on the top than the bottom line -- so I think [Apple] will go in this direction regardless of the risks," Enderle opined.
The Apple-IBM partnership will give enterprises one point person to go to when they experience difficulties with their mobile solutions, observed Carl Howe, a research vice president at the Yankee Group.
Apple will offer 24x7 premium AppleCare to enterprise customers, and IBM staff will provide field service.
Implications for BYOD
Over the past few years, corporations have moved toward a Bring Your Own Device approach that allows staff to use their personal mobile devices for work.
BYOD has let Android devices make inroads into the enterprise market. They have been given a boost by Samsung's Knox technology, some of which recently was turned over to Google.
The IBM-Apple partnership will give iOS users access to Big Blue's Big Data analytics, which "opens up a large market opportunity for Apple," Cook said.
It will strengthen Apple's hand against Android in the enterprise.
Further, IBM's custom apps will be hardened.
Something for Everyone
"The unspoken element that makes this deal important is trust," Howe said. "As one of the most trusted vendors in IT organizations, IBM brings many decades of enterprise credibility to Apple that ... would have taken years to develop."
While in the past IT used to say that no IT manager ever got fired for buying IBM, the partnership "now means that no one will get fired for buying Apple either," he suggested.
That doesn't necessarily mean the consumer will lose out.
"From Apple's perspective, this move is brilliant," Jeff Orr, a senior practice director at ABI Research, told the E-Commerce Times.
"It will let Apple continue its focus on the consumer and address any of the opposition that says it is ignoring the enterprise," Orr continued. "Now Apple can point to its friend IBM."