Apple, IBM form Strategic Partnership

New York City, New York – (StockNewsDesk) – 07/17/2014 — Two of the most influential technology companies over the past few decades came together to announce a landmark strategic partnership that will have IBM selling Apple iPhone and iPad to business clients as part of their enterprise service. In addition, IBM will be transferring over 150 of their tools, information technology applications, and enterprise software to native Apple platforms.

This is an interesting twist that would have been hard to fathom 30 years ago when Apple was the bold upstart, looking to take down IBM’s dominant share in the personal computer industry. Both companies have thrived over the years by evolving with changing times. Now, instead of bitter competitors, the CEO of both companies, Tim Cook of Apple and Virginia Rometty of IBM, in a joint interview stated that they are “a perfet fit “.

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While Apple has made incredible progress in taking over the consumer space in terms of phones, tablets, and computers, they have continued to lag behind when it comes to selling to businesses. IBM expertly made the shift to a company whose bulk of revenues comes from selling enterprise products and services to businesses. So, IBM’s expertise will allow Apple to sell more products to business customers.

Apple has mastered the craft of creating simple, aesthetic software that meets and anticipates the needs of consumers. This is Apple’s expertise, and they will be designing applications, specifically for IBM. IBM hopes it will revive its fortunes, which currently are experiencing diminishing revenue over the last eight quarters. Apple will be also an asset to IBM, as it transitions more software and services to mobile devices, one trend that IBM has failed to capitalize on.

Going deeper, Apple will also have access to IBM’s data and analysis systems, helping to fine-tune their  tune their own business processes. This includes improving the iOS cloud, security, and device management, especially where appropriate for large scale customers. This program is called IBM MobileFirst for iOS and describes the entire suite of apps designed for specific industry solutions. While,Apple will be designing and creating the software, the functionality and purpose of the software will come from the over 100,000 IBM consultants.

Apple and IBM plan to officially commence their partnership in the autumn with a focus on the insurance, telecommunications, transportation, travel, and banking industries. They are hoping the solutions developed will cover the whole gamut of customer needs. While Apple has attempted to make inroads into the enterprise space, previous attempts have not been completely successful. This time, with IBM’s expertise and input, Apple hopes to craft solutions perfectly suited for enterprise customers.

Based on the stock price, IBM is the more desperate party in this deal, as its business has lagged on a sales and profit basis over the last 3 years. Here is a 3 year weekly chart of IBM:


This under performance is even more stunning when considering that the Dow Jones Industrial Average is reaching new highs on a daily basis. IBM is hoping this deal will be an adrenaline boost to its fortunes as it hopes to resume its strong performance of earlier years, when its dominance of the enterprise space took its stock to new highs.

Apple’s stock has also had its own interesting journey over the past few years. It was one of the early leaders in this bull market, as its stock climbed more than 10 times from March 2009 to late in 2011. As growth in sales slowed for its products, the stock plunged dramatically. However, in recent months the stock has steadily gained back everything it lost, as it transitions from a growth stock to a value stock. Below is a look at Apple’s 3 year, weekly chart:


This news could generate the desired revenue growth for Apple products that could catapult the stock to new all-time highs, me highs, as the company regains its place as the world’s most valuable company.

This is truly a fascinating journey for these two companies that were bitter rivals only a couple of decades ago. Now they are natural partners with each filling in the holes of the others; IBM assists Apple in designing solutions for enterprise customers and then selling to them via their massive base of IT consultants. Apple, on the other hand, provides IBM with innovative products and an entire new suite of services and products in the hopes of reinvigorating their lagging fortunes.


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