Apple-IBM partnership off to 'impressive' start
"The three that I've seen were pretty impressive," said Van Baker, an analyst at Gartner. "They're very complex, with some drawing from three, four or more separate data sources."
Apple and IBM, partners from 1991 through 2005 -- they had a falling out a decade ago when Apple switched its Macs to Intel processors -- rejoined forces in July to meld Apple's iPhone and iPad with IBM's big data and analytics capabilities.
At the time, the two pledged to launch some apps this year from a list that would grow to around 100. Other pieces of the partnership put IBM in charge of selling iPhones, iPads and the apps to clients; providing on-site support to customers; and optimizing its cloud-based services for iOS.
Apple has also created enterprise support plans to accommodate the new customers.
At the time, analysts saw the partnership as a win-win, but gave the edge to Apple, which has historically been an afterthought in the enterprise. "The idea is that Apple must now be a real business vendor if IBM is building for you and selling for you. Little Apple has just grown up," said Ezra Gottheil of Technology Business Research in July.
Today, Gottheil was just as impressed with the progress the two have made.
"They've gone further than I thought they were going to go by this point," Gottheil said in a telephone interview. "The apps appear to be higher-quality versions of what IBM was already building."
According to Baker, however, that wasn't necessary accurate, as the native iOS apps blended capabilities and analytics that were previously available separately.
Among the 10 apps that Apple and IBM touted on Dec. 10 were an airline in-flight customer service and engagement app, another aimed at telecommunications firms for field repair calls and a third for law enforcement incident response. Others targeted business sectors rangeg from banking and insurance to retail and government social services.
The apps put flesh on the partnership's bones, and signaled how the two companies decided which apps to design and what markets to target.
"IBM's Global Services team drove the app selection," said Baker, referring to the arm of the Armonk, N.Y. company responsible for IT consulting, systems integration and application management. "Global Services knows what people [in business] are doing, where they are in the process of moving to mobile."
For its part, Apple was integral in the design of the apps, which in many cases resemble the Cupertino, Calif. firm's own iOS apps.
Part of the problem with the project, analysts contended, was that options were almost unlimited, what with a huge number of potential clients and disparate business processes. Apple and IBM have solved that, analysts said, by crafting apps that will apply to more than just one firm, with the option of customizing them to meet a company's specific needs.
Baker called them "foundational," in that they can be used across multiple industries, each a variation on a theme.
"It's a strategy that starts from the root and grows up and branches out," echoed Charles Golvin, founder of Abelian Research. "They deal with core problems, like employee efficiency or customer engagement, but I expect that they will be customizable [by IBM] for both other vertical sectors and individual companies."
Golvin called that approach one of "enormous opportunities" because virtually every Fortune 500 firm has similar core problems that need to be solved when transitioning to mobile. "Most transportation companies, for example, have common needs when it comes to customer engagement," Golvin said, citing the in-flight Passenger+ app as the foundation on which customized apps for other similar businesses could be built.
From what the analysts have seen, IBM is the driver of the iOS app strategy, which makes sense since it has the enterprise expertise and real-world interactions with customers, all of which Apple lacks.
The partners have not disclosed the financial terms of their deal, so it's unclear whether Apple receives a cut of the app revenue. However, it would be very unlike Apple to leave money on the table; the company, for instance, skims 30% off the top of all App Store sales.
But the success of IBM's iOS app strategy will pay off for Apple, said Gottheil, in sales of iPhones and iPads.
"When you create these kinds of high-values apps, the price of the device becomes trivial," Gottheil said, arguing that companies that invest large sums with IBM won't blink when it comes to buying Apple's devices in just-as-large volume.
Gottheil contrasted the iPad with Microsoft's signature device, the it's-a-tablet-no-it's-a-notebook-replacement Surface Pro 3. While the latter may be more capable and flexible -- it's able to run the enormous library of x86 Windows applications, both third-party and those designed in-house -- the iPad is a better bet for the tasks IBM has staked out.
"It's light, it's well-built, and it's uniform," said Gottheil of the iPad, referring to its screen resolution and ability to run the latest version of iOS when he ticked off the last item. "Companies will ask themselves, 'Why would we mess around with anyone else [than Apple]'"
The 10 apps touted last week will be followed by approximately 10 new ones each quarter, said Baker, as IBM and Apple build their inventory.
IBM's first wave, however, will be used for more than just a kick-off of the partnership. "[IBM] Global Services will use these as proof-of-concepts," said Baker. In other words, as sales tools. "They'll say, 'Oh, you like this We can customize it, just sign here.'"
Measuring the success of the partnership will not be easy, the analysts agreed, unless Apple discloses device sales specific to the deal -- which is unlikely -- and IBM calls out revenue derived from its app contracts, also unlikely.
Clues may include a regular accounting of the number of customers or at least additional names of the largest adopters. "Those names speak very strongly to this strategy resonating," Golvin said of the likes of Citi and American Airlines, two of those cited in the joint Apple-IBM press release last week.
"If some of the individual clients were to actually share concrete metrics of their own, that might tell us something," Golvin continued. "And there's an indirect measurement: The lack of adoption of Android tablets and smartphones in the enterprise would tell us the extent to which corporations changed their plans for that ecosystem."
The analysts were bullish about the new Apple-IBM mobile-in-the-enterprise strategy, calling what they'd seen so far a well-designed first step. "They've taken the things that each delivers, then provided significant benefits to large corporate customers," said Golvin.
"For Apple, these apps make its tablets more useful," Gottheil added. "Finding [use cases] that people had not thought of before is a net win for devices."