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Apps & Software

Can Apple Save IBM?

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By Douglas A. McIntyre Published
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IBM logo
courtesy of IBM
The tables have been turned over time. Decades ago, Apple Inc. (NASDAQ: AAPL) could not get businesses to buy its Macs. They were relegated to classrooms and individual buyers. After Apple added the iPhone and iPad, corporations took notice. Not only were the devices fine replacements for BlackBerry devices and PCs, employees favored them over other devices — often. Against that backdrop, Apple has cut a deal with International Business Machines Corp. (NYSE: IBM) for the computing giant to sell Apple products and produce apps for a number of industries. IBM, its growth stagnant at best, needs the deal more than Apple does.

A new partnership between Apple and IBM helps the consumer electronics firm around the edges. It does not have IBM’s army of consultants and salespeople who work with big corporations. Having this access to corporations may help it accelerate purchases of its hardware and use of its iOS, but the adoption of these is only a matter of time, based on Apple’s current progress.

Apple already claims that its iPhone and iPad are home to thousands of business apps. App developers have seen the corporate market as a favorable way to make money. And Apple has upgraded the two devices for corporate sales. The 64-bit iPad is aimed squarely at corporate buyers.

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IBM, on the other hand, which relies almost completely on corporate and government sales, has suffered from a sales decline. Revenue in the first quarter fell from $23.4 billion in the year-ago period to $22.5 billion. The drop in profits was even worse, from $3.0 billion to $2.4 billion. The only division of IBM that had significant growth was its financial arm. Sales collapsed in the Systems and Technology division, mostly because of a drop in demand for its massive System z computers. Part of IBM’s server business was recently sold to Lenovo.

When IBM announced its first-quarter numbers, Ginni Rometty, IBM chair, president and chief executive officer, said:

In the first quarter, we continued to take actions to transform parts of the business and to shift aggressively to our strategic growth areas including cloud, big data analytics, social, mobile and security.

IBM’s forecast for the balance of 2014 indicated the evolution would be slow.

IBM will get to ride the coattails of the new iPhone 6 and what is likely to be an upcoming upgrade of the iPad. As usual, the release of these products will cause a frenzy of sales, both to individuals and corporations.

When announcing the new partnership, the public relations offices of the two companies said:

By bringing together the analytics and enterprise-scale computing of IBM with the elegant user experience of iPhone and iPad, this partnership will deliver a new level of value for businesses.

It is the iPhone and iPad that will drive the sales. The IBM contribution of mobile apps and expertise by industry is window dressing.

ALSO READ: America’s Worst Companies to Work For

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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