Apple and IBM

Apparently, Apple has decided to partner with IBM in selling to the enterprise, as reported by CNBC and the Verge. Apple is open to new distribution channels, i.e. IBM, to expand sales of its iOS devices into the enterprise.

There are a number of striking elements and open questions about this partnership.

Jobs vs. Cook

It is highly unlikely this partnership ever would have taken place under Steve Jobs. Referencing Ben Horowitz who was paraphrasing the Godfather, an Apple employee was quoted only last week in the WSJ as saying that Jobs was a wartime CEO, while Cook is a peacetime CEO.

Steve Jobs viewed IBM as the evil empire. He delighted in tweaking their nose, mocking their culture and being everything they were not. The phrase “Think Different” meant different than the old boring guard, Microsoft and IBM. Indeed, in the movie Pirates of Silicon Valley, a young Bill Gates manipulates Jobs into doing what he wants by threatening to “work with IBM.”

Whether this move is good or bad, it is vintage Cook and absolutely not Jobs.

Distribution Channel Culture

Apple has always kept tight control over product placement, preferring to sell directly to retail when it can, and going through well-controlled channels otherwise. IBM is a different beast. Granted, Apple is much larger now than it was when it had to shun standard corporate channels, and therefore can pull its weight with IBM in ways it could not even a decade ago, let alone in the 1980s, but IBM has certain ways of doing business that will not change materially due to selling iOS products. An iPhone or iPad is still one quiver in the IBM arrow, who will make much better margin selling WebSphere or Lotus than Apple Keynote for iPad.

Indeed, IBM’s entire business model is built around fewer high-margin sales. It has no idea what to do with an order for two $500 iPads, or even 1,000 $500 iPads with each configured slightly differently (a.k.a. personalized).

Will IBM be able to successfully sell these products given its structure?

Corporate Devices vs. BYOD

BYOD, or Bring Your Own Device, is the mantra that more businesses have been using for the last 7-10 years. iPhones (and later Android) were sold to consumers, and they wanted to use them. So rather than have an entire department inside IT to procure, manage, provision, update, recover devices, let people bring their own devices, and give them the software they need to work safely with corporate services.

Indeed, BYOD fits perfectly with Apple’s culture and image, of being a rebel, different, individualized, unbound by the stifling shackles of corporate culture and IT.

It seemed – and continues to seem – that the backoffice will continue to be dominated by enterprise software and hardware, whether sold by IBM like WebSphere and Power+AIX, or open-source and commodity, like JBoss and x86+Linux; it isn’t a space where Apple can or does play. But the user-facing front-end – phones, tablets, laptops – is Apple’s strength.

The combination of Apple innovation with user pressure and eventually corporate acquiescence to BYOD would appear to make it a strength of Apple’s to avoid standard enterprise channels.

Clearly, Tim Cook’s Apple felt there were many enterprises where BYOD simply wasn’t happening, primarily due to culture and sales channels. It could not be technology, since whatever IBM will load and configure is identical to what would happen – and for a much lower price – to a user who brought their own iPad and had their corporate IT add profiles and apps.

Cultural Cross-Pollination

Will IBM influence Apple? Will Apple influence IBM? I suspect that – after many clashes – the groups dedicated to working with their counterparts will be influenced. The IBMers will become a little more innovative, open and relaxed; the Applers will learn more about process, corporate sales and channels and locked down requirements.

But those are a small subset. Over time, one would need to become more like the other, and neither is going to be swallowed or materially affected.

Predictions

I don’t like making predictions – it is so easy to get them wrong – but my estimate is that it will fall apart within 2 years from one of 2 directions:

  • Slow sales: Some mix of IBM culture not structured to sell Apple devices or companies that didn’t want BYOD being too wary to take them, even from IBM will make the cost of maintaining the partnership too high in light of relatively low sales via the channels.
  • Cultural Conflict: Apple will continue to market its products as hip, edgy, futuristic, individualizable… everything IBM and corporate IT are not. Apple will continue to push individuals to demand BYOD. Eventually the IBM sales staff will complain enough about encountering responses like, “we don’t need this from you; our people bring them on their own.”

They could surprise us, though. It is possible Apple is seeing leading indicators of BYOD slow-down, or large pent-up demand for devices from corporate IT if only they could get them pre-configured the right way and through the right channel. Time will tell.

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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