How Apple's IBM partnership will help its consumer business
July 17, 2014
While Apple is known for constantly thinking ahead in terms of the consumer, the brand will put a bigger focus on enterprise through a new collaboration with IBM, with both companies hoping to reimagine the use of mobile by businesses, address security threats and cause overall growth.
The uniqueness of the partnership buys the companies some time to perfect their strategy before others follow suit. The strategy could also boost Apples consumer business, which has been suffering from a perceived lack of innovation.
Apple has established itself in the enterprise market for its devices, said Erich Joachimsthaler, CEO and founder of Vivaldi Partners Group, New York. Executives are familiar with the brand, and request it from IT departments. This is a natural market expansion and opportunity for Apple but it is probably not a big one.
This market, Apple can serve already without IBM.
Mr. Joachimsthaler is not affiliated with Apple or IBM but agreed to comment as an industry expert.
Experts believe there are an endless amount of possibilities, both major and minor, through the partnership.
At another level is business solution apps that IBM might develop with Apple, Mr. Joachimsthaler said. While this appears interesting of an opportunity, the apps still are just a minor part of an entire enterprise solution because they are just an accessory to the larger solution that customers are willing to pay. For Apple this does not represent a significant revenue or margin opportunity.
A completely unique relationship, all eyes are on the brands awaiting a new launch of mobile applications.
Apple and IBM understand the magnitude of this alignment and will likely not rush to put out new products without the methodical approach and research that are trademarks of both companies, said Mary Beth Keelty, vice president of marketing and sales development at PM Digital, New York. As of right now, there are no other partnerships like this out in the market, so Apple and IBM have some time to not only perfect the development of the apps, navigate the transition between open and closed sourcing and develop appropriate sales campaigns and strategies.
Ms. Keelty is not affiliated with Apple or IBM but agreed to comment as an industry expert.
Though Apples focus will be shifted to an emphasis on B2B, experts think it will inherently encourage the brands consumer-facing existence.
This collaboration will actually greater meet the needs and wants of consumers, said Michael Maio, brand strategy consultant at Vivaldi, New York. Apple will be partnering with IBM on something that IBM does best: security and data.
With this partnership, Apple will be able to leverage IBMs security credentials to better fend off the increasing threats to our and business devices as hacking and surveillance have become increasingly large concerns in the past few years, he said. Its a win-win, IBM gets the benefit of helping companies crunch data and eventually lead them into purchasing more IBM powered analytical tools, and more hip associations.
Apple gets to use IBMs credentials to really break them into the B2B market, as you know today the vast majority fortune 500 companies are not run on iOS.
Mr. Maio is not affiliated with Apple or IBM but agreed to comment as an industry expert.
Approximately 100 new mobile applications from the partnership could appear by this fall.
Despite the greatness of the announcement, there are likely to be challenges the brands will be forced to overcome, but again, it is not likely that Apple will lose its stance, according to Ms. Keelty.
Their primary challenge will be in managing any potential culture clash that might exist in regards to the different dynamics that exist between B2B and B2C go-to-market and sales approaches, Ms. Keelty said. In selling to businesses, Apple will also be dealing with a completely new, and somewhat foreign, audience and in order to meet their demands Apple should form a new team dedicated to this line of business that blends the left-meets right attitudes of both companies.
But at the end of the day, its doubtful that Apple will neglect their existing market.
Amongst controversial predictions, it is merely impossible to imagine a world without iPhones, Ms. Keelty said.
This deal does not signify the abandonment of Apples core consumers: individuals and creative professionals, Ms. Keelty said. However, it has been predicted that Android products will outpace iOS devices four to one by 2015. Apple may not be able to combat the pace of Android growth and competitor innovation, but iPhones are so ingrained within our culture, especially the culture of younger demographics, that is difficult to see them seceding this grasp on consumers within the next 5 years.
Transitioning from purely a B2C company into B2B development gives Apple the chance to grow in new areas and within new demographics. Apple recognizes the strides their competitors are making in resonating with individual consumers, and theyre showing their agility as a company in this move to engage with businesses.
The two technology giants are in constant motion with new innovations.
Apples plan to develop hardware to complement its iBeacon technology could make the location-awareness technology available to a broader range of retailers, dramatically redrawing the marketing landscape.
The Cupertino, CA-based company said in a Federal Communications Commission filing that it tested the product jointly with Chinas Audix Technology over 14 days from April to May. Up to now, only third parties have offered iBeacon-powered hardware. The development underscores iBeacons growing prominence due to its potential to reach a vast audience in numerous sectors (see story).
Recent IBM research reveals untargeted mobile messages are the modern day equivalent to spam.
An IBM executive at the Mobile Research Summit: Data & Insights 2014 said 30 percent of all retail traffic online originated from mobile last holiday season and with expectations for a 7-10 percent increase this year, marketers must avoid broad messages that cause consumer distaste towards brands.
The definition of spam is changing from unsolicited commercial email, an idea based on permission, to a perception-based definition where consumers consider marketing messages from known senders to be junk if the content is uninteresting or exclusive of themselves. For example, when consumers are on the subway and receive a message from Walgreens that says Come into our store! but cannot come in because they are on the train, this leaves a bad impression (see story).
Despite the history of competition between the two manufacturers, a powerful connection exists as part of the collaboration. It is believed the brands must work intently to challenge their momentum in the right direction.
At still another level is the larger opportunity of enabling the digital enterprise, Mr. Joachimsthaler said. It is unclear how Apple and IBM can make this work. One of the key components of value creation is software. This is where value is created for customers.
Apple has to leave this value creation effort to IBM. Another value creation is the consulting services to define the problem and solve it. Again, this value is created through IBM not Apple.
Value creation is therefore driven primarily by IBM and far less by Apple. There is a real question whether two partners that are of equal strengths overall and sizes can make this work over time.
Caitlyn Bohannon, editorial assistant for Mobile Marketer, New York
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