Apple and IBM put rivalry to rest with mobile device deal

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br apple3 Bloomberg Apple and IBM have entered a deal that aims to unlock the potential of the corporate market for iPhones and iPads. The deal will help Apple expand after a recent slowdown in sales growth, and allow IBM to play catch-up in the mobile device space. Photo: Bloomberg

San Francisco/New York - Apple and IBM are putting aside a rivalry started at the dawn of the personal computing era to get more businesses to embrace iPhones and iPads.

The deal unveiled on Tuesday gives Apple access to an IBM sales force that will recommend Apple’s devices to customers in industries such as health care and banking, which have never been priorities for the consumer-focused iPhone maker. IBM gets a boost in a long-running effort to sell software and services to companies seeking to manage workers’ smartphones and tablets.

“We really recognised almost simultaneously that we could be uniquely helpful to one another’s strategy and that there was literally no overlap,” Bridget Van Kralingen, IBM’s senior vice-president of global business services, said.

The partnership helps Apple pursue a bigger slice of the market for corporate users of wireless devices. While many businesses allow the use of iPhones and iPads for checking e-mail and other tasks, some long-time users of computers running Microsoft’s Windows software have remained reluctant to adopt Apple’s gadgets.

For New York-based IBM, the alliance may aid the company’s efforts to catch up after watching other technology companies – including Apple – seize on the growing popularity of mobile devices.

“They’re now strongly associated with the premium mobile platform and mobile devices,” Frank Gillett at Forrester Research said of Apple. “If you want to do anything interesting in the enterprise, you now have to check with IBM on what they’re doing with Apple.”

Apple, which has seen sales growth slow in recent quarters, has recognised the potential of the corporate market, touting that its devices are used by employees at 98 percent of Fortune 500 companies.

Deutsche Bank had almost 20 000 iPhones, while Siemens had 30 000, Apple said in April.

“This is a shot in the arm for IBM and a great validation of Apple in the enterprise space, where they already are a huge success,” Aaron Levie, the chief executive of cloud storage company Box, said.

IBM shares rose 2 percent to $192.28 (R2 055.28) in extended trading on Tuesday after the pact was announced. The firm is scheduled to report earnings today. Apple, which reports quarterly results on July 22, climbed 1.6 percent to $96.80.

Apple and rival Samsung Electronics are seeking to further displace BlackBerry, which once held a strong grip on the corporate market. Shares of BlackBerry fell 4.2 percent to $10.83 in late trading after the deal was announced.

The partnership – announced with a press release that included a picture of Apple chief executive Tim Cook and IBM chief Ginni Rometty walking together at Apple’s headquarters – would be surprising to those following the companies three decades ago.

IBM and Apple were bitter rivals during the early days of the personal computer (PC). Apple’s famous “1984” Super Bowl television commercial to introduce the Macintosh computer compared IBM to George Orwell’s totalitarian Big Brother. The competition eased as IBM abandoned the PC business and instead focused on software and services geared for corporate clients.

Cook worked at IBM for over a decade before joining Apple.

While the companies’ agreement targets business customers, it puts IBM back in the position of selling consumer products – something it left behind in 2005 with the sale of its PC unit to China’s Lenovo.

A key element of the Apple-IBM deal is developing mobile-centric software tools for businesses. While smartphones are ubiquitous, in business they are mainly used for checking e-mail or calendars.

Apple and IBM said they would build more than 100 industry-specific applications for the iPhone and iPad, as well as tools for managing functions on the devices. – Bloomberg


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