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Apple-IBM partnership off to 'impressive' start

Gregg Keizer | Dec. 16, 2014
App and business sector choices reveal strategy of 'foundational' apps that can be customised for customers, say experts.

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]?'"


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