IBM teams up with West Coast rival Apple

IBM Corp. Chairwoman, President and CEO Ginni Rometty with Apple CEO Tim Cook. IBM/Apple photo

A photo widely circulated on the Internet recently shows Steve Jobs in front of an IBM building in New York, giving the IBM logo the middle finger. That photo was taken in 1983, just ahead of the release of the original Macintosh computer, according to Andy Hertzfield, who started the spread of the photo by posting it to his Google Plus account.

The companies spent much of the 1980s as bitter rivals, Armonk-based IBM Corp. representing the buttoned-up East Coast tech tradition and California-based Apple Inc. representing the rebellious West Coast movement.

The rivals are now partners.

“We are delighted to be teaming with Apple, whose innovations have transformed our lives in ways we take for granted but can”™t imagine living without,” said Ginni Rometty, IBM chairwoman, president and CEO. “Our alliance will bring the same kind of transformation to the way people work, industries operate and companies perform.”

Although the comments may have been surreal to some today, and would have been entirely implausible two decades ago, analysts say the announcement isn”™t as shocking as it may seem. The deal is the result of Apple”™s ongoing mobile wars and IBM”™s shift in development focus, experts said. In fact, the companies have worked together in the past, according to MarketWatch.com.

The collaboration, announced July 15, will see IBM sell iPhones and iPads to business clients and help develop exclusive apps and cloud services. Apple will offer support services. Together, the companies will deliver “made for business” apps. IBM has shifted its focus to software and cloud technology, and the company will help develop software to reinforce data security and allow businesses to manage workflow and tabulate analytics.

Tim Cook, Apple”™s CEO, said in a statement, “For the first time ever we”™re putting IBM”™s renowned big data analytics at iOS users”™ fingertips, which opens up a large market opportunity for Apple.”

The move can help Apple keep its head above water in the mobile and tablet
sector as it continues to lose its market share while Android continues to grow its dominant share. Recent pushes from other companies, including Microsoft, have some experts saying the deal was necessary for Apple to strengthen sales with the business and government-employee set. Apple said 98 percent of the Fortune 500 and more than 92 percent of the Global 500 use iOS devices in their businesses.

For IBM, the move may help give the company”™s Watson cognitive system development a mobile destination for its apps, according to an analysis on zdnet.com. The move would give IBM a platform, allowing Apple to get the high-performing apps before they are developed for Android or other platforms. There are possibilities for IBM”™s Watson in many business sectors.

“Healthcare is one obvious vertical for Watson, but IBM has many more industries targeted,” the article stated.

IBM has more than 4,300 patents in mobile, social and security, according to the company, and has 6,000 security researchers and developers in 25 labs around the world.

According to the joint statement announcing the partnership, some of the cooperative effort will include:

”¢ Developing IBM MobileFirst for iOS Solutions, “made-for-business apps” that will target specific industry issues or opportunities. The apps will become available starting in fall and into 2015, focused on retail, health care, banking and travel and transportation.

”¢ Offering AppleCare assistance for IT departments through AppleCare for Enterprise, with on-site service for businesses provided by IBM.

IBM is in the midst of a companywide staffing restructuring. It announced its second-quarter earnings July 17 and noted continued declines in revenue. For the second quarter, the company reported $24.4 billion in revenue, down 2 percent from the second quarter of 2013. Earnings were $4.32 per share, up 34 percent from last year. Both figures were better than analysts”™ predictions.

Apple announced its third-quarter earnings July 22, posting $37.4 billion in revenue, up from $35.3 billion a year ago. Earnings were $1.28 per share, up from $1.07 in the third quarter of 2013. Apple iPhone sales were up 13 percent from last year but slightly below the 36 million units analysts had forecast. IPad sales were down, at 13.3 million units, more than a million units less than last year”™s third quarter, according to Forbes.