With IBM Partnership, Apple Takes Another Shot At The Mobile Enterprise

Apple likes to talk about how nearly all Fortune 500 firms are using iPads and iPhones, with the implication that this makes it a force to be reckoned within the enterprise market. That's partially true, but in areas such as cloud computing, data analytics and artificial intelligence, Apple doesn't have much to offer big businesses.

Now Apple is partnering with IBM in a wide-ranging iOS-focused deal that represents its latest attempt to make itself more strategic in the enterprise. The deal has lots of cloud and big data components, and promises to create apps that are indispensable to businesses. Apple will benefit from the enterprise gravitas IBM brings, and IBM gets the "cool" factor that comes with associating with Apple.

Of course, there's lot of intrigue around this partnership because Apple and IBM used to be bitter rivals. Hollywood loves this kind of reconciliation story, and so does the technology industry.

And the Apple-IBM partnership sounds great on paper. IBM is building more than 100 native apps for iPhones and iPads and is enlisting some 100,000 consultants and software developers to help out. IBM also is optimizing its cloud device management, security and analytics services for iOS, and it'll also resell iOS devices.

IBM will offer packaged services such as sales, deployment and device activation, and will deliver AppleCare for Enterprise, an on-site service for enterprise customers, as well.

For the Apple-IBM partnership to deliver on its promises, however, Apple is going to have to figure out how to interact with a corporate culture that thinks very differently from its own. Solution providers told CRN that based on Apple's previous attempts to work with enterprise vendors and channel partners, it's fair to view the partnership with a hefty amount of skepticism.

"Apple has really struggled in the enterprise," one longtime Apple partner told CRN, speaking on condition of anonymity to protect his relationship with the vendor. "We work with their professional services organization, and they try to build pre-canned engagements around BYOD work. But they don't understand the enterprise, and they need something beyond what they have today."

While Wall Street's reaction to the IBM-Apple partnership was mixed, some analysts noted that Apple already has many large enterprises using iPhones and iPads and it's tough to see how the IBM deal could move the needle in a significant way.

"We do not expect the IBM partnership to have a meaningful impact on Apple's financials overall, primarily based on our belief that large corporations are already utilizing iPhones," Piper Jaffray analyst Gene Munster said in a note to clients after the partnership was announced. "We believe that IBM will add incremental functionality for corporate customers but is unlikely to be the make-or-break factor for a large corporation in utilizing iOS."

In 2011, Apple tried piggybacking on Microsoft channel expertise as a route to the enterprise, with its Mobility Technical Competency (MTC) in the Apple Consultants Network. With iPhone and iPad sales to enterprises booming, Apple needed Microsoft experts with knowledge of Windows networks and heterogeneous back-end infrastructure to help speed deployments, something its Apple Consultants Network partners mostly lacked.

Apple poached Francois Daumard, a popular Microsoft channel executive who spent 12 years at the company, to lead the MTC effort, which included recruiting more than 1,000 Microsoft partners. Apple also hired Bill Rielly, another former Microsoft channel executive, to help out.

Apple's MTC play was seen as a shrewd attempt to simultaneously fill an important need while capitalizing on its rival's slow progress in the mobile market. But after generating lots of buzz early on, the MTC has faded into the background. Daumard left last year for a job at Fiberlink, which was subsequently acquired by IBM, and Rielly jumped to Intel's McAfee unit.

Apple appointed Tim Reid, technical manager for the Apple Consultants Network, to fill Daumard's old role, but many Microsoft partners have stopped working with Apple through the MTC, sources told CRN.

"The Apple thing has died down with all the ex-Microsofties leaving Apple, or at least the ones I interacted with," one Microsoft partner told CRN, speaking on condition of anonymity. "The buzz is way down, and there doesn’t seem to be anyone really pushing [the MTC] at Apple right now."

Apple's reasons for partnering with IBM are somewhat different from the pressing strategic needs that Microsoft partners filled via the MTC. A big reason why Apple is teaming up with IBM is because it doesn't view it as a threat.

"If you were building a puzzle, they would fit nicely together with no overlap," Apple CEO Tim Cook said of the IBM-Apple partnership in an interview with Re/Code last week. "We do not compete on anything. And when you do that you end up with something better than either of you could produce yourself."

Sources told CRN it's possible that Daumard, in his current role as vice president of North America channels at IBM/Fiberlink, played some role in getting IBM and Apple to the table for this partnership. Daumard couldn’t be reached for comment.

However, IBM and Apple have apparently decided they can pull this off without leveraging the channel, which makes it difficult to imagine longtime channel advocate Daumard playing much of a role.

While Apple works with only a small base of partners, IBM has long preached the virtues of the channel and will no doubt be facing questions as a result of its Apple tie-up. Tim Huckaby, CEO of InterKnowlogy, an application development firm based in Carlsbad, Calif., said the deal makes a lot of sense for IBM.

"The partner angle is really interesting. Obviously, Apple is going to compete right in the IBM channel. That is really going to piss off the IBM channel partners," Huckaby told CRN.

The irony of the situation is that much of the systems integration work that will come out of the IBM-Apple partnership will be Office For iPad implementations in the enterprise, InterKnowlogy's Huckaby said.

Ira Grossman, CTO of end user and mobile computing for MCPc, a Cleveland-based Apple partner, is concerned that IBM is now going to be handling customer support and provisioning services for Apple. These are some of the last remaining ways for partners to make money with Apple, he said.

Grossman expects IBM to offer a level of AppleCare that goes beyond what traditional channel partners can provide.

Some solution providers believe Apple is partnering with IBM in response to competitive pressure from Google and Microsoft, the latter of which already has one of the biggest enterprise footprints in the IT industry.

Google Chromebooks are gaining traction in the enterprise through Google's partnerships with Hewlett-Packard and Dell. And with Office For iPad, Apple is also feeling pressure from Microsoft.

"As the OS becomes less important, and people move fluidly between different devices and form factors, Apple is feeling a threat it hasn't felt in the past," Grossman said.

Google is one of Apple's most bitter rivals, and both vendors are trying to figure out how to court enterprise customers. "Google is causing all sorts of heartburn to Apple and Microsoft. We’ve seen a lot of that firsthand," Michael Porter, principal of the portal and social practice at Perficient, a St. Louis-based IBM partner, told CRN.

The difference is that Google built many technologies that are vital to enterprise IT and has strong cloud and big data chops. Google's challenges in the enterprise are mostly on the sales side, and it has recently poached executives from Microsoft and Cisco Systems in order to build its credibility with large companies.

"We’ve built a deep bench across the board in Google Enterprise over the last couple years," Amit Singh, president of Google’s enterprise business, told Fortune earlier this month. "We’re hiring the best in the industry, including senior talent with decades of enterprise experience."

Apple-IBM will also be competing with Microsoft, which under CEO Satya Nadella has shown it's willing to release software for other platforms before Windows. Microsoft is also combining mobile device management with security and identity management in Enterprise Mobility Suite, an offering that debuted in April that aims to help enterprises with BYOD challenges.

"The marriage of IBM and Apple is going to shift some of the focus away from consumer technology back into the business space. And that’s a place I know Microsoft has retreated back to as they continue to struggle for consumer mind-share," Scott Stanfield, CEO of Vertigo Software, a Richmond, Calif.-based Microsoft partner, told CRN.

Unlike Apple partners, IBM's channel is bullish on the prospect of working with Apple. Jeff Guenthner, director of solutions architecture at CMI, a Mill Valley, Calif.-based firm that partners with IBM and other enterprise vendors, said the partnership will benefit both vendors.

"Apple will be able to push deeper into the enterprise and gain another marketplace to dominate. IBM gets the ability to boost their mobile strategy," Guenthner told CRN.

Perficient's Porter said IBM has made a ton of investment in mobile technology in recent years but doesn’t get much credit for it.

In recent years, IBM has reworked its development tools to be mobile-friendly; acquired mobile app development vendor Worklight; and released a mobile-friendly version of its Cognos analytics app on Apple's iTunes store, according to Porter.

"IBM doesn’t have the sizzle when it comes to mobile, despite the fact that they’ve spent a lot of time and money both buying firms and in incorporating mobile support throughout their features," Porter told CRN.

With Apple, IBM can sell hardware into a deal and package it in such a way to create a one-stop shop, he said.

"As a systems integrator partner, I know that we are talking custom development, but perception is key to the sales cycle," Porter told CRN. "It brings IBM much closer to top of mind when mobile Web, apps, development, reports or management are discussed."

PUBLISHED JULY 21, 2014