Analysts are starting to weigh in on the partnership Apple Inc. (NASDAQ:AAPL) and International Business Machines Corp. (NYSE:IBM) announced on Tuesday. Those at Cantor Fitzgerald say the partnership with IBM could give Apple a leg up in the enterprise smartphone segment. Barclays analysts say it could benefit Apple in terms of units over time and IBM as it shifts toward mobility and data collection with a goal of fueling its analytics strategy.
Morgan Stanley analysts looked at how the partnership could impact competitor Mobileiron Inc (NASDAQ:MOBL).
Apple and IBM said they are uniting to make it possible for IBM to serve enterprise customers by delivering mobile solutions over the iOS platform. The partnership brings together IBM’s enterprise-related relationships and technologies with Apple’s brand and consumer devices, making the mobile experience “more harmonious” for enterprise users, analyst Brian White of Cantor Fitzgerald said in their report dated July 14, 2014. They believe the partnership may put an iPhone and iPad in every cubicle.
While Apple continues trying to attract a greater share of the enterprise market, the analysts said the time is right for the expected larger 4.7-inch and 5.5-inch iPhones. They say the bigger models “could dovetail nicely” with the partnership. Assuming about 20% to 25% of the global smartphone market is used by work, they see about a market of about 250 million to 300 million this year. They believe more workers have the desire to use their iPhones at work and that IBM can help them do this.
Deal difficult to quantify
In a report also dated July 15, 2014, Barclays analyst Ben A. Reitzes and his team say the partnership is hard to quantify for both companies, although they see it as generally positive for both. They think the deal shows that Apple is changing under CEO Tim Cook’s leadership, demonstrating how management is “more willing to think outside-the-box” to provide the company with greater access to underserved markets. By partnering with IBM, they think Apple will better be able to address the enterprise market.
They believe IBM will benefit by leveraging its enterprise expertise. It also goes along with the company’s investments in cloud, data and engagement, all of which are areas of high growth. They say by partnering with Apple, IBM may “become more relevant in places from the checkout counter to an airplane cockpit,” giving the company a foothold elsewhere as it sees falling sales in mainframes and servers.
Mobileiron slumps on IBM – Apple agreement
Shares of Mobileiron fell by nearly 7% today after Apple and IBM announced their partnership. However, Morgan Stanley analysts said in their report dated July 15, 2014 that they don’t think the partnership will have that much of an impact on Mobileiron. They say it only “increases competitive noise.” James E. Faucette, Keith Weiss and Meta A. Marshall say the main concept of that partnership seems to be “delivering mobility solutions to enterprises,” but they think that Mobileiron’s value proposition is more about safety in bring your own device systems, using any app and any content.
The analysts admit that having a competitor that’s the size of IBM can’t be seen as good for Mobileiron, but they see four big reasons the company’s growth won’t be majorly impact. First, they say most of the company’s customers have mixed operating system environments, while the Apple – IBM deal focuses on iOS users. Second, Mobileiron users like the native app integration, and third, they usually do most of their IT buying through resellers and VARs, which usually prefer Mobileiron products. And fourth, they say most of the growth they’re expecting over the next two to three years is based on expansion of the company’s footprint within existing customers. The company has more than 90% renewal rates, indicating significant stickiness within its offerings.