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Yes, the IBM/Apple Deal is Huge!

There was a claim today from a usually respected industry analyst, Gene Munster of Piper Jaffray, that the new marketing deal between Apple and IBM wouldn’t cause a huge surge of iPhone and iPad sales. His logic is that iOS gear is already being tested or deployed in 98% of the Fortune 500 companies, and 92% of the Global 500 companies.

That figure comes from Apple, and, on the surface at least, Munster seems to be right on. But it’s clear he isn’t paying close attention, for otherwise he would not have made such a rash assumption.

You see, Apple’s figures do not report the actual number of iOS devices being used by these companies. One or two would put them on the list. Maybe someone in the IT department or a corporate executive bought a few for personal use, and decided to see how well they work at the office.

See where I’m going here? If corporations, knowing that IBM is running a full-court press to market and support Apple’s hardware, buy a few hundred or a few thousand, that could be a huge sales increase overall.

Yes, Apple has already gained enterprise cred, putting them in a position to exploit that status and actually put tons of gear into the hands of employees. In this new deal, Apple supplies the hardware and iOS software along with a business-class version of AppleCare providing 24/7 support. In turn, IBM builds iOS enterprise apps, provides business-grade cloud services and expanded on-site support. Some 100,000 IBM employees and outside sales reps will be selling products bearing the Apple logo. 100,000! Can you see where Apple gets a tremendous boost to corporate sales?

Imagine if each salesperson sold a mere 100 iPhones and 100 iPads each quarter. Multiply that by 100,000 and you’ll see some amazing increases in Apple’s sales. Of course, I’m making no assumptions as to how well each will do, or what efforts they would make to push Apple’s products. I also wonder whether a presumed major increase in sales of iOS hardware will create demand for Macs too, although that is not part of the agreement.

Now it has been emphasized both by Apple and IBM that this is an exclusive arrangement. It means that IBM isn’t going to go to, say, Samsung, and sign a similar contract. It’s all about Apple.

Some are wondering whether Steve Jobs, who often dismissed the enterprise, would approve such a move. But they forget that Jobs advised Cook not to consider what he would have done. Besides, the circumstances are different now, and Apple is merely leveraging the public’s embrace of iOS gear, including the business world, and taking it to the next level. Besides, Apple has already added enterprise-level features, including security, to the iOS. Indeed, Google and Android hardware licensees have lots to worry about here because they haven’t so far considered security to be a serious issue.

It’s also important to realize that the enterprise doesn’t move quickly. Company IT people are careful about migrating to new platforms, and even replacing existing gear. The biggest loser in this deal is very likely BlackBerry, which was a corporate darling for many years. What is left of BlackBerry may continue to decline as more and more of their cherished customers buy iPhones and iPads.

Another potential loser is Microsoft, which famously made that deal in the 1980s for MS-DOS with IBM that put the company on the map. Of course, it was a non-exclusive deal, which fueled the rise of PC clones and the ultimate decline of IBM’s PCs.

In any case, Microsoft, despite efforts to improve Windows Phone and the Surface tablet, is being left at the altar here. It doesn’t mean Microsoft will lose the enterprise. After all, you can get Office on the iPad too, but it does mean that the chances for success are lessened at least in the mobile universe. Most PCs will still run Windows, and while there may be more opportunities for Macs, it’s not certain how large the platform might grow.

At the same time, Apple is making a huge effort to fuel adoption of Macs and iOS gear beginning with iOS 8 and OS X Yosemite. The Continuity feature is designed to allow for seamless switching from Mac to iOS gear and back again, and I can see where the enterprise might actually pay attention to this setup.

IBM? Well, the deal is for iOS gear of course. But that doesn’t mean it can’t be extended to include Macs as well. After all, IBM has been out of the personal computer game for years.

Are there downsides to this deal? Sure. IBM’s previous pacts with Apple haven’t worked out so well. The PowerPC came to an abrupt end when IBM and Motorola failed to deliver more powerful and power efficient chips to compete against Intel. Hopes for a PowerBook G5 were stillborn.

Here, though, it’s about software and services. It doesn’t mean Apple has lost its mojo, as one ill-informed commentator claims. Tim Cook is also an IBM veteran, so he presumably understands how the company works, and thus crafted an arrangement that will be profitable for both companies. We’ll see how it plays out, but it all looks quite promising. At the very least, more than a few tech powerhouses are freaking as a result.