Jean-Louis Gassée puts on his devil’s advocate robes and shares his thoughts on the Apple, IBM alliance announced last month. Lots to digest here.
Apple is a focused company, its financial statements tell the story: Its money is made in hardware. All other activities, such as the important contributions from the App Store, make up an ecosystem that support the hardware volumes and margins. Everyone in the company knows this.
A look at IBM’s latest quarterly report tells a much more complicated story. In its simplest analysis, the company consists of three main segments, each with its own P&L (Profit & Loss) numbers and, one assumes, its own goals, rewards and punishments, and fight for resources. It is, counterintuitively as the shadow of its former grandeur remains, a smaller business than Apple’s: $24.4B last quarter (-2% year-to-year) vs. $37.4B (+6%).
I don’t see this as counterintuitive. Apple is still on top of a breaking wave, and IBM is on the decline, casting about for a new wave to ride.
On alliances:
Alliances generally don’t work because there’s no one really in charge, no one has the power to mete out reward and punishment, to say no, to change course. Often, the partners in an alliance are seen as a bunch of losers clinging to each other with the hope that there’s safety in numbers. It’s a crude but, unfortunately, not inaccurate caricature.
An important point, but IBM and Apple playing in such diverse business sectors gives a lot of motivation to make this work without the need for a carrot and stick.
For Apple’s part, the iPhone and the iPad have gained increasingly wider acceptance with large Enterprise customers: “98% of Fortune 500 companies have rdeployed iOS devices and more than 90% of tablet activations in enterprise environments are iPads.” Of course, a few BYOD devices don’t constitute wholesale adoption inside a company. Apple doesn’t have the manpower and culture to come in, engineer, deploy, and maintain company-wide applications and fleets of devices. That’s IBM forte.
And that’s the strength of this deal.