Apple (NASDAQ:AAPL) has inked a landmark deal with IBM (NYSE:IBM) that will see the two companies working together to further their enterprise mobility initiatives by bringing IBM's cloud computing, big data and analytics capabilities to Apple's popular iPhone and iPad devices. The financial terms of the deal were not disclosed. With the partnership, IBM will develop industry-specific apps and solutions for iOS devices, optimize its cloud services for the iOS platform and help with marketing Apple devices to enterprises. While Apple has been successfully increasing its presence in the enterprise space, largely through the addition of business-oriented features to its iOS platform, the deal with IBM will give the company a more well-targeted push. IBM brings to the table decades of experience in understanding the needs of business customers and also has a sizable salesforce needed to cater to large corporations. Additionally, the availability of IBM's apps and solutions on iOS could give corporations a more significant incentive to deploy Apple devices. 
Trefis has a $94 price estimate for Apple, which is slightly below the current market price.
Apple's Devices Already Well Entrenched In Enterprise Space
While the consumer market is subject to intense competition and customer switching, enterprises generally invest large sums into their IT systems and enter into multi-year contracts, making them less prone to changing vendors. This brings about greater revenue stability and less uncertainty for suppliers. Apple has been seeking to increase its exposure to the enterprise space given the slowing growth in both the consumer smartphone and tablet markets, and it seems to have been relatively successful thus far. While Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Android has a significant lead over Apple in the consumer market with a market share of over 70%, the situation is quite different in the enterprise space. According to IDC, the iPhone accounted for around 82% of smartphones deployed at U.S. corporations and about 36% globally. The iPad accounted for about 73% of tablets in use at U.S. corporations and about 39% globally.  The higher share in the business space is likely due to multiple factors, including the "bring your-own-device" trend that allows employees to use their personal mobile devices for some work-related tasks, the early launch (or exclusivity) of many apps on the iOS platform and the relative lack of enterprise-focused features on the Android platform.
The increasing penetration of mobile devices combined with improvements in big data, analytics and cloud computing have been transforming the way business is done by allowing companies to boost their efficiency, while improving customer service. The Apple-IBM deal brings together two sizable players in the mobile and enterprise IT space, with a negligible competitive overlap, allowing them to leverage each other's strengths. Here are some of the key attributes of the deal and how they could help Apple.
Industry-Specific Applications For iOS: The two companies will collaborate on building about 100 industry-specific applications for iOS, targeting various verticals such as retail, healthcare, banking, travel and transportation, telecommunications and insurance. Additionally, IBM's team of 100,000 domain and industry consultants and developers could tailor these applications to specific needs. These applications could make Apple's devices a more integral part of a company's computing infrastructure, potentially supplanting PCs and laptops for several typical business use-cases. We believe that this could potentially improve iPad sales to enterprises, considering that the tablet form factor is better suited for carrying out productivity oriented tasks.
Optimized Mobile Platform: The deal would also optimize IBM's MobileFirst platform for iOS, providing services including workflow and cloud storage, fleet-scale mobile device management and crucial security functions. While Apple itself has been adding more security and device management features to its iOS platform, IBM's end-to-end solutions could complement Apple's efforts. This could also give the company an edge over rival Google, which has been launching more business-oriented features such as data separation and greater security in its upcoming Android L software. Although IBM's platform will continue to support other mobile operating systems including Android, we believe that the greater iOS optimization will be beneficial for Apple.
IBM Will Sell Apple Devices To Businesses: IBM will also sell the iPhone and iPad to its business customers, combined with packages of apps and other services. This could be a very significant development for Apple, since IBM has a very long track record of selling to business and international customers. This could allow Apple to save time and effort from not having to build-up its own enterprise sales force, potentially reducing its marketing expenditures. Separately, Apple will also offer a new enterprise class of service under its AppleCare offering, providing IT departments and end users round-the clock assistance.
Disclosure: No positions.