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Summary

  • IBM/Apple could prove negative or positive, but more likely a non-event.
  • IBM/Apple both price high; BlackBerrys are generally low.
  • It pressures others, like SAP, Oracle, and Microsoft, to step up.

Elevator Pitch

The IBM (NYSE:IBM)/Apple (NASDAQ:AAPL) deal is a near textbook example of an event that pushes stock out of weaker hands. Six months from now this will likely prove to have been a major buying opportunity.

Company Description

BlackBerry (NASDAQ:BBRY) is an enterprise software company masquerading as a device manufacturer.

Thesis and Catalyst For BlackBerry Ltd.

We believe that the IBM/Apple deal will have little or no impact on BlackBerry's business over time. It could, but is not likely to, freeze the market in the near term.

IBM and Apple announced they would be working together to make Apple's mobile devices more useful to enterprises. The offering has 3 major elements, two of which seem directly competitive; the third has some overlap with BlackBerry.

At first blush, this seems bad for BlackBerry in the short and long run. Because I own BlackBerry and believe John Chen knows his way around enterprises, I think the outcomes could range from a material positive to a modest negative. More than anything else, this solves a problem for Apple: The iPad seems more about the view and less about the "do" than other tablets.

This is fairly normal industry evolution. At worst, there is a new competitor positioned upmarket from BlackBerry. At best, IBM and Apple's primary marketing will succeed, and BlackBerry will benefit from a larger market. Right now, my best guess is that enterprises will buy parts of what IBM and Apple are trying to do, and will also buy parts of what BlackBerry does.

Most enterprises will want multiple device support - iOS, Android, Windows, BlackBerry (old and new.) The IBM/Apple deal covers Apple only. BlackBerry manages iOS, Android, old and new BlackBerry. Undoubtedly there will be some iOS purists out there, and they are the best prospects. Neither Apple nor IBM provides a secure network.

More applications usually means more users. There is a high need for mobile vertical apps. IBM and Apple could get customers to think more seriously about SAP (NYSE:SAP), Oracle (NYSE:ORCL), or even BlackBerry verticals.

This announcement has no pricing information. IBM and Apple are generally high priced spreads. I am guessing where there is overlap, IBM/Apple will cost more. We will have to watch this carefully.

Finally, this validates BlackBerry's attractiveness to large enterprise software and service companies.

Details

Industry Specific Applications - Some Overlap

Target markets: Retail, healthcare, banking, travel, transportation, telecom, and insurance. Availability begins this fall and continues into 2015.

BlackBerry is strong in finance, healthcare, and telematics.

Access to IBM's Cloud Service including device management -- Directly Competitive

The IBM MobileFirst Platform for iOS will deliver the services required for an end-to-end enterprise capability, from analytics, workflow and cloud storage, to fleet-scale device management, security and integration. Enhanced mobile management includes a private app catalog, data and transaction security services, and productivity suite for all IBM MobileFirst for iOS solutions. In addition to on-premise software solutions, all these services will be available on Bluemix-IBM's development platform on the IBM Cloud Marketplace.

BlackBerry has been providing many of these services for years, and integrates with other vendors to provide customer best-of-breed applications. We expect Blackberry will partner for analytics, workflow, and storage.

AppleCare for enterprises with IBM providing on-site service -Directly Competitive

Mobile service and support: AppleCare for enterprise will provide IT departments and end users with 24/7 assistance from Apple's award-winning customer support group, with on-site service delivered by IBM.

This is directly competitive with BlackBerry's new Gold service model.

Valuation

BlackBerry stock is down more than 10% on the news that IBM and Apple will collaborate on a mobility suite that competes with BlackBerry. I think BlackBerry will make back the loss and then some.

Source: How To Think About The Apple/IBM Deal And BlackBerry