Analyst: Apple, IBM Partnership No Big Deal for iPhone Sales

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Apple and IBM announced a partnership on Tuesday to push iOS deeper into the enterprise market through the MobileFirst for iOS program. Piper Jaffray analyst Gene Munster doesn't see the team up as a big deal for Apple sales, but only because the iPhone and iPad are already being tested or deployed in nearly every Fortune 500 company.

Piper Jaffray doesn't see MobileFirst having a big impact on Apple's bottom linePiper Jaffray doesn't see MobileFirst having a big impact on Apple's bottom line

In a note to investors he said,

We do not expect the IBM partnership to have a meaningful impact on Apple's financials overall primarily based on our belief that large corporations are already utilizing iPhones. We believe that IBM will add incremental functionality for corporate customers, but is unlikely to be the make or break factor for a large corporation in utilizing iOS.

The MobileFirst for iOS program is designed to make it easier for companies to use the iPhone and iPad as part of their mobile business management system. Over 100 industry-specific apps are in development, and the program will make it easier to deploy and manage iOS devices.

Mr. Munster added that if the program convinced half of the Fortune 500 companies to buy 2,000 more iPhones and 1,000 more iPads than they originally planned, it would add only half a percent to Apple's revenue in 2015. The real benefit Mr. Munster sees in the partnership will be stronger relationships with enterprise-level companies that are using iOS devices. 

The value in building stronger relationships with Fortune 500 companies shouldn't be underestimated, and MobileFirst shows Apple's strong commitment to the market and will likely boost confidence in potential enterprise-level customers. The big money for Apple, however, will still be in consumer sales.

Comments

Arnold Ziffel

Gene’s so hyper focused upon a supposed Apple TV product, he can’t think straight.

Constable Odo

My take on the situation is that Apple is being valued differently from most other companies on the planet.  if Amazon or Google gets into some new collaboration, their share price will certainly rise whether the deal immediately moves their revenue needles or not.  For instance, Microsoft’s share price is continually climbing based on what?  Mobile is the hottest platform out there and Microsoft’s mobile position is weak at best.  Where’s all this gain in revenue coming from Microsoft to keep pushing the share price ever higher.  Smartphone sales? Nope.  Surface sales?  Hardly.  Windows 8.1 sales.  Doubtful.  Microsoft’s share price had been stagnant for years and suddenly it’s climbing incredibly fast and I’ve yet to see a solid financial reason for that.  That company isn’t being driven by innovation, for sure.

Munster can downplay this deal all he wants but I’m sure he has some hidden agenda since most of the analysts are seem rather positive about the deal enough to issue upgrades.  If it were Google that joined forces with IBM, we’d immediately see a 5% share price pop and a death watch for Apple.  Wall Street definitely has some bias against anything Apple tries to do.  It seems there’s vast differences of opinion where there shouldn’t be.

Arnold Ziffel

I agree completely, Constable Odo! MSFT has risen from the mid-$20s to nearly $44 per share, because Ballmer got pitched over the side???!!!

If that’s not a ‘WTF’ moment, I don’t know what is.

It has been clear for a long time, Apple and AAPL are misjudged consistently by much of the tech and Wall Street worlds. And I think it’s purposefully done.

vpndev

Constable Odo: right on. Apple’s P/E has now risen into double digits - it’s 16 today, but Google’s is 30. And Amazon’s is 555 !!

Apple has a very strong record now for very solid performance yet Wall Street treats it as risky.

As you say, Microsoft is up - more than 3% just today - and for no solid reason. Yes, there’s a new strategy in the making but that usually means that things are going to get worse during the transition. And yes, there will be headcount reductions and that often improves the numbers. But, if the rumors are correct, it’s the Nokia folks who will take most of the hit. Wait on - wasn’t the plan to buy Nokia to get talent and traction in mobile? If so, then why lay off the Nokia folks, and keep the old hands?? This doesn’t make a lot of sense.

skipaq

No one, including Munster, seems to even touch on the most important aspect of this deal. It isn’t what Apple would have done just a few years ago. Apple is partnering with IBM so that corporations will buy more iOS because Apple now cares about their needs albeit through IBM. It will be interesting to see just what access IBM will have inside the walls of the garden of Apple. With the WWDC announcements and this deal it is evident that Tim Cook continues to install doors in the walls of their garden giving keys to important partners allowing some access.

Cook has been adapting Apple’s business model to a new reality: Apple’s market power. This deal just could not have gotten done 5 years ago. It bodes well for Apple’s future. It portends Apple’s newfound willingness to go where they have not ventured in the past.

Paul Goodwin

Munster and Jaffray are small minded, short term thinking idiots. First of all, just having OS and some iPhones and iPads in 98% of the Fortune 500 doesn’t mean that they’re deployed to all the employees. Secondly, there are 10s of thousands of other substantial businesses that that haven’t yet made the iOS plunge because they haven’t been shown where the payback is, but will when the big guys figure out how valuable this alliance becomes to business. And thirdly, this move by Apple and IBM clearly sets the bar very high for Android and WinPhone getting into enterprise, and IMHO likely will close the door for them. This move, coupled with the new development tools is far bigger in scope than any competitor could ever execute. This is one of those Apple moments. The Munsters and the Jaffrays of the world obviously can’t think beyond next quarter’s iPhone sales counts. Their brains can’t begin to understand the depth of this move, and why strategically it puts Apple into another league. The Big Blue Apple is just about to supernova all over MS and ScamScum, and all others for that matter.

As for the stock price, once this move sinks in with the small thinkers on Wall St and they watch all their smarter colleagues upping their Apple stock price targets, and the stock continues to rise at the rate it has been, they too will go after the column hits by praising the move. And their small minded little following will still think they’re reading something derived from intelligence and understanding.

And we shouldn’t get too upset about the MS stock prices being up some. It’s up 75% from 5 years ago, and hasn’t even kept pace with the DOW which is up about 100%. To put it in perspective, Apple is up 350% !!!!!!!!!!  They were already in a different league. Now they’re in a different solar system.

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