IBM Corporation’s IBM tie-up with Apple Inc. AAPL is not only beneficial for the company but also its employee. Reportedly, IBM is offering employees an option to choose between MacBook Pro, MacBook Air and iMac as their main work PC. The company has deployed approximately 15,000 Macs and plans to add another 50,000 by 2015-end.
Reportedly, IBM has issued a memo for the first time urging employees to choose Macs. Going by the reports, the company plans to become the biggest enterprise Mac shop, giving a significant boost to its ongoing partnership with the iPhone maker.
It is not the first time that Apple has tried to enter into the IBM ecosystem. Reportedly, the company insisted that all IBM sales personnel dealing with app developing projects for Apple use Macs running Keynote presentations. However, this time, we believe this is a good opportunity for IBM to foster its partnership with Apple for selling customized apps for enterprise.
Additionally, the company offloaded its PC business to Lenovo long back, which leaves it with no threat from Apple. When IBM sold its own PCs supported by Microsoft’s MSFT operating system, it faced stiff competition from Apple.
Interestingly, the company is deploying Mac products under its Bring Your Own Device (BYOD) policy to lower costs. However, it is unclear whether the company will share the cost, like it did while offering ThinkPads, or if employees will have to bear it fully/partially. This again will boost IBM’s bottom line and enhance profitability.
Overall, we expect both the companies to gain from IBM’s new approach. In Jul 2014, IBM first entered into the partnership with Apple to develop enterprise class software and services, enabling both the parties to tap the BYOD trend gaining popularity among enterprises. In 2015, the companies plan to launch over 100 apps, strengthening their position in the enterprise business.
IBM is traditionally an enterprise player, but its growth has been range-bound of late. The company is gradually exiting the hardware market due to the unfavorable competitive climate and focusing more on the software and services business.
On the other hand, Apple is primarily a hardware maker with limited enterprise presence. So the combination will add IBM’s domain experience to Apple’s premium hardware to tap opportunities in this fast-growing segment.
IBM currently has a Zacks Rank #3 (Hold). A better-ranked stock in this sector is USA Technologies Inc. USAT, which sports a Zacks Rank #1 (Strong Buy).
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