Apple, IBM and the startup opportunity

Apple had another great quarter, but it's already sowing the seeds of dramatically better quarters to come…

Well, to no-one’s great surprise, Apple has had another great quarter:

Apple announced their Q3 2014 financial results today and the big numbers included 35.2m iPhones, 13.3m iPads, 4.4m Macs sold, $7.7 billion in in profit made.

All eyes are on its much-discussed – by everyone but Apple, of course – future product launches, notionally coming before the end of the year.

But I do wonder if the announcement that’s likely to make the biggest difference to the most people in the near future was actually made last week. To the surprise of event the most ardent Apple-watcher, it announced a major partnership with IBM to get iOS devices – not Macs, note – into enterprises.

And both companies made a really big deal of it. Tim Cook went as far as to say that he does 80% of his work on an iPad now, and that suggests this is about placing Apple in prime position for the next wave of work technology – one that isn’t PC-centric.

And Apple isn’t planning on doing this on its own. Why does this matter? Well, this is a hugely unusual move for Apple in recent times. They have been moving towards fewer people selling their stuff for them. More and more of their product is being shifted through their own channels, from their stores to their website. And yet, here they are, partnering with IBM to shift iOS devices.


The game Apple does’t play

Well, the clear and obvious truth is that Apple has very little in the way of a foothold in the traditional enterprise market. That’s been locked solid by Microsoft for the best part of two decades, since Windows 95 hit. But right now, we’re at a point of transition. Microsoft utterly fumbled the shift to mobile, and Apple, by stark contrast, led it. As a result, Apple has a beachhead in the Enterprise that no-one expected: senior staff bringing in their own iPhones and iPads and demanding that a Microsoft-centric IT team learn to support them.

Apple, in its own way, has helped. There are plenty of enterprise management-friendly features built into iOS already. But that’s as far as it’s going to go. The next step involves building an true enterprise sales team, and then dealing with customers who are used to demanding their own way from their supplier – and getting it. That isn’t how Apple operates.

And it’s something Tim Cook is clearly conscious of:

“We have to do some more things to get the business side of things moving in a faster trajectory,” Cook said.

Here, IBM makes sense. It has long left behind the hardware business and become an enterprise support business. It inserts itself neatly between Apple and the IT department, provides a layer of services that give them the control they demand, and the world looks better for all concerned. The IT department get the control, the users get the devices they want, and Apple and IBM start to rake in the cash…

The Startup Opportunity

The interesting thing this partnership opens up is a new market for the app startup world. Up until now the number of enterprise-centric startups has been relatively small. It’s been a difficult world to get in, as it was still dominated by the Windows hegemony, and that’s not a coding set that most consumer-centric startups have much experience with right now. Windows Phone is a distant third behind Android and iOS.

A rapid spread of iOS devices into enterprise in a fully-supported, IT-approved way could change that dynamic, and open enterprise-level revenues to the app startup world. There’s some serious money to be made in those volume licensing deals, and as making money in the app store gets harder, maybe this is something that entrepreneurs should be looking at very hard indeed…