Why Apple forged a partnership with IBM


Jul. 31 2014, Published 10:29 a.m. ET

Apple enters into a partnership with IBM to boost its presence in the enterprise market

A few weeks back, Apple (AAPL) and IBM (IBM) entered into a partnership in which IBM would be able to analyze the data collected from Apple’s devices. The purpose of the partnership is to create 100 mobile apps specifically for enterprise customers. Through this partnership, Apple hopes that its iPad and iPhone business will gain more traction, especially in the enterprise segment.

If this partnership proves fruitful, it should help exchange-traded funds (or ETFs) such as the iShares Dow Jones U.S. Technology ETF (IYW) and the Technology Select Sector SPDR ETF (XLK)which have high exposure to Apple.

iPad penetration in businesses is low

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During the conference call to announce its earnings, Apple mentioned that the iPad’s penetration in businesses is low at only 20%, citing IDC as the source. Comparatively, the penetration of Mac notebooks in businesses is 60%. This is where Apple believes its partnership with IBM will help it penetrate the enterprise market in a better way. Building apps for enterprises and then using IBM’s big data and analytics capabilities to improve productivity is one such way of providing better service to enterprises.

The iPad’s position in the overall tablet market is also declining. According to a report from IDC and as the chart above shows, Apple’s share in the worldwide tablet market declined from 33% in the second quarter of 2013 to about 27% in the second quarter of 2014. Samsung’s (SSNLF) share also declined, but Lenovo’s (LNVGY) share increased.

iPad continue to have high customer satisfaction rate

Although the iPad’s market share is declining, Apple mentioned that it’s scoring high in terms of customer satisfaction. Quoting a survey conducted by ChangeWave as the source, Apple mentioned that the iPad Air had a 98% customer satisfaction rate, while the iPad Mini with retina display had a 100% customer satisfaction rate. The survey also revealed that among the people planning to buy a tablet in the next 90 days, 63% of them plan to buy an iPad. According to Apple, more than half of customers who purchase an iPad are first-time buyers.


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