Have IBM & Apple Partnered Their Way to Cloud Leadership?
IBM and Apple were the first big success stories for cloud computing, and they've had to stand by and watch other companies enjoy the fruits of the industry they invented.
Apple launched the iTunes Store in 2003, turning the music industry upside-down (it still hasn't recovered) and kicking off the modern cloud era. But sadly for Apple, the iTunes store was its only big cloud success: iCloud is a niche product, serving Apple apps only, while MobileMe and Ping were industry jokes. iTunes was the ultimate one-hit wonder -- like this:
As for IBM's history with cloud computing: What do you think Timeshare was?
Timesharing and mainframes were the first generation of cloud computing, and the foundation of IBM's monopoly over the computer industry through much of the 20th Century. IBM has has been less successful with the cloud in this century, although that's changed recently. The company is shifting its focus to the cloud, and its business is growing, despite an overall sales slump for IBM that's stretched nine dismal quarters.
Both IBM and Apple have had to watch gloomily as Google, Microsoft, and especially Amazon have pushed the two companies to the sidelines of the industry they created.
That could change with this week's groundbreaking IBM and Apple partnership. Apple will provide iPhones, iPads, and support for those devices, while IBM provides enterprise expertise -- 100 apps for vertical industries, as well as security and analytics and cloud support. (See Analytics, Security Key to Apple, IBM Tie-Up.)
Even separately, IBM and Apple have been getting their cloud acts together recently. IBM's cloud offerings as a service are now at an annual run rate of $2.8 billion, compared with $2.3 billion as of the first quarter. That's still just a fraction of IBM's $100 billion revenue last year, but it's brisk growth. Cloud sales grew 50% for the first half of 2014 year-over-year.
And Apple's new cloud offerings, announced last month, look very promising. The company is getting into the Internet of Things with interfaces for home automation and healthcare, broadening iCloud to be a Dropbox competitor for document storage, and launching CloudKit to allow developers to build applications using iCloud. (See Apple Launches Biggest Changes Since iPhone and Apple Launches Evil Plan to Steal Carriers' Customers.)
Taken together, IBM and Apple can offer a cloud one-two punch: IBM has the enterprise business and Apple the consumer side.
Moreover, IBM offers the cloud infrastructure and Apple provides the client devices. In order to truly lead the cloud, companies need to control the user experience from end to end: That's why Google acquired and relaunched Android and, more recently, why Amazon introduced its own phone. You can't lead the cloud if someone else controls the point of contact with the user.
Apple and IBM are a powerful combination. In a few years, when we talk about cloud leaders, we may find ourselves listing Amazon, Google, Microsoft... and the IBM and Apple partnership. That depends on how well they execute. But both Apple and IBM are great at executing; these are two focused companies that do what they say they will do.
What does this mean to carriers? The same thing the cloud always means: It's a great opportunity for carriers to provide connectivity between data centers, and from the data center to the user. But it's also a threat: As carriers themselves look to get into cloud computing, they find powerful incumbents already there.
By the way, this article was inspired by a blog post by veteran industry analyst (and Light Reading friend) Tom Nolle: The Battle in, and for the Cloud. Tom is definitely on a roll this week. (See How NFV Gets a Foot in the Door for SDN.)