Apple Inc.’s (NASDAQ:AAPL) success in its consumer business needs no introduction. Consumers around the world have been enjoying “iPhones,” “iPads,” Macs, and “Apple Watches.” However, there is something else that could provide further growth for the company and the AAPL stock price: the enterprise business.
AAPL Stock: Expanding into the Enterprise Market
Apple has long eyed the fruitful enterprise business. However, success in the consumer business does not guarantee success in the enterprise market. How did Apple approach this situation? It partnered with International Business Machines Corporation (NYSE:IBM).
In July of last year, Apple and IBM announced an exclusive partnership to build industry-specific apps. (Source: “Apple and IBM Forge Global Partnership to Transform Enterprise Mobility,” Apple Inc., July 15, 2014.) The partnership is a great move for Apple because having industry-specific apps will increase the adoption of “iOS” in the enterprise market. Moreover, Apple could benefit from IBM’s big data and analytics capabilities. By having IBM as a partner, Apple could also use IBM’s channel to market the apps to corporations.
Under the partnership, Apple and IBM together would create more than 100 industry-specific enterprise apps developed exclusively for the iPhone and iPad (at the time the Apple Watch hasn’t been launched yet). IBM’s cloud services, including device management, security, analytics, and mobile integration, would be optimized for iOS. The target industries include retail, healthcare, banking, travel and transportation, telecommunications, and insurance.
Since the announcement of the Apple-IBM partnership, the companies have made solid progress. In December 2014, they launched the first 10 industry-specific apps for iOS. These include the “Retention” app for the insurance industry, the “Expert Tech” app for telecommunication companies, and the “Case Advice” app for governments and law enforcement, just to name a few.
In April of 2015, Apple and IBM introduced eight additional apps, including four for the healthcare industry that help nurses and nurse practitioners better manage patients. In July 2015, the companies brought out another 10 enterprise apps, this time aimed at the mortgage industry, business travelers, and workers in the field. Note that this time there were two apps that were available on the Apple Watch.
The enterprise move seems to have worked. Last December, United Airlines announced that it would give an “iPhone 6 Plus” to each of its 23,000 flight attendants. This December, the company announced that it would buy another 6,000 iPhone 6 Plus phones for its customer service employees. (Source: “United Airlines to ‘Mobilize’ Airport Customer Service Representatives with Apple’s iPhone 6 Plus,” United Continental Holdings Inc., December 2, 2015.)
In October’s earnings call, Apple’s CEO, Tim Cook, said the company estimated “enterprise markets accounted for about $25.0 billion in annual Apple revenue in the last 12 months, up 40% over the prior year and they represent a major growth vector for the future.” (Source: “Apple’s CEO Tim Cook on Q4 2015 Results – Earnings Call Transcript,” Seeking Alpha, October 27, 2015.)
To further infiltrate the enterprise business, Apple decided to make its “Swift” programming language open source. This way, developers can use it to write programs not just for iOS devices, but also for servers and cloud applications. (Source: “Apple Releases Swift as Open Source,” Apple Inc., December 3, 2015.)
The Bottom Line on AAPL Stock
Some investors have doubted Apple’s growth potential in its device business despite the tremendous year-over-year increases in iPhone sales. Apple bears should take note that other than the consumers, large corporations also represent a big market for Apple’s products and services. With strong growth in Apple’s enterprise business, AAPL’s stock price could climb higher.