Size Does Matter – Apple and IBM Agree Bigger is Better in B2B Space!

In his July 18, 2014 article, “Why Has the Growth in Tablets Stalled?” Tim Bajarin explains, “While tablets at first were exciting to many, it turns out their smartphones really sit at the center of their digital universe. As screens on smartphones have been getting larger, they find they can do pretty much what they need or want to do on a tablet on their smartphones. Now screens that are five inches to six inches meet a lot of their tablet needs.”

Is it any wonder than that Forbes.com in its July 25, 2014 analysis, “Surprisingly iPad's Drop In Sales Is Not Samsung's Gain, Welcome To Tablet Transformation,” suggests that Apple is adopting an enterprise strategy by partnering with IBM for “generating new enterprise-ready apps for the corporate tablet market.” But while Apple moves more aggressively into the B2B domain for its iPads, Forbes.com noted, “The big gainer in tablets is Lenovo according to the IDC” because it is “anticipating trends well” such as the global PC market’s revival after its 2013 slump.

However, it is Apple’s strategic shift in channel focus targeting the B2B world for its tablet (i.e., the iPad) is what is intriguing. For the longest time, the B2C market’s principal demands – in the converging mobile devices segment of computers, communications and consumer electronics – were driven by “better, cheaper, faster, lighter and smaller.” All of these comparatives, with the exception of “cheaper,” were Apple’s forte in this B2C segment, whose convergence, was largely forced by Apple’s innovative products and drove its phenomenal growth in the past decade. Now that the smartphone (a touchscreen category introduced by Apple in 2007) has started cannibalizing the tablet (a touchscreen category introduced by Apple in 2010) from a size standpoint, “lighter and smaller” seem to have lost their importance in the B2C realm. Given the reality of its supply chain logistics, Apple recognizes that its tablet cannot compete with the Samsung’s and Lenovo’s in the B2C domain, especially if it requires reverting to the old PC/consumer electronics paradigm of “better, cheaper and faster.”

So Apple announced recently that it’s shifting its sales focus for iPads (which were anyway pricier than competing tablets) to an upmarket B2B channel through a partnership with IBM. As the E=MC6 enterprise begins to take hold in corporate America, we are seeing more “Bring Your Own Device (BYOD)” policies being implemented at a number of B2B companies and B2G institutions. However, Blackberry has dominated the B2B/B2G space with its long established mobile device management (MDM) capabilities on corporate/government networks. Keeping this MDM stranglehold in mind and possibly given Blackberry’s financial and management turmoil of the past few years, the Apple-IBM partnership announcement specifically mentioned an IBM-developed MDM native to iOS. Also, iOS devices, such as the iPhone and the iPad, are arguably more secure and privacy-conscious mobile devices than Android and Windows based platforms and could quickly gain traction on corporate/government networks with a little help from Big Blue, which has amassed a sterling reputation in the business world for over a century.

Finally, as Mark Hachman of PC World reported back in February 2014, “In his first public comments since being named chief executive Tuesday morning, Microsoft chief executive Satya Nadella promised a ‘mobile first, cloud first’ strategy.” Subsequent announcements, including one relating to the consolidation of its various Windows operating systems into one, would position Microsoft as a more direct challenger to Apple in the aforementioned converged B2C segment. Microsoft’s“mobile first, cloud first” strategy could well have been the impetus behind the Apple-IBM partnership in the B2B space? In any case, while the efficacy of Apple’s new channel strategy will need to be proven over the next several quarters, it still allows Apple to carve out a niche market segment, and a profitable one too, for its iPads. It’s hard to belie the irony of the barely four-year old tablet segment’s sales growth in the B2C domain being hampered by, of all things, size? So size apparently does matter after all from both, a product and a channel standpoint. Bigger is better, at least, in the B2B space!