Apple, IBM To Develop Apps For iPhone, iPad

Apple Inc. AAPL recently announced that its partnership with IBM Corp. IBM has yielded mobile software for business customers. According to reports, IBM's mobile solution -- MobileFirst -- will be delivered through iOS devices in order to develop customized business applications and cloud services.

The deal was primarily aimed at integrating IBM's big data and analytics capabilities with iPhone and iPad for business customers. We believe that this partnership has the potential to help Apple expand in the enterprise segment and help IBM generate much-needed growth.

An app developed under the partnership will cater to telecom service workers enabling them to find customer locations more efficiently using GPS on iPhones or iPads. Reportedly, the partnership will also develop new apps for iPhone 6 Plus that will be offered to United Airlines, a subsidiary of United Continental Holdings, Inc. UAL flight attendants to better serve on-board passengers.

In Jul 2014, Apple entered into the partnership with International Business Machines Corp. to develop enterprise class software and services. The deal was a first of its kind between the two technology giants that have been competitors rather than partners in the past. But it offered the two a viable gateway to tap the Bring Your Own Device (“BYOD”) trend that has been adopted enthusiastically by enterprises. According to Gartner, by 2016, 38% of the employers will stop providing devices to workers and nearly 50% employers would require employees to use their own device for work.

Overall, IBM and Apple plan to launch 10 apps targeting businesses across different markets from airlines to retail. The partnership will therefore boost IBM's position in the mobile applications market, which forms a significant part of its fast-growing software business.

IBM is traditionally an enterprise player, but its growth has been range-bound in the recent past. The company is gradually exiting the hardware market due to the unfavorable competitive climate and is now focused on its software and services business. Apple is primarily a hardware maker but with limited enterprise presence. So the combination will add IBM's domain experience to Apple's premium hardware to tap opportunities in this fast-growing segment.

Apple currently sports a Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

Another stock in this sector to be considered include Frontline Ltd. FRO with a Zacks Rank #2 (Buy).