What's the deal with Apple-Cisco deal?

Analysts parse vague statement, try to figure out what partnership means for Apple's enterprise strategy


Cisco Executive Chairman John Chambers, left, and Apple CEO Tim Cook at Cisco's Global Sales Experience Conference in Las Vegas, where they announced a mobile enterprise partnership on Monday, Aug. 31, 2015.

Credit: Cisco Systems

Apple earlier this week expanded its push into enterprises, announcing a partnership with Cisco to sell more iPads and iPhones to businesses.

But unlike the deal Apple struck with IBM last summer, the partnership with Cisco was outlined in only the broadest terms. The vagueness put off one analyst.

"The IBM announcement provided context, a list of bullet points that would be done, like 'We will develop these apps,'" said Jan Dawson, principal analyst at Jackdaw Research. "But [the Cisco announcement] was just lots of analogies, like 'create a fast lane.' What does that actually mean? Does it mean iOS traffic will be prioritized? Is it related to routing? Why not come out and say it?"

The joint statement issued by Apple and Cisco on Monday was short on details, as Dawson pointed out. "Apple and Cisco today announced a partnership to create a fast lane for iOS business users by optimizing Cisco networks for iOS devices and apps, integrating iPhone with Cisco enterprise environments and providing unique collaboration on iPhone and iPad," the statement began.

Because the partnership was described in such hazy terms, Dawson wondered whether there's much to it. "One possibility is that there is nothing to this, and it's like so many tech partnerships, where it's just two companies that think they can benefit from having their names linked," said Dawson.

The other possibility, added Dawson, is that Apple and Cisco have reached agreement on a broad outline but haven't yet fleshed out the details.

Another analyst wasn't as bothered by the generalities, but admitted that there was a difference between this partnership announcement and that of Apple and IBM in 2014. "[The statement] didn't bring nearly as much detail as the prior one with IBM," acknowledged Patrick Moorhead, principal analyst at Moor Insights & Strategy. "But remember, it was IBM who disclosed the details of the partnership last year. So this [vagueness] could have been Cisco's idea."

That the Apple and Cisco partnership was outlined only in broad strokes is more than just academic interest -- or analyst angst -- because it leaves experts in the dark about its significance, and thus whether the deal means increased sales of the iPhone and iPad, in particular the latter, which has been in a six-quarter contraction.

Moorhead saw some intriguing opportunities for both Apple and Cisco, including enterprise-wide substitution of traditional office telephony and video collaboration with iPhones and iPads.

"Most businesses still have land-line phones, although many have moved from PBX to IP-based phones," said Moorhead, referring to Internet protocol-driven telephony, where calls are routed over the Internet. "More workers are moving around, but they still have two types of phones, a land-line and a mobile. Why not just make one phone, with the mobile phone emulating an IP phone? That's what I think will be part of the deal: The iPhone will emulate the Cisco IP phone at the desk, but when it's disconnected from the network, it works as a normal mobile phone."

Moorhead believed that a dual-use iPhone as he described it would be implemented by software -- "More of an app model," he said -- but because it would require deeper access to iOS than a typical developer or vendor is given by Apple, a partnership was necessary.

Alongside that move, said Moorhead, Cisco's video telephony and conferencing could be deeply integrated with iOS to provide a better experience for companies that rely on Cisco's software and services, including WebEx. And the "fast lane" mentioned by Apple and Cisco may hint at furthering the packet prioritization already supported by the latter's networking hardware.

"In a modern Cisco network today, you can prioritize traffic across the WAN [wide-area network], WLAN [wireless local area network]," added Moorhead. "Maybe the deal will prioritize packets [to and from an iPhone] to bring a better mobility experience, and along the way, reinforce the value of Cisco hardware and networks."

Cisco may see the partnership as a way to gain what Moorhead called "an unfair advantage" over networking rivals when connecting to iOS devices, which are pervasive in enterprises, especially the iPhone. The devices are often owned by workers themselves rather than bought by the company for employees.

If the iPhone works better on a Cisco-based network, Moorhead speculated, the San Jose, Calif. company could use that as a potent sales weapon when going head-to-head with competitors like Juniper Networks. Meanwhile, Apple could pitch its iPhone and iPad to enterprises as not only a replacement for land-line telephones and expensive video conferencing gear, but preferred throughout by virtue of the new technical benefits.

Apple would like to push the iPad to enterprises as a way to get the tablet back on a growth line. Dawson, for example, saw the partnership as a way for Apple to sell more iPads, perhaps the rumored larger-sized model most expect to see this year.

"This could make it more attractive for businesses to buy iOS devices, but Cisco gets more out of this at this point," Dawson concluded, given Cisco's association with the world's leading technology brand. Apple, by comparison, continues what Dawson dubbed its "salami tactics" as it approaches enterprises. "A little bit here, a little bit there," said Dawson, referring to the IBM and Cisco partnerships, and the believed-imminent larger iPad.

"Apple's chipping away [at the enterprise market] bit by bit," Dawson said.

For Moorhead, the partnership favors Apple. "Apple wants to be more successful in the enterprise," he said. "The great thing strategically about Apple is that they know what their core competency is and what it isn't. They need help from partners to translate into sales in the work environment."

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