With Apple at Its Side, IBM Grasps for a Shiny New Future

IBM CEO Virginia Rometty and Apple CEO Tim Cook launch a partnership to help the aging Japanese
Apple CEO Tim Cook left addresses a news conference joined by Japan Post CEO Taizo Nishimuro and IBM CEO Ginni Rometty...
Apple CEO Tim Cook, left, Japan Post CEO Taizo Nishimuro, and IBM CEO Ginni Rometty, at IBM Watson headquarters, in New York.Richard Drew/AP

On a recent morning in downtown Manhattan, IBM’s Virginia Rometty and Apple’s Tim Cook sit on a small riser, each leaning back slightly with legs crossed. Between them sits Taizo Nishimuro, an older Japanese man with heavy black orthopedic shoes and an elegant cane. Nishimuro helms the Japan Post, a company that owns the country’s postal service, a bank, and its largest life insurer. We are gathering to hear the trio make an announcement that, just by virtue of their attendance, must be important.

But it also feels a bit curious: what could be this important?

The venue is IBM’s new global headquarters, a 12-story glass tower designed by the Pritzker-Prize winning architect Fumihiko Maki. It sits just across the way from Facebook’s Silicon Alley outpost in Astor Place, eight blocks south of Google’s New York offices. It’s a building so modern the elevators don’t have buttons inside. The lobby’s dominant feature is a red sculpture of a balloon rabbit by Jeff Koons. This is the symbolic face of IBM’s future. Just 38 miles north, the company’s Westchester offices, built by iconic architects of the last century like Finnish-American Eero Saarinen, have been emptying out even as the company makes plans to bring 600 IBMers to Manhattan. The changing geography becomes a metaphor for the changing business landscape.

IBM’s challenges are real. While the company’s first-quarter earnings surpassed Wall Street’s expectations, revenues have declined at the company for 12 quarters straight. IBM executives have called this a transition year as the company invests in new growth areas while some of its traditional businesses lose suffer.

Much of its future is pegged to investing aggressively in new fields like data analytics, cloud computing and mobile applications for its customers. It has created new business units around its Watson artificial intelligence technology and Internet of Things technologies. And it has also forged major new partnerships. In October, it announced a partnership with Twitter for data analysis. And last July, the company announced a partnership with Apple to make mobile applications for iPhones and iPads. IBM now has the world's most valuable company at its side---the resurrected giant that it hopes to also become.

Growing Old With iPads

This morning, Cook and Rometty have gathered us to explain what's happened since the two companies joined forces. Specifically, eight months after the announcement, they’ve launched 22 new mobile applications that serve customers in eleven industries. Rometty describes an app designed for Air Canada that helps agents rebook customers from a tablet on the fly and the Citi app for the new Apple Watch, which will allow us to check our balance form our wrists. (All the IBM execs are sporting Apple watches, no surprise. Rometty’s has a white band perfectly coordinated with her black-and-white blazer.) They are on track to create 100 applications this year, Rometty says.

The endeavor launching with Japan Post is among the most significant. Japan Post is the largest employer in Japan, where 33 million people---a quarter of the population---are older than 65. Nishimuro’s company is planning an IPO later this year that is expected to be among the world’s largest, possibly even larger than Chinese e-commerce company Alibaba.

In a pilot program set to launch during the second half of the year, Japan Post will provide 1,000 iPads to older citizens for free. Apple will supply the iPads, which already have an operating system packed with accessibility features, including settings for people with vision or hearing impairments. IBM will work with the Japan Post to develop iPad software that will improve a service the company already has in which postal service workers stop in on the elderly, and to train Japan Post employees to work with the technology.

The company plans to expand the pilot into a business that will reach four-five million Japanese customers by 2020. “I am approaching 80 years of age,” Nishimuro tells us, gesturing toward his cane as he explains the serious crisis that Japan faces in managing its rapidly aging population.

Spring Forward

Cook emphasizes how simple iPads are to use, a point that will be important for elderly users expected to adopt a new technology. “I’ve given an iPad to a one-year-old who knows how to use it, and actually when I gave them a magazine, they didn’t know how to use the magazine.” (I should point out here that most one-year-olds I know would just attempt to eat both.) He calls out Edith Kirchmaier from Santa Barabara who, at 107, he describes as the oldest known iPad user. “It’s a key part of her life, and we’d like more people like Edith out there,” he says.

Rometty sees the larger business and social opportunity. She brings up some startling statistics, the kind that make you triple-check your 401k balance. Today, she says, 10,000 people will turn 65 in our country. About 40 percent of them live alone or with just a spouse. And by 2050, she says one in five people around the world will be a senior. “It promises to be a great long life, but there are challenges,” she says. If she were talking about IBM itself, she couldn't have put it better.

Outside, it’s bright shiny news on a bright and shiny April morning. The magnolias are blooming this week. NYU students are roaming Astor Place in light jackets and sun glasses. Everything feels possible. But can a beautiful new office and a warm moment with Tim Cook be enough to address IBM's challenges? For that matter, will this ventures with Japan Post and others to follow be significant enough to jumpstart IBM's growth engine and return it to its former glory? This is the spring of IBM's transition year; autumn always comes faster than we expect.