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3G iPhone: The business perspective

What's standing in Apple's way in the enterprise?

A correction was made to this story. Read below for details.
The 3G iPhone goes on sale this Friday, and the launch hype is already in overdrive--but is the device really going to take the corporate world by storm, as O2 hopes?

O2 claims there's a lot of interest from business--largely because Apple has licensed Microsoft's ActiveSync protocol, so Exchange users will be able to get push e-mail, calendar and contacts on the iPhone. This is why the operator has finally launched iPhone business tariffs. Previously, U.K. enterprises determined to get the 2.5G iPhone had to sign up to an O2 consumer tariff.

E-mail is the lifeblood of businesses, so Exchange support certainly removes a major barrier preventing many senior execs from clipping iPhones to their belts--at least, provided they can talk their IT department into adding iTunes support to its list of responsibilities.

That's because every iPhone user must have iTunes running on their desktop--not an ideal scenario for some businesses.

So even if senior execs get their hands on iPhones, the iTunes factor may make some corporates reluctant to push devices out to the rank and file.

Companies may also have misgivings about iPhones being too attractive to thieves as one CIO Jury member pointed out when iPhone 1.0 launched last year--and/or concerns about using the touch-screen keyboard, which is undoubtedly an acquired taste. Two-thirds of a recent CIO Jury IT user panel said they prefer a Qwerty keyboard over the latest touch-screen interfaces.

O2 UK has been beta testing the 3G device with 15 corporate customers, including Citigroup, Logica, and McDonald's, but has not put a figure on the number of businesses that pre-registered an interest--so the level of genuine interest from business is hard to calculate.

Enterprises looking to play the iPhone game may also be worried about the apparent scarcity of devices. O2 has warned consumers intending to purchase an iPhone on Friday it will only have, on average, a few dozen 3G devices per store--and expects to sell out quickly (indeed, it is already out of stock online via its pre-order scheme).

And while O2 says it is making provision for businesses (by setting aside a separate allocation of iPhones from each stock shipment, which will then be available through its business channels and via a proportion of its B2B partners), this stock is still limited and will be allocated on a first-come-first-served basis.

Business customers such as small to medium enterprises that wish to buy in store will only be able to buy two devices each (consumers are rationed to one). Corporates buying through O2 Business Sales--or through the operator's B2B reseller partners--are not limited on the number of iPhones they can buy (subject to stock availability).

Of course the main problem with the iPhone is that companies not doing business with their country's exclusive iPhone carrier (or its B2B partners) can't adopt the hardware--and are very unlikely to go to the hassle of immediately changing network operators just to get a couple of iPhones. A radical strategy shift from Apple--moving to a multiple-operators model--would be needed before the phone becomes an option for the majority of U.K. businesses. As it stands, the iPhone's enterprise reach can only go so far at this point.

The operator factor is one of two main reasons why Associated Newspapers, a Vodafone customer, will "unfortunately...not be deploying or supporting iPhones in the near term," according to CIO Ian Cohen.

He told CNET News sister site the other big reason the 3G device is not suitable is because his company uses Lotus Notes, rather than Exchange, so push e-mail support is missing. "The closed and proprietary nature of the device means it is unsuitable for our needs," he explained.

So despite all Apple's enterprise-focused hype--and even if businesses switch to O2--there are still corporate software barriers to iPhone adoption. Given time, however, as more companies push out iPhone support--and app makers get busy with the iPhone SDK (software development kit)--things should change.

Security is another issue that could influence enterprise adoption of the iPhone. Analyst Gartner has described the device as having only a "basic level of enterprise security"--and specific concerns have been raised about the threat posed by Wi-Fi hackers.

Enterprise infrastructure vendor Sybase claims to have seen an increase in inquiries about its back-end secure mobile e-mail software--which links mobile devices such as the iPhone to corporate systems--from financial and manufacturing logistics companies, for instance.

So what's the verdict for iPhone in the enterprise?

Don't expect Apple's hardware to be flooding into your office overnight. Businesses will want to see answers to a variety of questions and concerns before they decide to walk Apple's way.

That said, it's certain the iPhone--and its app store--has bags of potential as a business tool--so in the not too distant future it will undoubtedly be disrupting a fair amount of workplaces, and work practices.

As one Mac developer said: "The iPhone is not just a phone; it's a whole new platform for developing consumer and enterprise apps. And I think it's the first truly mobile computing environment where consumers and developers are excited.

"The iPhone is powerful enough to develop useful mobile apps. The interface is great for end users. And the development environment is based on mature technology (the same development environment we've been using on OS X for years)."

He added: "I wouldn't rule out developing for (Google) Android one day but for now, all eyes are on the iPhone."

Natasha Lomas of reported from London.

Click here for CNET News' complete iPhone 3G coverage.

Correction: This story incorrectly cited the number of iPhones businesses can buy. While smaller businesses are limited to two devices, corporations can buy in larger quantities.