Businesses warming up to the iPhone

The original iPhone was not welcome in corporate America. While the BlackBerry still rules the boardroom, the second-generation iPhone is getting a fresh look.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
Tom Krazit
6 min read
Businesses are gradually getting used to the idea of using iPhones in the enterprise, but Apple has a long way to go. Apple

Apple has captivated the general public with the iPhone, but has it convinced the business world to take the plunge?

Even after the March preview of the "business-friendly" iPhone 2.0 software for the iPhone released in July, it seems that most iPhones are being purchased by individuals rather than corporations, who still look first at Research In Motion's BlackBerry when it comes to equipping their workers with mobile computers.

But the iPhone is making a guerrilla attack on the business world, brought into the corporate world by influential executives, CIOs rethinking their approach to deploying technology, and younger workers who move seamlessly between their personal and business lives.

There are several high-profile businesses, such as Genentech and Disney (both with strong ties to Apple CEO Steve Jobs, of course), that have declared their intentions to work with Apple on deploying iPhones inside their corporations. That seems to be having the effect of increasing the overall number of business smartphone users, however, rather than turning the iPhone into any kind of "BlackBerry killer."

At Apple's Worldwide Developers Conference in June, Jobs said 33 percent of the Fortune 500 had participated in Apple's beta program for the iPhone 2.0 software. But RIM still dominates the market for mobile devices used for business purposes.

According to data from J. Gold Associates released in September, 65.5 percent of North American businesses that deploy mobile computers say they actively support the BlackBerry, compared with 22 percent that support Windows Mobile devices and just over 10 percent that support the iPhone.

There is some overlap in those numbers, represented by companies such as Chicago law firm Sonnenschein Nath & Rosenthal, a participant in Apple's beta program.

About half of CIO Andy Jurcyzk's 1,800 employees worldwide use some kind of mobile device, and at the moment, 200 of those people are using the iPhone 3G. Sonnenschein's employees who are deemed worthy of mobile computers can get the company to buy them a new mobile device every 24 months--provided that AT&T carries that device.

"My philosophy is that devices are personal, and it's difficult for organizations to standardize on a single device" given the wide range of preferences people have with mobile computers, Jurczyk said.

Not all organizations feel the same way, and have built up years of expertise managing the BlackBerry inside their walls. Frank Gillman, the CTO for Los Angeles law firm Allen Matkins, says there has been some interest in the iPhone among his constituents but he finds it more cost-effective to stay a BlackBerry shop.

"Our reasons for not doing so have more to do with the age-old issue of having a finite number of internal resources to support our firm's technology. Given our already significant investment in BlackBerry, we cannot make a strong business case for adopting yet another platform."

The BlackBerry is still by far the preferred choice of the enterprise, but the iPhone is gaining ground, according to J. Gold Associates. J. Gold Associates

That's just part of the uphill battle the iPhone faces in the enterprise. For one thing, Apple's dependence on a single carrier is a nonstarter for some companies that have long existing relationships with a different carrier, and enjoy the discounts that come along with that partnership.

And while Apple's 2.0 software update brought along several business-friendly features that improved the security and manageability of the device, some analyst firms that advise CIOs on how to spend their technology dollars still feel the iPhone's security isn't quite where it should be compared with other options in the market. Gartner, the 800-pound gorilla of IT consulting, gave the iPhone a thumbs-up in July after the release of the 2.0 software but noted that iPhone security isn't strong enough yet when it comes to custom applications on the device.

Jurcyzk is following the recommendations of J. Gold Associates by having his employees access secure corporate data through the iPhone's Safari browser backed by the firm's own security certificate. That way, no sensitive data actually resides on the device, but users can still open documents and view them with "full fidelity," which is a huge plus for traveling lawyers who need to review documents with clients anywhere and everywhere, he said.

There's also the issue that corporations will have to install iTunes on every iPhone user's computer, which might not be part of the standard application list employed by big conservative corporations that grudgingly allow their employees to check baseball scores on ESPN.com from their PCs. And some IT managers also like to lock down a specific collection of software on the mobile device itself, but have no real way of preventing an employee from going home and adding Asphalt 4: Elite Racing to their iPhone.

But small businesses don't have the same strict security and manageability requirements as larger enterprises, allowing them to move forward with iPhones more quickly than the big guys. Independent observers of that market are seeing more and more demand for iPhones among those types of customers, who fly under the radar individually but could add up to serious revenue for Apple.

While the iPhone may not be the ideal device from a manageability and security standpoint, it does come with high customer satisfaction ratings among business users. CC Cristiano Betta

And there's a sense inside some corporations that times are changing as mobile phones become computers that aren't just for business, and aren't just for fun. Executives and salespeople--the primary users of mobile computers in the enterprise--are constantly on the go, and an executive waiting for an airplane who pauses an episode of Mad Men to answer an e-mail from a client is a productive, accessible, and satisfied employee.

"Other devices are just hardcore e-mail devices, and even at that they don't render the messages well," Sonnenschein's Jurcyzk said. "I travel a lot and it's nice to have a personal aspect to my life, to look at photos of the family, to listen to music, or watch a movie. It's nice to have that other stuff."

Apple's not the only company adapting to that shift in how we use mobile computers. "The new BlackBerry Storm that is coming out this month from RIM/Verizon brings a lot of the iPhone design and features to the BlackBerry platform. Assuming the device works as advertised, we'll likely offer that as an option for our folks who want those types of features," Gillman said. Microsoft CEO Steve Ballmer has also said similar things about the need for future versions of Windows Mobile to cater to both personal and business tasks.

Before too long, businesses might decide that certain trade-offs regarding the manageability of their smartphones are worth making, so long as their concerns over security are met. Analysts expect Apple to improve the native security of the iPhone over the next several years, and it's also possible that a major third-party enterprise software vendor such as SAP will step forward with a product that does it for them.

Well over 200 business-related applications are available on the App Store that help make the iPhone easier to use in a corporate setting. If Apple finds a way to improve the security profile of the iPhone to allow organizations to develop custom applications that store sensitive data on the device, it will have another feather in its cap.

Still, J. Gold Associates predicts just 16 percent of U.S. corporations to have an active interest in the iPhone in three years. The iPhone isn't going to put RIM out of business just yet. But it is challenging the other company in its backyard, just as RIM doubles down with its efforts to make the BlackBerry more consumer-friendly with models like the Storm and the Bold. And it's making everyone more aware of the trade-offs and needs of mobile computer users in the enterprise, which will make everyone's product better in the long run.

And if Apple proves itself as an enterprise-friendly company with the iPhone, those famously stodgy CIOs might be tempted to take a second look at the Mac.