Apple iPhone faces challenges in enterprise bid

Apple's new enterprise focus for the iPhone has promise, but the company has to work through a number of software and hardware issues before the device is widely adopted for use in the corporate environment, according to analysts.

Apple's new enterprise focus for the iPhone has promise, but the company has to work through a number of software and hardware issues before the device is widely adopted for use in the corporate environment, according to analysts.

At Apple's Worldwide Developers Conference on Monday, CEO Steve Jobs launched the new iPhone 3G, which includes support for faster data downloads and has features like GPS (global positioning service) that could make the smartphone attractive to the enterprise.

However, Apple has failed to address reliability issues with the iPhone hardware, including battery problems, and the built-in software lacks the reliability, management and security software features that could make it easier for enterprises to manage the device, analysts said.

Stressing the use of the iPhone as an enterprise device, Jobs launched iPhone 2.0, a new software platform for the iPhone that includes a software developer kit (SDK). IPhone 2.0 will allow enterprises to push e-mail and contacts from an Exchange server to the iPhone. Also new is support for Cisco IPsec VPN (virtual private network) for encrypted access to corporate networks.

With support for Microsoft Exchange and other features, Apple has responded to requests from enterprise users who live by their mobile phones, said Ahmed Datoo, vice president of marketing at Zenprise. Location-based applications could appeal to enterprises like transportation companies, who can use the iPhone's new GPS capabilities to track inventory, he said.

However, applications developed using the iPhone 2.0 SDK will be distributed using Apple's App Store, which will require users to install iTunes on the iPhone, Datoo said. Enterprises may hesitate using iTunes, what is considered a consumer application.

Apple also needs to provide more support tools: the ability to wipe out user data from stolen iPhones is included, otherwise remote troubleshooting features are scarce with the new software, Datoo said.

A support organization needs to be established by Apple to troubleshoot iPhone software problems, Datoo said. Research In Motion already has a support organization for the competing BlackBerry mobile device, where companies can buy a contract or buy support per incident.

Apple's market approach with the iPhone differs from RIM, said Jack Gold, principal analyst at J. Gold Associates. The Blackberry was built as an enterprise product and is trying to enter the consumer market. Apple built the iPhone for consumers and is now trying to enter the enterprise, which is more daunting task, Gold said.

Enterprises look for security and manageability to manage their devices, and Apple didn't announce anything on Monday that would, for example, prevent an employee from downloading pornography on the iPhone, Gold said. iPhone also has on-board encryption issues that raise data security concerns.

A number of hardware problems could also make iPhones unreliable, analysts said. If a model goes bad and the battery fails, users will have to mail in the device and perhaps wait a week for a replacement.

"To go without a device for a week, that's going to be a hard pill to swallow," said Bill Hughes, principal analyst for In-Stat.

But it's not all bad news.

Despite some issues, Apple will grow in the enterprise space and Monday's announcements were the first step ahead, said Hughes.

For Apple to survive it will have to go up against the dominant BlackBerry and Microsoft's Windows Mobile platforms that dominate enterprise use of smartphones today. In the next two years Apple may not beat the RIM and Microsoft platforms, but the company will make gains in the enterprise space given the interest surrounding the iPhone, Hughes said.

Perhaps the best news for enterprise users is that the competition from Apple will invigorate the market and that will be good for everyone, he said.

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