Apple Faces Challenges In Driving iPhone Adoption By Business - InformationWeek

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Apple Faces Challenges In Driving iPhone Adoption By Business

While Apple has generated the feeling that the iPhone is business-ready, it will take at least six months before it reaches parity with RIM's BlackBerry and smartphones running Microsoft's Windows Mobile.

Apple has used its formidable marketing machine to convince many pundits and fans that the iPhone soon will be ready for use in corporate America. But once the Apple-generated excitement fades, the computer maker will face a formidable challenge from BlackBerry-maker Research In Motion, a company with a lot more credibility in business.

On Thursday, Apple made a number of technology announcements that would make the iPhone more than a stylish gadget for consumers. Come June, Apple plans to upgrade the smartphone's operating system with security, communication, and e-mail features, including support for Microsoft Exchange, that are the baseline for consideration by corporations.

In addition, Apple released in beta a software development kit that companies could use to build custom applications. The same SDK would also be available to independent developers, who could then distribute their applications to iPhone users through an online Apple App Store.

While Apple has managed to generate the feeling that the iPhone is business-ready, the fact is it would take at least six months before Apple reaches parity with what's available for RIM's business-dominating BlackBerry and smartphones running Microsoft's Windows Mobile today, In-Stat analyst Bill Hughes said. By that time, however, the latter two are expected to be further ahead.

The reason for the delay is the iPhone OS won't be ready for enterprise development until version 2.0 ships three months from now. In addition, it will take time for Apple to test and then launch business applications submitted by independent developers on the App Store.

What will help Apple as it plays catch-up with rivals is its mastery in merchandising. "For reasons I don't quite get, the technology on the Apple platform just seems to be more exciting," Hughes said. "Yet, I can't come up with a reason why an application would be better on an iPhone."

The excitement around the device will have an impact because about half of smartphone business users buy the device themselves and then either seek reimbursement from their employers or simply eat the additional cost, Hughes said. These types of users are most likely to be influenced by Apple's merchandising.

Businesses, on the other hand, will be less affected by the fanfare around the iPhone and will need a compelling financial reason to choose Apple over RIM, which has the credibility in business that Apple lacks, Hughes said. "I have a hard time imagining that a lot of companies would buy iPhones for workers."

Nevertheless, smartphone sales are expected to outpace other segments of the mobile phone market for sometime, which means there will be lots of new business for Apple, RIM, and others. "There is enough business to go around," Gartner analyst Van Baker said. "This is not a saturated market by any stretch."

The fact that the iPhone started out as a consumer device with lots of entertainment features, such as video and music playback, could help it in business. "If those bells and whistles make it more likely that employees will carry it with them, than that's on the plus side," Baker said.

One deficiency Apple will have to address is its lack of a large corporate sales force. To sell the iPhone to companies in the United States, Apple is likely to rely on AT&T, the exclusive wireless carrier for the device, Baker said. "This is very much going to be an AT&T play."

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