Analysis: Can iPhone's biz-savvy lure enterprise?

Apple has made a push towards enterprise with the release of its SDK roadmap yesterday -- but will enterprise take the bait?
Written by Suzanne Tindal, Contributor

Apple has made a push towards enterprise with the release of its SDK roadmap yesterday -- but will enterprise take the bait?


In its software roadmap unveiling, the software giant announced features which it claims will make the iPhone more attractive to enterprises, such as licensing Microsoft's ActiveSync for push e-mail and contacts with Exchange servers.

Gartner has previously warned enterprises off the iPhone, citing security concerns. However, Gartner research VP Van Baker said today that the enterprise feature announcements at the SDK roadmap launch have put the smartphone in the running for the corporate market.

"Most of the objections that the enterprise had relative to the iPhone have been addressed in this announcement," he told ZDNet.com.au with the inclusion of push e-mail functionality and remote device management.

Kevin McIsaac, advisor at research firm IBRS, agreed that Apple has taken a step in the right direction and that the device now has enterprise potential, but he believes the company will encounter stiff resistance in bringing the phone into businesses. "Apple is doing the right thing, but being very late [in the market] means they'll have a lot of momentum to fight against," he said.

"Already the BlackBerry has got a big jump on the market," he continued. For organisations, he said, a "lock-down-homogeneous environment" is desirable. "The more brands of phone you integrate, the more difficult it'll be," he added.

He likened the smartphone market to its PC counterpart: "Why hasn't the Apple notebook swept Microsoft Vista out the door?" he asked. The answer: "Inertia."

Gartner's Baker doesn't see RIM's market dominance as such a hurdle, as the market far from saturated. "People are going to position this as Apple versus RIM, but it doesn't have to displace RIM to be successful," he said.

The consumer smartphone industry is in its infancy, Baker continued, and even the enterprise market has a long way to go before saturation occurs. "In most enterprises, it's a subset of the users that have a smartphone now. There are many [users] that don't and many enterprises that don't, he said. "There's a lot of upside room for both RIM and Apple."

Apple's move into the corporate market will also be made easier by not relying on its own enterprise sales team, Baker said. Instead, it will use its operator partner AT&T's sales experience and reach. "RIM has a significant presence in the enterprise market, and if it was Apple having to go and sell this themselves, they would face a bit of a challenge, but the announcements put AT&T in the position to compete for that business."

Although he says including Exchange e-mail support is a great step forward, IDC telecommunications analyst Mark Novosel said that until Apple moves away from the proprietary iTunes synchronisation model, it will not be considered as a serious business tool.

He also believes that the single carrier model is a drawback to the phone. "Businesses want the flexibility of being able to select the device that best meets their needs, while also allowing them to select the carrier that provides the best value," he said.

The biggest hurdle for the iPhone, according to IBRS's McIsaac, is the lack of 3G, especially for Australian and Asian users. He is sure, however, that the 3G issue will be resolved.

Apple founder Steve Wozniak, who recently expressed his disappointment over the iPhone's lack of 3G, might hope so.

Gartner's Baker said he would be very surprised if the June launch of the enterprise features did not coincide with the release of a 3G iPhone.

Because the launch of the software is occurring at the same time across the world, Baker said it was even possible Australia may not have to wait any longer ...

...than the US for a 3G iPhone.

IDC's Novosel went a step further, saying that the iPhone will definitely not be considered for business use in Australia until a HSPA version is released. "There are very few business users that would be willing to compromise and be stuck on dial-up equivalent speeds for the benefit of a nice screen and iPod in a single device," he said.

So who are the likely enterprise adopters?
IBRS's McIsaac sees adoption coming in specific areas like education and graphic design as well as in companies where CIOs are "Apple aficionados and can set the agenda". He believes SMBs with technically savvy bosses could also see high adoption rates.

Gartner's Baker thinks the phone's popularity in the consumer segment will be mirrored in the enterprise: "It's an elegantly done device with strong popularity in the consumer segment. An awful lot of consumers work in the enterprise."

Claudio Castelli, analyst at Ovum, also believes users will have a large say in whether or not the device makes it in the business world. "Business devices are very much chosen by the user," he said.

"Given time, there will be a niche market of business iPhone users, but the total iPhone penetration in Australia will not be nearly as high as initial hype would have suggested," Novosel said.

IDC forecasts that the iPhone will only have a 7.4 percent share of the total converged device market in Australia by 2012, with Symbian remaining the dominant operating system at 74.1 percent of the market. In terms of the overall mobile phone market in Australia, by 2012 the iPhone will comprise only 3.5 percent, Novosel said.

"When you consider that Nokia is now well over the 50 percent market share mark in Australia and with strong expansion goals in mind, I don't believe the iPhone is going to make any sort of serious splash in the business arena," he concluded.

RIMs outages help Apple's cause?
The timing of Apple's foray into the market comes after two outages for RIM within one year.

"Apple tried to position themselves [at the SDK roadmap launch] as not having that weakness in the distribution infrastructure," Gartner's Baker said, but he doesn't believe the outages will give the iPhone a big boost.

"It's not like the Blackberry folks are having an outage ever other week," he said.

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