Apple Using iPhone to Gain Entree to Enterprise

 
 
By Elizabeth Millard  |  Posted 2008-03-08
 
 
 
Much digital ink has been spilled over the past ten years about whether Apple can ever get significant traction among business users, with critics usually pointing out the company‚Äôs tiny enterprise market share as its chief obstacle. But a round of iPhone announcements late last week has analysts saying Apple may  now be  ripe to gain the corporate foothold that has eluded it for so long.

Apple most likely doesn't envision a Mac in place of every PC, but it could realistically imagine a day when the smartphone in most briefcases is an iPhone, experts say.

During Thursday's presentation, Jobs noted that the iPhone would now be open to third-party developers, and most notably, the phone would include support for Microsoft Exchange ActiveSync.

The new functionality also came with an announcement about a venture capital play: iFund, a $100 million pool created by Kleiner Perkins Caufield & Byers that will assist iPhone software developers in creating new applications for the device.

For Apple, the new iPhone efforts are a step in what has been uneven path toward enterprise customers, according to Tim Bajarin, president of Creative Strategies.

"Going after the traditional enterprise market was never in the cards for Apple, even though after Steve Jobs left, there was a push to get into enterprises," he says. "But, when Jobs came back, he saw he had to take care of the core customers."

For Apple, those customers were, and still are, in the graphics, education, and engineering niches, as well as the consumer market. Bajarin adds, "Jobs didn't pursue enterprises because he felt the company didn't have the resources to put together a massive service organization to support that type of customer."

But what the company does have is plenty of support for iPhone, and significantly, the buzz seen both before and after Jobs' announcements is enough that other smartphone developers, particularly RIM, may be a bit nervous about their future marketshare, notes Paul DeBeasi, a Burton Group senior analyst.

"It's amazing that Apple can generate this level of interest and for some reason, other people can't," he says. "Right now, they're aimed straight at RIM, so people are asking themselves which they'd rather have, a BlackBerry or an iPhone. And now that the iPhone has all the security features that an enterprise requires, and can synch with Exchange, the answer to that question of preference becomes pretty important."

DeBeasi predicts that Apple could surpass RIM in a year and a half to make the iPhone into the most-used smartphone on the market. That success will depend on whether all the features work as advertised, he notes, and whether the 3G release of the phone slated for June will boost its popularity as expected.

Most likely, business travelers will embrace the smartphone, and corporate IT departments will let them, since the iPhone has new security features like remote swipe capability.

Also important is the ecosystem that Apple is building around the device, DeBeasi adds. The company has always had a strong developer community, but creation of the iFund brings that commitment to a new level, DeBeasi says: "The impact of giving developers so much freedom and capability could be enormous. You'll have applications rolling out regularly, and many of those will probably be geared toward enterprise users."

But even though Apple may be attractive to more corporate customers in the near future, that doesn't mean it's suddenly going to be in every cubicle and on every desktop. In a research note, BMO Capital Markets' Keith Bachman noted that Apple faces roadblocks in the mid- to large-enterprise space, but that it will make better inroads with SMB markets.

The challenges that cropped up in the past in terms of providing enterprise service levels still remain, notes Bajarin.

"The bottom line is that for Apple to put effort into an enterprise play, it would have to bulk up its service," he says. "This latest move with the iPhone will expand Apple's presence in enterprises, though, and allow the company to finally make a solid stab at that market."