Making the iPhone work for business

March 5, 2008: 8:54 AM ET

By Jon Fortt and Michal Lev-Ram

Will Apple give up some control over the iPhone in order to court corporate customers?

That's one of the juiciest questions surrounding a gathering on Apple's (AAPL) campus Thursday, where CEO Steve Jobs has promised to open up the iPhone's software secrets to the world for the first time. Apple's invitation to the event also hinted at new business-friendly features for the device, and Silicon Valley is abuzz about what that could mean. Will the BlackBerry-toting masses be able to trade in the company smartphone for an iPhone?

After all, Apple just isn't overtly business-like. (When was the last you saw Steve Jobs in a suit?) Sure, its products work well in office environments, but the company doesn't go out of its way to satisfy the needs of corporate buyers. While Hewlett-Packard (HPQ) and Dell (DELL) design some of their computers to look like office equipment, Apple always aims for more of a trendy, consumer look. The implied message: Take Apple gear to the office if you like, but expect to stand out.

So, many onlookers are wondering how far the Apple will go to make the iPhone business-ready -- and whether the company will go far enough.

At a bare minimum, several analysts agreed, Apple will have to offer better corporate e-mail connectivity on the iPhone. That will mean working with the likes of Microsoft (MSFT), which through its Exchange platform already has influence over the way businesses handle messaging. If Apple can link the iPhone into Microsoft's system, workers with iPhones will have just as much control over e-mail and contacts as they would from their desks.

"I believe they're actually working with Microsoft to make e-mail sync work," said Rob Enderle, principal at Enderle Group. "By connecting natively to Exchange, Apple would be able to get over the biggest hurdle that's now keeping companies from buying iPhones."

Jim Swartz, chief information officer at database company Sybase, said that the e-mail and corporate directories in Exchange are not the only concern for corporate customers. At $399, the iPhone remains expensive. Plus, companies like Sybase want the freedom to put their homegrown software on a smartphone. Nonetheless, he said, "Here we're seeing a lot of interest and desire for the iPhone."

Apple will also face pressure to let outside companies make their mark on the phone. That will mean forging partnerships with heavyweights including Oracle (ORCL), SAP (SAP) and IBM (IBM), to make sure their business software runs smoothly on the iPhone.

"The individual companies who create software for the enterprise will have to adopt the [software developer's kit] and begin innovating," said Tim Bajarin, president of the Creative Strategies consulting firm. "My personal sense from talking to these guys is that they're going to jump on the iPhone bandwagon."

Not everyone is convinced.

Michael Disabato, vice president and service director at the Burton Group, said that for big businesses to truly embrace the iPhone, Apple will have to give them the freedom to load tailored software onto it, and to remotely erase data from iPhones that are lost or stolen. That's a level of control that Research in Motion (RIMM) and Microsoft provide with their software, but that Apple almost never does.

"For Apple to make this an enterprise device, they have to accept that the enterprise will want to manage this thing lock, stock and barrel," Disabato said. "And they're not going to do it."

Or they might. Believe it or not, in the early days of the iPod, when the device worked only with the company's Mac computers, Apple executives argued about whether to make the device compatible with Windows PCs. The old Apple would have said no -- that all products should feed the Mac ecosystem. But the company eventually decided to let the iPod stand alone, and work with either type of computer. Because of that decision, the iPod became a hit, not just an also-ran mp3 player.

Will Steve Jobs be just as pragmatic about the iPhone on Thursday? A lot of companies are eager to find out.

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