Apple carves out an enterprise plan but won’t change the corporate landscape, analysts say

At last Thursday’s news conference, Apple made a significant inroad into the corporate world by announcing the iPhone’s support for Microsoft Exchange, push email and a Cisco IPsec VPN client for acess to private corporate networks. CEO Steve Jobs maintained that Apple was not trying to outshine Research In Motion’s (RIM) popular enterprise device, the Blackberry – tempering expectations for those who have it slated as a true RIM-killer.

Analysts on the enterprise mobility team at Current Analysis are not banking on Apple dominating the enterprise market, or at least not quite yet. According to Brian Riggs, Current Analysis research director, the enterprise market is very much a sideshow for Apple; the software giant is only entering this arena because its customers require it. Apple is focused on playing keep-up and staying relevant, rather than trying to dominate a new market.

“While the iPhone users who are very devoted to this mobile device and want to use it in a business situation will certainly be able to do that, there is not going to be necessarily a huge up-swell that we’ve seen over the last few years with RIM,” Riggs said. “They have had a multi-year head start in the business market. It is a very focused company. Whereas Apple is much less focused.”

RIM entered the market back in the mid-‘80s, at a time when a platform for enterprise mobility was becoming vital for increasingly mobile corporate users. The iPhone, on the other hand, has become a recent consumer favorite more so for its multimedia apps than its functionality. That being said, Riggs pointed out that an iPhone consumer often is a business user from 9 to 5 on Monday through Friday. As businesses are giving their employees more latitude in choosing their own handsets, Apple will become another viable option.

“When the iPhone first was released, I was pretty concerned that Apple was taking an ostrich approach to the enterprise market, meaning sticking its head in the sand and pretending the enterprises simply didn’t exist,” Riggs said. “Now that Apple is convinced of the commercial viability of the iPhone amongst consumers, it is obviously prepared to tackle enterprises as well. It is only natural, really, since there is often a pretty fine line between consumer and business users of mobile devices.”

Kathryn Weldon, principal analyst of enterprise mobility at Current Analysis, agreed that the iPhone will not be the game-changer it was in the consumer market. Consumers keen on multimedia functions have been buying up the iPhone for its entertainment value and aesthetic appeal, but the staid corporate user who primarily wants email will largely not be compelled to switch.

“In terms of a time-to-market and market advantage, RIM and Nokia have been there for years and have legions of developers and hundreds of applications already available for their devices, whereas it is going to take Apple a little while,” Weldon said. “Even with the device elements and supposedly being a fairly simple thing to develop applications, it could take months – if not years – to get to the point where other device manufacturers are. It depends what you want to use it for, but it won’t instantly have people saying we can do CRM [conditional rights management] and field-force automation.”

The enterprise apps currently available include support for Exchange servers 2003 and 2007, giving users access to their contact list, calendar and scheduling applications. The push email access will include the ability to view PowerPoint, Word and Excel attachments, as well as manipulate emails in the Inbox. Through ActiveSync support, security features such as remote wipe, password policies and auto-discovery, as well as WPA2 Enterprise with 802.1x authentication will ensure iPhone users have the latest standards for protection of Wi-Fi networks.

In the Q&A portion of Apple’s conference, Jobs stressed that iPhone security provisions are superior to RIM’s, saying of RIM, "Every e-mail goes through a NOC [network operations center] up in Canada. That provides a single point of failure, but it also provides a very interesting security situation, where someone working up at that NOC could be potentially having a little look at your e-mail. Nobody seems to be focused on that. We certainly are. We think that a direct connection could be a little more secure."

Apple’s direct connection comes with the provision that AT&T will remain the only carrier for the iPhone – another potential roadblock in Apple’s path to enterprise mobility. AT&T did release enterprise iPhone plans that include a $25 credit per month if users sign up by the end of March. Blackberries typcially sell for $99 per user on the enterprise level, and Apple has yet to say if it will reduce the $400 price tag for company-wide adoption of the iPhone.

Both Riggs and Weldon agreed that adoption of the iPhone amongst enterprises will occur primarily on an individual basis, rather than company-wide adoption. So what will it really take for Apple to give RIM a run for its money? While the iPhone currently only supports Outlook, adding applications for different email servers including SAP, Oracle and Lotus notes would be a step in the right direction. Furthermore, AT&T needs to step up with a subsidy, Riggs said. Apple can’t expect massive adoption of the iPhone amongst corporations if it won’t offer bulk discounts for the two-year AT&T commitment, he said, adding that a 3G network would help as well.
According to Weldon, the list of potential applications Apple could add is seemingly endless, but it may just take one unique and indispensable app to solidify Apple’s enterprise presence.

“In the future, the integration of multimedia in the business environment is going to be a big thing, but it really hasn’t happened yet,” Weldon said. “Then some of that isn’t so much a device issue but has more to do with the availability of 3G and 4G networks. A device that is optimized for multimedia will be really cool once we are doing business video-sharing and business video conferencing on a cell phone. Once IMS has supposedly allowed all this stuff to happen seamlessly…In the future when we are really optimizing the network capacity in the next generation, something like the iPhone could be pretty compelling for the new apps yet to be conceived.”