Apple iPhone: Can it Leap from Consumer to Corporate?

Posted by: Lauren Young on October 2, 2009

Will Corporate America take the next big bite into Apple’s (AAPL) iPhone?

Maynard Um, a UBS tech analyst, upgraded Apple from neutral to buy on Oct. 2. Um’s new price target is $265, up from $170. His reasons include the stickiness of the Apple store along with new strategic partnerships.

But what caught my eye is this interesting point: the iPhone is gaining traction in the corporate world with 19 of the biggest 100 companies using iPhones. Um does not think iPhones will displace Research in Motion’s (RIMM) ubiquitous BlackBerry, “but, rather, believe it is likely at the expense of other Microsoft Exchange capable smartphones,” he says.

In order for Apple to gain greater traction in the enterprise market, in our opinion, the company must overcome some issues including providing 24x7 customer support, providing more future product roadmap details (to allow large enterprises to build ahead and prepare), provide alternatives to OS upgrades solely from iTunes desktop application.

What do you think? Can the iPhone make the transition from consumers to corporations? If so (or not), what does it mean for Apple?

Reader Comments

Abasse Asgaraly

October 2, 2009 12:23 PM

Apple's iPhone faces two major challenges in the corporate market. One, security and higher encryption of data exchange. Second, iPhone does not allow applications to run automatically like the Blackberry. One needs to activate a particular application on iPhone to use it. However, the availability of a very large pool of applications for iPhone makes it more and more appealing to corporations.

Ken Smith

October 2, 2009 1:14 PM

The leap of the iPhone from consumer to corporate has already begun. While there are far more apps for games and music, the number of business related offerings for the iPhone is growing at a fast pace.

This is not to take anything away from the BlackBerry, which is a very good system run by a company that knows its market and can make moves quickly.

This is a topic that I find fascinating, so a month ago I started a small blog that posts daily news articles about the iPhone in the workplace. The articles posted so far can give a quick introduction of where the iPhone might be going in the corporate world.

Take a look: http://iphonetoday.mobi

The site is also optimized for the iPhone.

siphandone

October 2, 2009 1:35 PM

I hope iPhone not succeed in Corporate...

DanTe

October 2, 2009 2:36 PM

iPhones should definitely be adopted widely by the corporate world. Especially since it's OS falsely reports their security status re Exchange and VPN policies (http://news.techworld.com/security/3201981/apples-iphone-problems-continue/). The more financial companies adopt iPhones, the better it will be for a lot of folks to pad their retirement funds.

Not A Schiller

October 2, 2009 4:29 PM

"However, the availability of a very large pool of applications for iPhone makes it more and more appealing to corporations."

This is also a reason it is less appealing. A company does not provide a cell phone for the user's benefit, but the benefit of the company.

Unless Apple does something drastic to the way apps are provided to the phone (forced apps, lockdowns, etc.), it is not corporate friendly.

MikeZ

October 2, 2009 4:54 PM

what is even more interesting is the blurring of the line between consumer and corporate. Does the world really need two of everything these days?

Rich

October 2, 2009 5:33 PM

I'm not sure Apple needs to leap from consumer to corporate. They're doing well enough in the consumer market! Let's not get too greedy...

rogerr

October 2, 2009 7:15 PM

The iPhone is severely lacking with regards functionality for corporate use where Exchange is involved, e.g. the ability to decline meetings. The iPhone is also much more a consumer-oriented device than a corporate one, as evidenced by simply looking at the amount of "silly" applications - iBeer, the multiple gun variants etc ad infinitum. Definitely hardly business essential/critical.

Also, iphones bring the baggage of iTunes, movies, mp3s, photos and MMS to the corporate environment, creating a possible nightmare for any company that either does not have a mobility policy, has one that is not kept up-to-date for emerging technologies, or for companies that just let things "slide". (Corporate e-mail on personal disasters can potentially be a disaster waiting to happen if the device gets into the wrong hands and I.T. is not aware of a user having set up a personal device with their e-mail.

Lastly, from experience, introducing iphones into a corporate environment is the equivalent of waving a wand and turning your workers into 5-year olds. I.E. people see others have them and become "I want one" and getting pouty until they get one. A beautiful illustration of this is the "Ice Cream Man" sketch by Eddie Murphy. Replace "Ice Cream" with iPhone and you pretty much have it down. For a companies' staff to degenerate to that level is, frankly, pitiful and sad.

rogerr

October 2, 2009 7:16 PM

The iPhone is severely lacking with regards functionality for corporate use where Exchange is involved, e.g. the ability to decline meetings. The iPhone is also much more a consumer-oriented device than a corporate one, as evidenced by simply looking at the amount of "silly" applications - iBeer, the multiple gun variants etc ad infinitum. Definitely hardly business essential/critical.

Also, iphones bring the baggage of iTunes, movies, mp3s, photos and MMS to the corporate environment, creating a possible nightmare for any company that either does not have a mobility policy, has one that is not kept up-to-date for emerging technologies, or for companies that just let things "slide". (Corporate e-mail on personal disasters can potentially be a disaster waiting to happen if the device gets into the wrong hands and I.T. is not aware of a user having set up a personal device with their e-mail.

Lastly, from experience, introducing iphones into a corporate environment is the equivalent of waving a wand and turning your workers into 5-year olds. I.E. people see others have them and become "I want one" and getting pouty until they get one. A beautiful illustration of this is the "Ice Cream Man" sketch by Eddie Murphy. Replace "Ice Cream" with iPhone and you pretty much have it down. For a companies' staff to degenerate to that level is, frankly, pitiful and sad.

marcelo

October 2, 2009 7:41 PM

Today there are many phones that are very similar in features to the Iphone, with large capacitive touch screens, and intuitive interfaces, so hardware will not be an issue (for business).
Email only will not be enough in the future as companies will try to give mobility to more and more of their business applications (project, kpis, crm).
The game will be won by the company that provides the best development tools for mobile applications.
The best development tool and the most widely used is still MS Visual Studio, and Silverlight will soon be the preferred platform to develop any business application.
So if IPHONE allows silverlight to run in the iphone, the iphone with its consumer appeal, will be a strong competitor. If not Microsoft will comeback strongly to leadership.

marcelo

October 2, 2009 7:41 PM

Today there are many phones that are very similar in features to the Iphone, with large capacitive touch screens, and intuitive interfaces, so hardware will not be an issue (for business).
Email only will not be enough in the future as companies will try to give mobility to more and more of their business applications (project, kpis, crm).
The game will be won by the company that provides the best development tools for mobile applications.
The best development tool and the most widely used is still MS Visual Studio, and Silverlight will soon be the preferred platform to develop any business application.
So if IPHONE allows silverlight to run in the iphone, the iphone with its consumer appeal, will be a strong competitor. If not Microsoft will comeback strongly to leadership.

John

October 3, 2009 5:35 AM

Rogerr,

You are sadly mis-informed. The iPhone can Decline meetings and has full Calendaring functionality.

iTunes is not required for use with the iPhone - it is only needed once for device activation and you can have one machine doing that or deploy itunes in Activation only mode.

RJ

October 3, 2009 6:15 AM

"Apple iPhone: Can it Leap from Consumer to Corporate?"

The question should be can the Blackberry become more consumer friendly like the iphone with all the apps and functionalities etc? AS a businessman I use my smartphone for both business and personal use and find the Blackberry limiting in apps and functionality. Therefore, I find myself more and more thinking about switching to the iphone. The only reason I haven't YET is AT&T.
Are you listening RIM and AT&T?

Ted cranmore

October 3, 2009 1:16 PM

Blackberry will remain the 'king' in the corporate world, but Apple will make slow and steady inroads. Apple's progress will surprisingly not come from a switch in direction from the CIO, but from a bottom up groundswell. As opposed to the enterprise buying the smartphone for the high ranking employee, it will come to the enterprise via the lower ranking employee asking to put his iPhone in the world of his work email. The corporation gains the efficiency of a 24x7 worker, but doesn't have to foot the bill for the device. This slow and steady inroad will have many variants in cost sharing model that depend both on corporate policies and employees need for the device. Even if the company shares nothing in terms of initial or monthly costs, most iPhones users will still desire integation with the corporate email and calendar from a personal efficiency angle.

When you consider how many more foot soldiers there are compared generals, you can see why the iPhone has great potential in the enterprise despite blackberry's dominant position here.

west

October 4, 2009 3:15 AM

"Rogerr" - you have no idea what you are talking about. iPhone allows you to decline meetings. For someone that obviously never used iPhone with Exchange, I'd suggest you do more research before such a critique. How is getting a iPhone any different than a Blackberry Bold or Thunder, the same employees are gonna "pout" regardless of what it is. Your argument regarding movies, mp3s, photos and MMS is weak as there are various phones that already have these functions prior to the iPhone. Ever heard of Slingbox? Doubt you have based on your response. Blackberry users can stream TV via their cellular network -- something that AT&T blocked from the iPhone.

David Tubbs

October 5, 2009 12:10 PM

I don't think it will. Not unless corporate America AND Apple change the way they think and operate. The iPhone just isn't made for the average business user. The benefits of other business phones far outweigh the benefits offered by the iPhone. Even worse, the disadvantages of the iPhone kill it completely.

Reason 1: brand perception and image - the iPhone Just Doesn't Fit in

The iPhone is perceived as something belonging in the hands of the young and trendy. The young & trendy image is not one that fits into the culture of corporate America. Conversely, the perception of the Blackberry is one that belongs in the hands of a manager wearing a navy blue suit, a Tag Heuer watch and sitting in business class on his way to a mergers & acquisition meeting in Singapore.

The iPhone is definitely not a phone that appeals to the corporate types. Its image alone is enough to offset many of its benefits.

Reason #2: Build Quality

The build quality of the iPhone is not what it should be. They scratch easily. The screens crack if dropped. Ebay is full iPhones and iPods with cracked screens. The iPhone is not just another phone you can slip into your pocket or purse and carry around. In other words, the iPhone is way too delicate. This translates into higher costs.

Reason #3: The perception of Apple as a company

Regardless of its operating system, Apple is not exactly a customer-centric company. This works for Apple and the majority of its targeted audience, but it's not something that corporate America is okay with. Also, Apple is perceived as a company that manufactures over-priced equipment. Its products satisfy a lot of consumers, but the iPhone is definitely not what people would consider a good deal.

Reason #4: It's the Economy, Stupid

In an age of budget cuts and high unemployment, the last thing companies want to do is spend more on company phones.

Also, don't forget one perception factor of iPhone - it communicates prosperity. This isn't the time to scream out "hey I'm rich, and you're not."

Reason #5: System crashes

I have heard numerous reports on iPhones crashing and all of the data on the phone being lost. Regaining corporate confidence in a product is even more difficult than regaining consumer confidence.

Reason #6: Apple Doesn't Want It

Apple may very well not want to make the iPhone a corporate accessory. Doing so may damage its short-term and long-term brand perception plans. Some people buy an iPhone because it's different.

Reason #7: Productivity Killer

Remember those studies published that revealed lost productivity of employees due to the surfing of Facebook and MySpace? Just imagine how the iPhone will take that lost productivity even higher. To add to costs, companies will have to invest even more resources into restricting usage.

Reason #8: Competitors are offering better valued products

As usual, Apple is not changing its pricing model to compete with the lower-priced phones being released by LG, Nokia, and Samsung. These phones often have similar or improved features over the iPhone.

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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