Not Everyone Wants an iPhone

The Apple smartphone's incompatibility with most corporate e-mail services is limiting adoption among businesses

by Arik Hesseldahl

Any doubt about whether the iPhone holds appeal for consumers has been put to rest by images of folks lining up for days outside Apple stores and by opinion polls reflecting high interest in the multimedia calling device.

But whether the iPhone can satisfy the needs and cravings of businesspeople hinges on how capably the device can interact with corporate networks and handle applications such as e-mail. It's an important question for Apple (AAPL), which in recent years has moved beyond computer-making competitors like Dell (DELL) and Hewlett-Packard (HPQ) to tussle with makers of digital music players such as Sony (SNE), Creative Technology (CREAF), and SanDisk (SNDK). As a newcomer to cell phones, Apple is already girding for battle with manufacturers of wireless handsets such as Nokia (NOK), Samsung, and Motorola (MOT). And if the iPhone takes off in the business arena, Apple will find itself grappling with the likes of smartphone makers Research In Motion (RIMM) and Palm (PALM).

BlackBerry Remains the Gold Standard

So will BlackBerry addicts soon be switching their allegiance to the iPhone? Not likely, says Gartner (IT) analyst Ken Dulaney. Gartner is advising clients—mostly big corporations—not to support the iPhone for now. "It's just not ready for prime time as a corporate e-mail device," Dulaney says. "The resistance by the IT departments of large companies to supporting the iPhone is going to be fairly widespread."

That's certainly the case at Bank of America (BAC). "BlackBerry is our current standard and we have no plans to change that," says Bank of America spokeswoman Shirley Norton. "We look at new technology all the time and BlackBerry is all we have right now." In the area of e-mail, the iPhone has some key disadvantages. While it will connect to the kinds of accounts consumers are likely to have from providers such as Yahoo! (YHOO), Google (GOOG), and EarthLink (ELNK), it will connect less easily with corporate e-mail accounts, especially those running on Microsoft's (MSFT) Exchange, the dominant messaging platform in large corporations.

The iPhone is designed to work with Exchange in cases where a system supports a message-retrieval method known as IMAP. The trouble is, most Exchange installations don't. "Only a fortunate few will find they will be able to use their iPhones for corporate e-mail as a BlackBerry replacement," says Forrester Research (FORR) analyst Charles Golvin.

Security Risks Inhibit Corporate Adoption

A tech-savvy user can probably figure out a way to forward corporate e-mail to a Yahoo, Gmail, or EarthLink account to which the iPhone is more easily linked, but they could run afoul of corporate IT policies designed to keep e-mail confidential. "That becomes a problem," says Gartner's Dulaney, "because corporate IT hasn't secured those external accounts."

A big concern for many IT managers is ensuring that any new wireless communication devices are secure. "It is imperative for Apple to continue to analyze the inherent security risks with the iPhone architecture," say Jan Volzke, global marketing manager for mobile security at McAfee (MFE). "As it grows in popularity, the iPhone will surely become an attractive target for hackers."