iPhone Takes the Enterprise? Doubt It.

That didn't take long. Before Apple's (Nasdaq: AAPL  ) iPhone was a year old -- before it had even scratched the surface of the mass consumer market -- some pundits had concluded that the device would continue its march right into the enterprise space. Much of the debate falls along the same battle lines drawn in the Mac vs. PC war: namely, that Apple's innovation will win over converts in any demographic.

Yet while I believe the iPhone is a smash hit, I don't think penetration of the enterprise market will go as easily as many envision. In fact, I think there's a good chance the iPhone will fail to reach a significant penetration level in corporate hallways for a number of reasons.

First, it should go without saying that the iPhone will have to be offered by Verizon (NYSE: VZ  ) , T-Mobile, and Sprint Nextel (NYSE: S  ) -- not just AT&T (NYSE: T  ) . But fellow Fool Tim Beyers made another good point: Information technology (IT) departments hate change.

But wait, Tim says, Research In Motion's (Nasdaq: RIMM  ) BlackBerry has successfully broken through IT resistance, and now has companies issuing the devices to millions of suit-and-tie types. Some believe that Apple has the same -- or even better -- chance at becoming a mainstay tool for the white-collar workforce.

But there's a big reason why RIM won its long battle to capture the enterprise market: At the time, there was no viable alternative for email on the go. Apple today would have to do more than just match RIM's ability to efficiently manage core enterprise applications such as email, calendar, and contacts.

Steve Jobs would also have to give corporations good financial reasons to either toss out all those RIM servers or support both devices -- partnerships with Microsoft (Nasdaq: MSFT  ) and Cisco (Nasdaq: CSCO  ) alone won't do it. iPhone junkies caught with their pants down and no ROI to show will be sent back to their offices, where their BlackBerrys wait on their desks.

Unless a dramatic overhaul of IT policy in corporate America occurs and RIM falls flat on its face in the next few years, Apple will just have to be content with plundering the consumer market.

More Foolishness:

Apple is one of many game-changing companies picked by the Motley Fool Stock Advisor service. To see all the stocks that have helped Tom and David Gardner beat the market by 44 points on average, take a free 30-day trial.

Fool contributor Dave Mock loves change, and often earns the ire of the IT department. He owns no shares of companies mentioned here. Sprint Nextel and Microsoft are Inside Value picks. Apple is a Stock Advisor recommendation. The Fool's disclosure policy has already won the hearts and minds of IT departments.


Read/Post Comments (8) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 17, 2008, at 5:57 PM, 55Sullivan wrote:

    All good points. Each smart phone has its strengths, and the iPhone has taken over the browsing space, just as BlackBerry owns email. A friend who works at the online channels of Dow Jones told me that not long after the iPhone's intro last year, 4% of wsj.com's traffic was from iPhones. Talk about moving the needle in a heart beat. So I think RIM is safe for a while, but as corp types need to dig into content and not just reply to messages, AAPL has shot at grabbing market share. And don't underestimate the 'cool' factor... some just have to have the latest and greatest.

  • Report this Comment On June 17, 2008, at 6:21 PM, pintoa2000 wrote:

    The "consumer" are people who are also "enterprise users", if they prefer the iphone for its ipod capabilities , browsing superiority and ease of use in their personal everyday lives .. why on earth would they carry two devices if the one device iPhone would do all that they want..

    I dont understand the difference.. once the consumer market is in the bag.. the enterprise market is a given... we are afterall talking about the same "person/user"....with 2 different needs ... both of which can be addressed using the iPhone... unlike the Blackberry which can only address one.

  • Report this Comment On June 17, 2008, at 6:22 PM, Uruzone wrote:

    You write:

    "Apple today would have to do more than just match RIM's ability to efficiently manage core enterprise applications such as email, calendar, and contacts.

    Um, it DOES more than match RIM. It has in fact surpassed RIM with the addition of MobileMe, which will bridge the gap between home, mobile device and business. It's boasts a full browser and is essentially a handheld computer, neither of which RIM offers. It's more secure. The release of the iPhone SDK, an incredibly easy developer's environment, will enable companies to make specific applications for iPhone and push them to specific users in their organization. Did you watch the WWDC keynote, Mr. Mock, or are you just trying to fill column space? The Fortune 500 are ALREADY well on-board with the 3G iPhone, from security companies to banks to pharmaceutical companies -- traditionally the most conservative groups.

    iPhone is not only in feature parity with a Blackberry, as of July 11, it is far beyond it.

  • Report this Comment On June 17, 2008, at 6:57 PM, FoolishApple wrote:

    I guess the fact that 1/3 of all Fortune 500 companies have requested the iPhone SDK means nothing to you.

  • Report this Comment On June 17, 2008, at 7:38 PM, slapppy wrote:

    So the companies that are on the Enterprise program are not qualified to be an Enterprise company? Since your stating the iPhone is not enterprise ready.

    The companies previewed sure sounds like a huge corporation with thousands of users that their IT has to handle.

    http://www.apple.com/iphone/enterprise/

    http://www.apple.com/iphone/features/

    http://www.apple.com/iphone/features/appstore.html

    http://www.apple.com/mobileme/

  • Report this Comment On June 17, 2008, at 11:17 PM, none0such wrote:

    Thanks for your article. I think it is well thought out and expresses your opinion in a convincing way. It will be interesting to see how Apple's gambit actually plays out. Right now we can only speculate since corporate interest or orders for iPhones is not the same as corporate use and Apple ROI.

  • Report this Comment On June 19, 2008, at 10:10 AM, MobileAdmin wrote:

    love reading all these comments who by the majority are by USERS who have no clue about managing thousands of mobile devices.

    1. Exchange ActiveSync is governed by Active Directory settings so unless you either have access to AD or your company has everyone enabled by default for ActiveSync (likely not) good luck bringing your personal Iphone to work expecting it to work.

    2. I'm also in the Iphone 2.0 beta and while it's doing some stuff right it's still night and day between what I can do with Blackberry Enterprise Server and the granual control I have via policy to lock down functionality, get usage reporting etc. With ActiveSync I get the same as Windows Mobile - 3 security and of those 2 are not working 100%! The password policy still lists a time out lock of 4 hours, when our policy limit is 30 minutes and worse after the invalid password attempts the iphone DOES NOT erase, it goes through a series of "locks" and can be unlocked as easily as plugging into Itune - real secure.

    3. I want nothing to do with the deployement / support of Itunes on our desktops/laptops. Apple needs to drop this and provide over the air activation like Blackberry, with that this impacts the ability to deploy devices without having to first touch every single one. Another note by our compliance department is what about the legality of files users may have on their iphone and those would sync to our systems if we allow itunes? It's a real issue for companys with concerns over copyright infringement.

    4. During the OS 2.0 beta I've passed the iphone around to all the power users and people who have inquired about supporting the iphone .. feedback from everyone is the same. Nice GUI, Nice web experience. But I'll stick with my Blackberry as it's easier to use and I like having a keypad.

    All that said, the iphone is a fantastic device and I see it having a secondary role for most of the excutives we support, they use the BB all week and come weekend they use the iphone as email is lighter and they want to enjoy the web / music / movie etc. For those that are just not up to date on what is possible:

    So to recap until Apple has a solution that offers the SAME secutiry and functionality as the BES it will not be "taking over" anything other then the consumer market and those companies that do not have tight security requirements.

  • Report this Comment On September 11, 2008, at 9:44 PM, GoNuke wrote:

    My friends in high end financial services security claim the iPhone can't be made secure. I know a lot of IT people who refuse to give their senior managers' iPhones access to the e-mail servers.

    Apple is a consumer electronics company. I am writing this on a Mac G5. I spent 25 years as a marketing manager at a manufacturing company. I am 51, my PC is right beside me. When I deal with Apple I feel like the ugly guy in the line up to get into club 54.

    I have no patience for this. Apple does not ascribe to the thesis that the customer is king -the mantra of commerce.

    The Apple culture is driven by Steve Jobs and the company's focus on selling "cool" toys to kids. It does not trust or support its customers which is typical of retail where sales are not based on relationships or trust. It will have to change its culture dramatically before it breaks into the corporate market.

    Apple is a terrible company (from a customer perspective) with great products. This is acceptable for a consumer products company. It is a bad strategy for a commercial products company.

    Ironically the iPhone's flexibility makes it a bad product for business because its openness is what makes it hard to secure.

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