The iPhone Vs. BlackBerry Era Begins

InvestorsBusinessDaily.com
By Patrick Seitz

Apple's (AAPL) new and improved smart phone, the iPhone 3G, goes on sale Friday, to the delight of gadget-loving consumers. But the feature-packed touch-screen device also could make an impact with corporate and enterprise customers.

Analysts say Apple's iPhone 3G could give Research In Motion's (RIMM) BlackBerry devices a run for their money in the business and government markets. Many changes to the original iPhone, which debuted a year ago, target the enterprise market.

The smart phone market is shaping up as a "two-company horse race" between market leader RIM and upstart Apple, says Paul Carton, director of research for ChangeWave Research. Other contenders include companies selling devices using Microsoft's (MSFT) Windows Mobile and Nokia's (NOK) Symbian operating systems.

"Long term, Apple has the potential for making inroads on up to a third of the U.S. enterprise market," Carton said. "The will is there. Realistically, it's going to happen a (market share) point at a time."

Faster E-Mail

IPhone improvements include access to faster 3G wireless networks for quicker Web browsing and e-mail downloads. The iPhone 3G also supports Microsoft's Exchange ActiveSync, a data synchronization program that lets mobile users access their e-mail, calendar and contacts from work computers.

The iPhone will match RIM's BlackBerry in business-class e-mail and the ability to remotely wipe data off the device should it be lost or stolen. Apple's second-generation iPhone also offers Cisco Systems' (CSCO) IPsec VPN for encrypted access to corporate networks.

Plus, Apple has made available a software development kit that lets third-parties create iPhone applications. At launch, more than 500 native applications for the iPhone will be available for download at Apple's online App Store. More than 125 applications are free. The programs range from games to enterprise-productivity tools. Enterprises also will be able to make custom applications for their workers.

A ChangeWave survey of more than 500 corporate information technology buyers last month shows a big demand for the new i- Phone, Carton says. Six percent of respondents said the improvements made it "significantly more likely" that their companies would buy i- Phones in the future. An additional 23% said the changes would make it "somewhat more likely" that their companies would buy iPhones.

The iPhone 3G is likely to appeal to business professionals more than corporate IT departments, says Kevin Burden, research director for mobile devices at ABI Research.

"RIM still has the enterprise locked up, because it's not just a device, it's a whole solution and the infrastructure behind the device," Burden said. Enterprises have made investments in handheld and server hardware and training and they aren't going to throw that all out and get iPhones, he says.

But a lot of business users don't have BlackBerrys, and the iPhone could appeal to them, he says. The iPhone 3G is better suited for going back and forth between consumer and enterprise applications, Burden says.

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Lobbying Will Take Place

Many iPhones could find their way into corporate environments through the back door, says Mike Disabato, an analyst with the Burton Group. Executives and employees will buy the iPhone 3G and then press their tech departments to support the device.

"The enterprise push starts Monday morning," Disabato said. That's when the first wave of iPhone 3G buyers will approach the IT guys at their companies to hook the device up to their e-mail system.

At this point, the iPhone still is predominantly targeted at consumers, Burden says. Die-hard early adopters waited in line to buy the iPhone 3G outside some Apple Stores days before its release.

Apple will make a gradual play for corporate customers, he says. The Cupertino, Calif.-based company has taken a measured approach to the enterprise market.

"They seem to be taking small steps," Burden said. "They're focusing on applications that have proven to win in the mobile business community, and those are office applications and mobile e-mail."

The corporate market is gravy for Apple, which gets the lion's share of its business from consumers, Carton says.

At the same time Apple is moving into the enterprise market with the iPhone, RIM is moving into the consumer market with its BlackBerry devices, he points out.

Apple says the iPhone 3G is twice as fast as the original iPhone at half the price. It's thinner than its predecessor and includes built-in GPS navigation for expanded location-based mobile services.

The iPhone 3G is available in the U.S. for $199 for a model with 8 gigabytes of storage and $299 for 16 GB and requires a two-year service contract with AT&T (T ).

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