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Bank of America, Citigroup Said to Test Apple’s IPhone

AT&T Still Seeking Exclusive Devices
AT&T activated 5.2 million iPhones last quarter. Photographer Rupert Hartley/Bloomberg

Nov. 5 (Bloomberg) -- Steve Jobs may soon bag a pair of the biggest U.S. banks as iPhone supporters.

Bank of America Corp. and Citigroup Inc. are considering whether to let employees use the Apple Inc. phone as an alternative to Research In Motion Ltd.’s BlackBerry for corporate e-mail, said three people familiar with the plans. The banks are testing software for the iPhone that’s designed to make it secure enough for company messages, said the people, who didn’t want to be named because the plans aren’t public.

The tests are the latest sign that RIM may be losing its tight grip on the corporate smartphone market. Companies are experimenting with alternatives, including the iPhone and devices that use Google Inc.’s Android software, as their workers adopt those smartphones for personal use.

“People are delighted with their iPhones and Android phones and they want to use them for work,” said Roger Entner, head of telecom research at Nielsen Co. “The result is RIM now has real competition for corporate customers.”

Research In Motion, based in Waterloo, Ontario, has lost 18 percent in Nasdaq Stock Market trading this year, while Apple, based in Cupertino, California, has climbed 50 percent. RIM fell $1.45, or 2.5 percent, to $55.66 at 4 p.m. New York time and Apple dropped $1.14 to $317.13.

Apple, led by Chief Executive Officer Jobs, said last month that 80 percent of the Fortune 500 companies are deploying or testing the iPhone, including Procter & Gamble Co. and General Electric Co. JPMorgan Chase & Co. is exploring whether to let workers use iPhones and Android phones for corporate e-mail, two people familiar with the bank’s plans said in September.

1,000-Person Trials

Bank of America, which has about 284,000 employees, and Citigroup, with 258,000 workers, are also testing Android smartphones, one person said. The efforts are intended to widen the choice of devices employees can use, rather than replace the BlackBerry, the person said.

The trials at Bank of America and Citigroup involve more than 1,000 employees, two people said. Testing, which typically takes four to six weeks, is advanced at Bank of America and will be followed by a pilot project before potentially wider implementation, one person said.

Laura Hunter, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on any specific trials, adding that “we continuously evaluate new and innovative technologies.” Janis Tarter, a spokeswoman for New York-based Citigroup, said the company doesn’t comment on supplier relationships, though it is always looking for ways to enhance productivity.

Apple’s Appeal

Jeff McDowell, a RIM senior vice president, said the number of its corporate subscribers continues to grow and the company continues to lead the market.

“The opportunities for both corporate-issued and employee-purchased smartphones are growing,” he said in an e-mail. “RIM provides the best overall platform for chief information officers to address both scenarios without compromising security or manageability.”

Apple is taking steps to make its products more appealing to businesses and challenge the BlackBerry, which won over Wall Street banks and corporations with its security and reliability.

Apple is working to improve the iPhone’s security by strengthening encryption tools, adding the ability to set longer passcodes and integrating with server computers that can wipe out or lock an iPhone if it’s lost. The company also enlisted computer-services provider Unisys Corp. to help it sell more devices to corporate customers.

Security Improvements

Natalie Harrison, an Apple spokeswoman, declined to comment beyond referring to the earlier statistics about growing corporate use of the iPhone.

While both RIM and Apple’s share of the global mobile-phone market rose last quarter from a year earlier as more consumers upgraded to smartphones, Apple moved into fourth position, knocking RIM into fifth, according to research firm IDC. The popularity of Apple’s latest model, the iPhone 4, helped the company sell more handsets than its Canadian rival.

UBS AG, Switzerland’s biggest bank, has also said it is considering letting employees use iPhones for company messaging. Standard Chartered Bank Plc said in May it’s switching from the BlackBerry to the iPhone and expects to have 15,000 distributed by year-end. More companies are set to follow suit, according to an August survey done by Sanford C. Bernstein & Co.

Waning BlackBerry Loyalty

Of 200 companies polled in the U.S. and U.K., 74 percent let their employees use devices other than BlackBerrys, the research showed. For the U.S. alone, the figure was 83 percent. Cost savings and employee preference were the two biggest reasons cited by companies for the shift in the study. Employees would rather own an iPhone and are increasingly willing to buy the device themselves, which helps companies cut costs, said Pierre Ferragu, an analyst at Sanford Bernstein in London.

Other research suggests BlackBerry loyalty may be fading among the bankers, lawyers and government workers who drove RIM’s initial success. About 42 percent of BlackBerry users say they want to stick with the brand when they buy a new phone, according to an August survey by Nielsen. The rate is 89 percent for iPhone owners and 71 percent for Android devices, which are made by companies including Motorola Inc. and HTC Corp.

“RIM clearly has to defend its turf,” said Nielsen’s Entner. “Superb e-mail is no longer enough. RIM has to evolve.”

To contact the reporters on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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