Making The iPhone Mean Business

The addition of a secure e-mail function will be crucial for road warriors

Ralph de la Vega pulls a sparkling new iPhone from his coat pocket during a meeting at the InterContinental Hotel in Chicago. De la Vega, who heads up consumer and entertainment initiatives for AT&T (T ), the iPhone's exclusive carrier, wakes up the phone and deftly navigates through its applications. He shrinks and expands Web pages with strokes of his fingers and launches an episode of Ugly Betty that looks as crisp as an image on an HDTV.

But when asked if he can get his corporate e-mail, de la Vega pulls a Research in Motion (RIM) (RIMM ) BlackBerry from his pocket. No, he admits, the iPhone "doesn't do live over-the-air e-mail like the BlackBerry." It's clearly aimed at folks who are more interested in mobile music, YouTube (GOOG ) videos, and locating a club on a Web map than in being tethered to their office e-mail. Yet with corporate use making up a vital 20% of the overall $176 billion global market for mobile phones, according to consultants Strategy Analytics, AT&T and Apple can't neglect businessfolk forever. "We clearly will go after them in the future," says de la Vega.

But how? Elegance alone won't help the iPhone snag business users. Major companies demand high levels of security in the tools they support, including such features as the ability to delete e-mail and other corporate data remotely if a device is lost or stolen. To make the iPhone corporate-ready, Apple needs to do a deal with a service provider or come up with a homegrown solution. Either way, there's no quick fix. "It's easy to underestimate the complexity of the corporate market," says analyst John Jackson of tech research firm Yankee Group.

The most important missing piece is a secure way to "push" messages automatically from corporate mail systems such as Microsoft (MSFT ) Exchange or IBM (IBM ) Lotus Domino to handsets. BusinessWeek has learned that last year Apple Inc. (AAPL ) negotiated with a leading provider of secure mobile mail, Good Technology Inc. (MOT ), about putting Good Mobile Messaging software on the iPhone. Good already supports a variety of smartphones using Palm and Microsoft software.


The good-apple discussions broke down last fall, according to executives close to the situation, when Motorola (MOT ) purchased Good. Even before that, tension arose between Motorola Chief Executive Edward J. Zander and Apple's Steve Jobs after an acrimonious partnership that resulted in the disappointing debut of the Rokr music phone. Kathy Paladino, president of Motorola's enterprise mobility business, wouldn't comment on the talks, but she says a Good-Apple relationship "is possible."

Analysts point out that Apple has other e-mail options. Visto Corp. in Redwood City, Calif., another developer of solutions for portable e-mail, has held talks with Apple, according to analysts, but there has been no deal. Another possible player is Nokia's Intellisync (NOK ) unit. But it, and other even smaller players, can claim only paltry market share compared with e-mail giants RIM and Good. "Everyone is ready to glom on to the iPhone's cachet," says Cliff Raskind, wireless specialist at Strategy Analytics. Apple declined to talk about its plans or discussions with software suppliers.

The betting, say those familiar with Apple's ways, is that Jobs will turn to its old rival Microsoft. Its Exchange mail system offers a feature called Direct Push that lets smartphone makers build software that automatically syncs mail, contacts, and calendar items. "The Microsoft product is not in the same class as BlackBerry or Good," says Ken Dulaney of researcher Gartner, "but it is probably acceptable to chief information officers." And Richard Doherty, a co-founder of tech research firm Envisioneering, thinks Apple could have its own "push mail" software in the works. That could push the iPhone into the corporate game.

By Roger O. Crockett and Cliff Edwards, with Olga Kharif in Portland, Ore.

— With assistance by Olga Kharif

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