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Apple iPhone Making Inroads Into Corporate Market

November 7, 2008

Despite claims that most companies are unwilling to abandon their trusted Blackberries, analysts say a small but growing grassroots movement is afoot as Apple Inc.’s iPhone appears to be making steady inroads into the U.S. corporate market.

The trend is being led by small and mid-sized companies, whose employees have purchased their own iPhones and are now persuading their employers to embrace the new device.

“I see very few companies turning off BlackBerries,” Jack Gold, founder of research firm J.Gold Associates, told Reuters.

“I see more companies turning on support for the iPhone,” said Gold, adding that 15 to 20 percent of those who purchase iPhones will use it for business purposes.

“Those are people who have gone out and bought these things and have taken it to a company and said ‘make it work,’ or have made it work somehow,” he said.

Apple’s iPhone is already experiencing blockbuster sales with consumers, having sold 6.9 million units of its new 3G iPhone during the quarter ending in September. The number exceeds the 6.1 million BlackBerries sold by Research in Motion Ltd. (RIM). And although iPhone sales are expected to decline amid a slowing economy, the iPhone’s fast start has created significant industry buzz.

Apple signaled its intent to pursue the enterprise market last March, when the company announced its new 3G iPhone would feature Microsoft Corp’s Exchange and other security standards to support corporate e-mail and other applications.  At the time, bellwether firms such as Nike Inc., Genentech Inc and Walt Disney Co announced they would support the new device.   

But no one doubts that the BlackBerry continues to dominate the enterprise market, and Apple will have significant challenges breaking into some sectors such as government and finance, which have tighter security standards for email.     

And Apple may simply see the enterprise market as icing on the cake of its consumer success, and could ultimately choose to forego the time, effort and investment required capture and support corporate customers.

As expected, RIM is making its own push into the consumer market with its new touch-screen Storm smartphone, although the device has not yet been released.

Surveys of IT managers typically show RIM with a 70 to 80 percent enterprise marketshare, and Apple with 10 to 15 percent.  However, some analysts say this is only a measure of smartphone purchases, and that when measured by enterprise email accounts the iPhone is actually gaining traction.

“IT managers rarely make top-down decisions on new technologies, which often enter from the side or the bottom, and the iPhone will probably come along those same routes,” Cowen & Co analyst Matthew Hoffman told Reuters, adding that Apple’s advancement has gone somewhat unnoticed.

Hoffman said the iPhone’s vigorous Web browser should not be underestimated in its appeal to business travelers.

Michelle Wilcove, who works in sales for consulting firm Bluewolf Inc, purchased her own iPhone because she prefers its user interface.

Wilcove estimates roughly one in four of the company’s 200 employees use iPhones, a number she says is “growing fast.”

Ken Dulaney, vice president of mobile computing at Gartner Inc., predicts the iPhone will double its share of the enterprise wireless email market within the coming year.

“I think they’re having a lot of luck getting into the enterprise, although still to a limited extent,” he told Reuters.

Ryan Reith, a senior analyst with IDC, expects a “slow-moving” trend toward the iPhone with small and medium-sized companies, but says that large companies will buy few, if any, iPhones out of reluctance to abandon long-held purchasing networks and security standards.  

However, he acknowledges, “It’s inevitable that Apple will move into the enterprise space.”

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