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updated 6/29/2007 5:13:49 PM ET 2007-06-29T21:13:49

Any doubt about whether the iPhone holds appeal for consumers has been put to rest by images of folks lining up for days outside Apple stores and by opinion polls reflecting high interest in the multimedia calling device.

But whether the iPhone can satisfy the needs and cravings of businesspeople hinges on how capably the device can interact with corporate networks and handle applications such as e-mail. It's an important question for Apple, which in recent years has moved beyond computer-making competitors like Dell and Hewlett-Packard to tussle with makers of digital music players such as Sony, Creative Technology, and SanDisk. As a newcomer to cell phones, Apple is already girding for battle with manufacturers of wireless handsets such as Nokia, Samsung, and Motorola. And if the iPhone takes off in the business arena, Apple will find itself grappling with the likes of smartphone makers Research In Motion and Palm.

BlackBerry remains the gold standard
So will BlackBerry addicts soon be switching their allegiance to the iPhone? Not likely, says Gartner analyst Ken Dulaney. Gartner is advising clients—mostly big corporations—not to support the iPhone for now. "It's just not ready for prime time as a corporate e-mail device," Dulaney says. "The resistance by the IT departments of large companies to supporting the iPhone is going to be fairly widespread."

That's certainly the case at Bank of America. "BlackBerry is our current standard and we have no plans to change that," says Bank of America spokeswoman Shirley Norton. "We look at new technology all the time and BlackBerry is all we have right now." In the area of e-mail, the iPhone has some key disadvantages. While it will connect to the kinds of accounts consumers are likely to have from providers such as Yahoo!, Google, and EarthLink, it will connect less easily with corporate e-mail accounts, especially those running on Microsoft's Exchange, the dominant messaging platform in large corporations.

(MSNBC.com is a joint venture of Microsoft and NBC Universal News.)

The iPhone is designed to work with Exchange in cases where a system supports a message-retrieval method known as IMAP. The trouble is, most Exchange installations don't. "Only a fortunate few will find they will be able to use their iPhones for corporate e-mail as a BlackBerry replacement," says Forrester Research analyst Charles Golvin.

Security risks inhibit corporate adoption
A tech-savvy user can probably figure out a way to forward corporate e-mail to a Yahoo, Gmail, or EarthLink account to which the iPhone is more easily linked, but they could run afoul of corporate IT policies designed to keep e-mail confidential. "That becomes a problem," says Gartner's Dulaney, "because corporate IT hasn't secured those external accounts."

A big concern for many IT managers is ensuring that any new wireless communication devices are secure. "It is imperative for Apple to continue to analyze the inherent security risks with the iPhone architecture," say Jan Volzke, global marketing manager for mobile security at McAfee. "As it grows in popularity, the iPhone will surely become an attractive target for hackers."

In the meantime, some companies are exploring how to overcome the security concerns. "We're getting lots of requests from our customers to find out what the effects of this device might be," says Neel Mehta, who leads a research team at IBM's Internet Security Systems unit. "Since it's largely aimed at consumers, the features you need to secure confidential e-mail just aren't there yet." Wall Street brokerages and law firms, both big markets for BlackBerry devices are especially skittish because they have stringent e-mail confidentiality requirements.

One security advantage that the iPhone has, Mehta says, is that hackers wanting to target the iPhone will have trouble doing so, since Apple hasn't yet released a software developer kit. "All the attacks we've seen on smartphones have come as the result of using software development kits. Without an available kit, it's a lot harder to write malware for the device," he says.

Building a bridge to Exchange servers
Andy Hargreaves, an analyst at Portland, Ore. brokerage Pacific Crest Securities, says many of the concerns about the iPhone and security are overblown and that his employer will let him use the iPhone at the office. "I think the security concerns come mostly from misunderstanding how the phone interacts with Exchange," he says. "It doesn't open up any new holes in connecting to Exchange."

Some companies specializing in wireless e-mail are working on their own approaches to connecting the iPhone to corporate e-mail services. Visto, which bridges corporate and consumer-grade e-mail services with wireless phones of every stripe, said on June 28 that it has a wireless e-mail client for the iPhone. Visto expects to deliver the product sometime late in the third quarter. Another wireless e-mail company, MessageOne, based in Austin, Tex., announced plans for its own service that will give corporate users access to e-mail by way of the iPhone Web browser. MessageOne says the service will work with Exchange and IBM's Lotus Notes.

Some tech enthusiast blogs have speculated that Apple will license Microsoft's ActiveSync technology, which lets devices synchronize e-mail, calendar, and contacts directly with Exchange servers, but Hargreaves considers that scenario unlikely. "They'd only do that if sales weren't meeting expectations," he says. Apple and Microsoft declined to comment on the speculation. More generally, though, a Microsoft spokeswoman added, "The mobile industry is broadly adopting Microsoft Exchange Server for mobile messaging with Motorola, Nokia, Palm, Sony Ericsson, Symbian, and many others licensing Exchange ActiveSync."

Early executive adopters
As high as the hurdles may be for corporate users, some of the same features that make iPhone attractive to consumers will surely make it a hit among businesspeople. It's clearly going to attract attention for digital media enthusiasts, even many who already use an alternative smartphone.

The iPhone wouldn't be the first device to enter corporations through a back door. Originally released in 1996, the PalmPilot made a splash among busy executives with a tech bent and a busy schedule. PalmPilots began showing up on many corporate desks at the initiative of employees. Corporate IT managers only later began supporting them.

Yet as appealing as the iPhone will be to executives when they're outside the boardroom, don't expect it to replace the BlackBerry or Treo right away.

Copyright © 2012 Bloomberg L.P.All rights reserved.

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