Five Reasons the iPhone Won’t Infiltrate Your Business

The hype around Apple’s iPhone is dizzying. As the iPhone makes its debut, we’re going to stay grounded and seek answers to this question: Will it infiltrate corporate America? To understand why it won’t, read on. To scan a list of reasons why it very well could, see here. After reading both lists, tell us what you think is going to happen to the iPhone and the enterprise—a marriage made in heaven or a disaster waiting to happen?

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See: Five Reasons the iPhone Will Infiltrate Your Business

A Brief Pre-Release History of the Apple iPhone

Why Apple iAnything Is a Non-Issue for CIOs and Corporate America

Why the iPhone Is the Single Most Important Thing to Happen to CIOs This Year   1. The Cost

For those cost-conscious CIOs who love a good deal (meaning: deep discounts for bulk purchases), that’s not going to happen with the iPhone. AT&T is not offering any kind of discount on the device. On Tuesday, Apple and AT&T announced announced that charge-by-the month plans start at $59.99 (for 450 minutes) and run up to $99.99 (for 1,350).

A recent IDC survey found that just 10 percent of users researching their next cell phone purchase were OK with paying the full price for the iPhone and inking a two-year contract with AT&T.

In addition, many analysts and pundits have pointed out that there may be plenty of bugs and problems with iPhone 1.0, and that could turn many people off. “I am the quintessential early adopter, and I’m not doing it anymore,” says Richard LeVine, a security and risk expert for mobile devices at Accenture. LeVine says he bought a Suzuki Sidekick when it first came out, but adds, “I’m not buying a first-gen V1 iPhone.” He’s a huge Apple fan (he bought a first-generation iPod), but with the iPhone, “I expect firmware and patch releases and bug fixes.” So he’s going to wait on the iPhone. In addition, he claims like many others that he doesn’t like iPhone’s touch screen because he “wants a phone with physical buttons.”

2. Apple’s Never Been Enterprise-Driven

The BlackBerry’s turf is mobile corporate users. RIM has more than 8 million CrackBerry fanatics right now, and that’s going to be tough to crack. Even more difficult for Apple is the fact that RIM recently delivered new devices with more multimedia capabilities—the Curve and the Pearl—that work just like other “corporatized” BlackBerrys.

Apple-related products (Macs) are usually just too different and too expensive for most companies. The iPhone runs the Mac OS, and according to a report on the iPhone from Jack Gold, founder and principal analyst at researcher J. Gold Associates, “this is a major constraint, since few third-party application vendors (for example, Good Technologies for a push e-mail client) run on the Mac.”

Lastly, the iPhone can’t edit Microsoft Office documents and there are issues with Windows Outlook or Lotus Notes e-mail applications, which the iPhone doesn’t support right now. (But, really, who even uses those anymore?)

3. Security Issues (and that Glass Touch Screen!)

There’s been a lot made of security vulnerabilities and the fact that the iPhone is just another new and untested device that falls in a long line of mobile devices users would like to hook into CIOs’ networks. In a recent Computerworld article, Andrew Storms, director of security operations at nCircle Network Security, called the iPhone “a nightmare for security teams. What I’m afraid of is that enterprises are going to get pressure from, say, sales, to bring this in. And even if it’s not approved, people will try to connect it to their corporate networks. It has no place in the enterprise.”

According to the article, Storms’ issue with the iPhone is the lack of a security management tool that could enforce enterprise policies about which devices connect to the network. “There are no central management tools. If there was a product that integrated with [Mac] OS X Server, it would be a totally different story,” said Storms in the article. “Apple has been quiet about enterprise security, so we have to expect and plan for the worst.”

And what about that glass touch screen? Indeed, the iPhone is beautiful, like a delicate piece of china. However, we all know what happens to a delicate piece of china when you drop it. As a recent report from CurrentAnalysis points out, “A hardened glass screen may be durable—Motorola is also using glass on its RAZR2 product—but it sure sounds like something that ought to crack. The commentary on gadget enthusiast sites is already replete with jeering critics cheering the expected rash of smashed screens. Sure, most of these people aren’t materials scientists—some are probably 12 years old—but ‘glass breaks’ is a message Apple will have to overcome.” (To see a video spoof as an example of the potential “fingerprint smudge problem, go here.)

4. Enterprises Aren’t Huge Fans of Multimedia Devices—Yet

Although this trend is starting to change, CIOs and security chiefs are still hesitant to allow mobile devices that have these newer capabilities on the network (or even in the building: the digital camera feature is Exhibit A). So just how important is it that a company pay for its sales staff have MP3 or video players on their mobile devices?

According to a 2007 report from In-Stat, few of the more than 800 respondents to a mobile handset survey who did not own a multimedia handset had any desire to purchase one. In addition, In-Stat analyst Bill Hughes says that while there has been a recent increase in the number of multimedia devices sold in the United States, “the growth in multimedia handsets has more to do with operators pushing multimedia handsets to the market, rather than a strong desire by consumers to adopt multimedia handsets or use multimedia services.” For example, he found that more than 80 percent of users with handsets that have these capabilities rarely, if ever, use the features.

And when compared with the rest of the world—Japan, India, South Korea and most of Europe—the United States has historically lagged in utilizing mobile devices for anything more than making phone calls or checking e-mail. “I hesitate to call the U.S. a laggard, but it’s a different cultural environment,” Hughes adds.

As to the iPhone’s success, Hughes hedges a bit. “I believe the iPhone will be moderately successful,” he says, “but I don’t believe they’ll get 1 percent of the phone market.”

5. Carrier, Content and Network Issues

From a historical viewpoint, there’s been a lot of frustration with wireless carriers—and most businesses have been reluctant to partner with the carriers to develop mobile solutions.

Most of the frustration with carriers stems from three areas: inconsistent networking standards among competitors, the two-year customer lock-in agreement, and the slower speeds on those networks. “The mobile networks are incredibly bad quality in the United States compared with Europe and the more advanced countries in Asia,” says Web usability expert Jakob Nielsen, a principal of the Nielsen Norman Group.

Verizon Wireless’s launch of its EV-DO (or Evolution-Data Optimized) 3G service last year has certainly helped spur growth in the consumer realm, but enterprises still aren’t sold. And because AT&T is the exclusive wireless carrier of the iPhone, there’s been much grumbling about the two-year contract and the fact that the iPhone will run on AT&T’s EDGE-based data network, which many analysts point out has slower speeds than 3G and has been called ancient by some. “The bigger problem is the AT&T network,” writes Pogue in his iPhone review. “In a Consumer Reports study, AT&T’s signal ranked either last or second to last in 19 out of 20 major cities. My tests in five states bear this out. If Verizon’s slogan is, ‘Can you hear me now?’ AT&T’s should be, ‘I’m losing you.'”

Nielsen says that while the iPhone “is a nice piece of hardware, in most of the United States it’s not going to work,” he says. “Have you seen the coverage map?” He also points to one fact which the iPhone won’t be able to gloss over with it’s pretty interface and bells and whistles—the pervasiveness of “dead zones” in U.S. mobile coverage areas and dropped calls. “Even now, with just making a cell phone call, we don’t have a stable resource,” Nielsen says. “And that one thing explains it all.”