O2: iPhone 3G to take enterprise by storm

Apple's iPhone 3G is poised to take the UK business world by storm, according to O2, which said corporate customers involved in beta testing are very interested in deploying iPhone 2.0.

The mobile operator, which is Apple's iPhone partner in the UK, launched the Edge device without offering a business tariff; enterprise customers wanting to use the device had to sign up for a consumer contract. The iPhone 3G, however, will start life with a choice of business tariffs.

O2 UK's head of business sales, Ben Dowd, told ZDNet.co.uk sister site silicon.com that the company has undertaken beta testing of the 3G device with 15 corporate customers, including Citigroup, Logica and McDonald's. "The feedback has been very positive," he said. "[They've] said: 'Yes it's useable, yes we like it, yes can we find out more?'"

Dowd added: "That sort of feedback, in addition to the feedback that Apple got — from about 30 percent of the Fortune top 500 customers — is all very positive. Absolutely this can be used in the business world."

Although he would not reveal figures for the number of enterprise users O2 signed up for the original device, Dowd said "a lot of business customers took it on the consumer tariff". He added that, as of last week, 130,000 people had registered interest in the iPhone 3G, of which "many" are business customers.

He said: "It gives us a gauge for a level of interest."

There are no signs that enterprise users have concerns about any potential security implications of deploying iPhones, according to Dowd.

The iPhone 2.0 comes with a software update that not only includes enterprise-friendly licensing of Microsoft's ActiveSync protocol — for push email, calendar and contacts — but also supports Cisco IPSec VPN for secure transmission of data, and WPA2 Enterprise with 802.1x authentication for Wi-Fi network protection.

Yet analyst house Gartner has described this as a basic level of security for business. And rival mobile company RIM, which makes the BlackBerry smartphone and has a large enterprise customer base, touts the security credentials of its hardware as something which gives it an edge over the iPhone.

But O2 said corporate customers are not displaying any security concerns about the iPhone, pointing to the fact that even the US Army has been testing the 3G device.

Dowd said: "It's got the Cisco IPSec VPN… If you take O2 as an example, we're using it through our corporate server, so we feel that the security is strong enough. Plus, clearly, the customers that Apple have contacted and we've contacted feel that the security piece is not a big issue."

However, one thing business customers will certainly have to weigh up is how they manage iTunes — as every iPhone user will need to have it running on their desktop for synching data.

Dowd said: "It's absolutely something that we need to communicate to corporate customers… so that they can get their IT support people to support that appropriately."

He added: "Ultimately it'll be [corporate customers] that decide whether they want their whole corporate base with iTunes on their desktops or whether they're going to limit it to a certain few… And we can work with their IT-support functions to make that happen."

Dowd said iPhone pricing for corporate customers — companies with more than 200 employees — will be bespoke "because their usage profiles and everything else can vary dramatically depending on which sector they're in". Smaller businesses can choose from O2's existing business tariffs. These tariffs range from around £30 per month to more than £200 depending on the package, and include a bolt-on charge of around £8.50 for the privilege of using an iPhone.

The bolt-on cost is largely because users get unlimited data and Wi-Fi usage, Dowd explained. He said iPhone users tend to gorge on data, consuming over and above other smartphone users. "What we're seeing [with] the iPhone [is], the level of data usage is nearly on a par with laptops," he added.

Existing iPhone customers can upgrade to an iPhone 3G for free — and switch onto business tariffs without incurring any penalties. And Dowd said these tariffs will enable enterprise customers to have mixed device portfolios.

He said: "You can balance your portfolio — so, if… you've got some BlackBerry [devices] already and you want some iPhones and maybe you've got some Microsoft-enabled devices as well, that's fine; you can put them all together… multi-users onto one bill."

"And that will suit a lot of customers from a continuity point of view, because they'll want to balance their portfolio rather than put all of their eggs into one basket," said Dowd.

Dowd said he expects the iPhone will do well in all business sectors and does not see it being particularly attractive or unattractive to certain verticals.

He said: "I don't think we're seeing one particular sector where it's going to be very strong and other sectors where there's going to be no interest because, actually, when you look beyond email, there is a need — particularly given the climate that we're in right now — for businesses to really embrace the whole mobilisation capability and drive out what efficiencies they can for their business."

Nor does he see it being more popular in big businesses than SMEs, or vice versa. "I think we're seeing interest across both of those segments. And I would expect high levels of demand in both," he said.

The launch of the software-development kit for the iPhone offers particular opportunities for enterprise, as business customers can develop bespoke enterprise apps, such as CRM, said Dowd. GPS means fieldforce applications will be able to link in to the device. "This stuff drives out real business efficiencies and cost efficiencies for corporates," said Dowd.

Asked whether he believes Apple always had an enterprise strategy for the iPhone, Dowd is unequivocal: "I think at the very start they were very clear about that — that, as they launched it, it was never just going to be a consumer device. They wanted to target all segments."

Dowd said O2 has extended iPhone distribution, with 16 of its long-standing partners in the B2B reseller space now signed up to supply and support iPhone 3Gs for enterprise users. This figure may rise to 22 as more contracts are inked, he added.