Apple iPhone winning corporate fans despite flaws

BOSTON/SAN FRANCISCO (Reuters) - Mike de la Cruz, a senior vice president with German software giant SAP AG SAPG.DE, shows off the latest weapon of the corporate road warrior -- his iPhone.

A hit with consumers because it combines a phone, music player and Web browser, analysts say Apple Inc's AAPL.O iPhone is gaining ground as a business tool as well, and could one day rival Research in Motion Ltd's RIM.TO popular Blackberry line.

Although sought out by high-end consumers, Apple products have never been accepted widely by business, so major corporate adoption of the iPhone would be a breakthrough.

“It’s fun,” de la Cruz said in Boston at an industry conference earlier this week. “It’s so popular.”

Indeed, it is popular enough that software makers such as SAP, Inc CRM.N and scores of smaller developers are letting sales and finance teams work away from the office on their iPhones.

On Monday, SAP broke with precedent by saying it would introduce a version of its upcoming customer relationship management software for the iPhone before launching versions for mobile devices from RIM and Palm Inc PALM.O.

The reason? SAP’s own salespeople were clamoring for it, saying the iPhone was easier to use, according to Bob Stutz, SAP senior vice president in charge of developing customer relationship management software.

“This isn’t necessarily iPhone deployment by way of the IT department, but it’s by people who really want to use this device and IT is responding in a really positive way,” said Michael Gartenberg, an analyst with market research firm Jupiter Research.

But analysts said several things need to happen before the iPhone becomes a serious challenger, the most crucial of which is more support for corporate e-mail.

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Blackberries became an indispensable part of the business world for their ability to forward e-mail from a corporate network straight to the phones.

The iPhone’s e-mail service can be configured to work with corporate systems, but it does not “push” the entire message to the device. Contacts and calendars also cannot be updated over the airwaves, but require the iPhone to be physically docked with a computer.

Since many businesses use Microsoft Corp's MSFT.O Outlook software for e-mail, contacts and scheduling, Apple would need to license Microsoft technology that lets mobile phones work with Exchange, the server software that underpins Outlook.

Apple need only look at its recent past to find a business justification for working with its long-time rival.

“What really made the iPod take off was when they made it compatible with Windows. So if they made the iPhone compatible with Windows e-mail, meaning Outlook, that would really make sales take off,” said Shaw Wu, an analyst with American Technology Research.

E-mail is not the only stumbling block to wider corporate adoption of the iPhone.

Analysts said some potential business buyers are holding out for a model that runs on newer cellular technology that enables faster Web connections. AT&T Inc T.N, the exclusive U.S. carrier, said last week it expects that kind of iPhone in 2008.

Moreover, while surveys show more than 90 percent of iPhone users are happy with the device, several executives have gone on the record, including at the Reuters Media Summit in New York last week, as saying it is too vexing to tap out long e-mails on the touch screen.

People enter the T-Mobile Store in Cologne, November 9, 2007. A hit with consumers because it combines a phone, music player and Web browser, analysts say Apple's iPhone is gaining ground as a business tool as well, and could one day rival Research in Motion's popular Blackberry line. REUTERS/Ina Fassbender

After a launch late in June, Apple sold 1.12 million iPhones in its fiscal fourth quarter ended in September. RIM shipped more than 3 million Blackberries in its second fiscal quarter ended September 1.

Most iPhone sales were to non-corporate users, but Apple says the device is great for business.

“We’ve said many times that we’re providing a solution in iPhone that many businesses love,” Apple Chief Operating Officer Tim Cook said in October. “Clearly, there are some businesses buying them and very much enjoying them.”

An Apple spokeswoman declined to discuss future iPhone plans, saying only that the company was happy so many software makers were interested.

Analysts who follow the company speculate it may eventually offer a model with a keyboard, or use technology that mimics the sensation of pressing real keys by making the phone vibrate for a split-second when the screen is touched.

“If they get those pieces together, it would make iPhone a much stronger competitor,” Wu added.

Editing by Andre Grenon