Telecom & Wireless

Apple's iPhone Strategy For Business, A Long Journey in the Making (AAPL, RIMM, MSFT, PALM, T)

Apple has determined that the best way to reach and ultimately exceed its goal of selling 10 million iPhones this year is by adding more features and opening up the code and making the system more interoperable with other systems.

Today it has made efforts to become more business-friendly than it is currently.  This is one of the issues that has constantly been brought up by fans and critics alike. Steve Jobs has gone as far as supporting the Microsoft (NASDAQ: MSFT) Exchange program to push email to the iPhone in order to allow iPhone to be more business email oriented.  Apple even gave details of a software toolkit that lets outsiders write applications that can be purchased via the iTunes store.  It appears that much of the software will not be available to developers until June 2008, so don’t think that all of your iPhone wishes are going to be instantly met tomorrow or next week.

This is a direct attack in the space dominated by Research-in-Motion (NASDAQ: RIMM) and that which was part of the Palm (NASDAQ: PALM) space. The truth is that this can impact R-I-M, and almost anything can impact Palm since they have been losing out in a field they had a huge jump in.  Research-in-Motion shares are down over 3% to $99.00 today, and Palm shares are down over 3.5% to $6.01 today.

The truth is that many small business users I have run into are alreadyusing the iPhone for their businesses.  They may not get all of thesame features that they get in others, but most are happy to use theiPhone.  The most common complaint is “the learning curve” and the lackof a keyboard, but that is from my “user reviews” rather than fromlarger companies.

Kleiner Perkins just launched a fund to go after developers to developnew tools and applications for this space.  Developers have beenteaming with ideas from what we have heard and read, so it sounds likethe Apple-crowdsourcing model may actually take place here.

Apple’s largest difference between it and the rest of the universe isthat the company has stayed loyal to the technologically orientedconsumer user rather than the bulk of the business climate.  It isnon-existent in the government and enterprise markets.  Apple still hasmuch room to grow in Europe and with the wealthy throughout Asia.

The street is worried that this will drastically cut into R-I-M’smarket.  This may be unwarranted, at least for quite a long period oftime.  So far Apple is married to AT&T (NYSE: T), although it hashinted that it would not be that way forever.  R-I-M just came out andupdated its subscriber forecasts to 15% to 20% higher than the 1.82million subscriber adds for the quarter-end in March that is hadforecast in December.  It now expects 14 million subscribers by the endof the quarter.  Apple could easily make their efforts easier if ittried to get out of the exclusivity in AT&T, but until then itisn’t going to be a destroyer of Research-in-Motion.  Palm is adifferent story, but its woes are known.

On last look, Apple shares were down 1% at $123.10.  This is going to help get the iPhone more subscribers and more users.  But the company is going to find that this is not just an effort that pays off rapidly.  This is a quest that will take the Knights of the iTable many years.

Jon C. Ogg
March 6, 2008