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iPhone Exchange ActiveSync makes iPhone viable for businesses

Apple's support for Exchange ActiveSync on the iPhone will improve the viability of the device for business users. Find out how iPhone 2.0 will measure up against BlackBerry and Palm.

Service provider takeaway: Service providers can prepare for customer interest in the iPhone by learning how the device measures up to BlackBerry and Palm in cost and security.

The long-quiet business-oriented mobile device market could be in for a shakeup triggered by changes to Apple's iPhone, as well as this week's debut of the BlackBerry Bold. Service providers who are keeping pace with market shifts can fill a need for their customers and, of course, make money while doing so.

Research In Motion (RIM) ignited the market with its BlackBerry device and proprietary operating system (OS) more than a decade ago. In 2003, Handspring (now Palm) introduced the Treo 600, which combined personal digital assistant and phone, controlled from a touch-screen interface. Consumer acceptance of the Treo 600 quickly led to its adoption in the mainstream business market, first directly to "prosumers" and then to larger companies' IT departments. The Treo presented a fantastic opportunity for value-added resellers (VARs) to provide solutions that integrate mobile applications and mobile email and to earn commissions on device activations.
Over the years, the mobile operating system market settled into tranquil maturity, with BlackBerry and Windows Mobile the dominant OSes.

Then, last summer, Apple released the iPhone with much fanfare. The device clearly broke new interface ground and had the mindshare needed to drive sales among consumers, but the phone had no native support for corporate email systems such as Exchange Server, limiting its usefulness as a business tool. Apple changed that scenario in March with the announcement that Exchange ActiveSync support will be built into iPhone 2.0 software, which is due to ship in June. Support for Exchange ActiveSync will bring accessibility to popular features such as Exchange-based calendar, contacts and email synchronization.

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iPhone's support for Exchange will have an impact on the marketplace, and service providers should be prepared to help customers who want to migrate to the iPhone. There are service cost advantages with the iPhone compared to BlackBerry, and that incentive alone could push some customers to make the switch. RIM isn't sitting still, of course, and just this week the company announced the BlackBerry Bold, which is seen as a strong competitor featurewise to the iPhone.

Like the Treo 600, the iPhone has the potential to bridge the gap from consumer use to business use. It has a unique user interface that could pave the way for new business applications. For example, its support for video could be extended into business training applications, and its mapping tie-in with Google Maps could pave the way for new logistics applications. More importantly, its programming language, Objective C, can be leveraged by the independent software vendor (ISV) community to develop feature-rich applications that make use of iPhone's unique capabilities.

Pricing breakdown

Assuming AT&T's service area coverage is acceptable, the iPhone can carry a monthly recurring charge lower than the BlackBerry and the Palm. When customers subscribe to the BlackBerry service, they pay a fee ($45 for the personal plan) to the carrier so that they can connect to RIM's network operations center, which handles the connectivity between the customer's email server and mobile device -- and provides an added layer of security (more on that below). The iPhone carries a $20 fee for data access via AT&T Edge. It's important to note that the iPhone works only with AT&T service; the two companies have an exclusive multiyear agreement. RIM's BlackBerry, on the other hand, is supported by a variety of providers. Your customers might not be keen on being locked into AT&T service.

Here's a per-device cost comparison for AT&T service for the iPhone and BlackBerry, as well as the Palm:

iPhone BlackBerry Palm
Voice plan (900 minutes) $59.99 $59.99 $59.99
Data plan $20 $45 $35
Total monthly recurring costs $79.99 $104.99 $94.99

The Palm devices themselves are less expensive than both the iPhone and the BlackBerry. Unlike the other two, iPhone has no activation rebate. The BlackBerry 8820 is listed at $499, the same price as the 16 GB iPhone, but with a new activation, the cost drops to $299 for the BlackBerry. The Palm Centro is $79.99 after rebate, and the Palm 755 is $199 after rebate. That said, Palm devices really don't compare feature-wise with the BlackBerry and iPhone.

Security concerns

It's clear that Exchange ActiveSync is the key to the iPhone's adoption among businesses. However, there are security weaknesses related to ActiveSync, as there are with Windows Mobile. The BlackBerry is inherently more secure, since traffic to a corporate network goes through RIM's operations center. With the iPhone and Palm, the process of securing the devices when connected to the corporate back end is more complicated. Therefore, small businesses less concerned about security exposure might be more willing to allow direct connections from the iPhone to their Exchange Server. Big companies will most definitely want to add layers of security between the iPhones and their Exchange infrastructure.

If businesses do decide to adopt the iPhone en masse, service providers are in a good position to make money on implementation services related to getting all the pieces to work together securely. Companies that were stymied by lack of Exchange support in the first-generation release of the iPhone software will be happy to hear of support for Exchange and are likely to seek help from systems providers in getting the darling of the mobile device market to sync with Exchange.

About the author

Alex Zaltsman is a technology entrepreneur. He co-founded Exigent Technologies and over a 10-year period developed its IT consulting practice. He has worked with companies such as Johnson & Johnson, AT&T Labs, Lucent Technologies, Wal-Mart and Philip Morris, as well as many small businesses. Alex is also on the board of directors of the New Jersey chapter of Entrepreneurs' Organization, and he maintains a blog at

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