(Fortune) -- Steve Jobs has won over legions of new customers since he returned to Apple, but one key group has stubbornly eluded him: big business.
The reason isn't a mystery.
Apple's mercurial CEO decided a decade ago that corporate IT departments weren't worth the trouble. Though they buy tech gear by the truckload, when it comes to computers they often favor stripped-down, predictable technology - the stuff Jobs finds boring. Rather than chase that business, he has courted upscale consumers with innovative devices like the iMac and iPod that are as fashionable as they are functional. It's hard to argue with the results: Apple stock is up nearly 2,000 percent in the last 10 years.
But now as Jobs seeks to turbocharge sales of the 3G iPhone, he'll have no choice but to embrace the corporate stiffs. That's because while Apple's computer and iPod sales are healthy, analysts believe the popular smartphone has the most growth potential - and business buyers could be the key to its success.
Can Apple do it? With its strong brand and balance sheet, experts say now might be the perfect time to try. But the real question is whether Apple is willing to put the money and time into the humdrum work of treating businesses like first-class customers.
In the iPhone's realm, the most coveted customers are road warriors who read e-mail, surf the web, and handle multimedia files on the go. To date, most of them have embraced Research in Motion's (RIMM) BlackBerry, and devices running software from Microsoft or Symbian. But investors, believing that the iPhone can steal those customers away, have recently bid up Apple's stock on analyst hopes that the company can sell between 20 million and 45 million units worldwide next year.
Mark Tauschek, an analyst with Info-Tech Research Group, notes that though business buyers make up only 30 percent of phone users, they spend the most money. "To reach these lofty goals they have to make the leap to enterprise sales," he says. "That's where most of the pickup is."
There are already signs Apple is warming to businesses. The latest version of the iPhone, which goes on sale July 11, doesn't come in retail-friendly candy colors; instead, it's packed with features right off an IT manager's wish list: tighter security, support for Microsoft Exchange and Office, and software tools that let businesses roll their own custom applications, to name a few.
The new capabilities are enough to get Apple's handpicked group of outside corporate testers excited about the device; 35 percent of the Fortune 500, including Bank of America (BAC, Fortune 500), Morgan Stanley (MS, Fortune 500), Disney (DIS, Fortune 500) and Genentech (DNA), signed up to try out the software and tell Apple how to make it better. "Everything they told us they wanted we have built into iPhone 2.0 software out of the box," Jobs said when he unveiled it this month.
But now that they've tested it, will they buy? We won't know for several months. Wachovia (WB, Fortune 500) technology chief Jim Ditmore expects to include the iPhone among the devices employees can use for e-mail by October.
At Wells Fargo (WFC, Fortune 500), Steve Ellis, executive VP of wholesale services, notes that workers can't wait to get their hands on iPhones - he says he fielded two dozen employee e-mails the day Apple unveiled the business features. But while Ellis says he found Apple wonderful to work with, he acknowledges that winning over other IT managers could be a challenge for a company used to wowing consumers. "Enterprise is kind of a new thing for them."
Gartner analyst Ken Dulaney puts it more bluntly. "Apple's reputation's not good. Most of the companies I talk to say that when they bring the Apple rep in, the first thing he says is, 'Why should we work with you?' Not the kinds of practices that endear you to the enterprise."
And while Apple's penchant for dramatic product unveilings may thrill consumers and the press, it just annoys businesses who like to plan for new technology well in advance. Apple's decision to build all iPhones itself and offer service exclusively through AT&T in the U.S. has Gartner is recommending that clients who buy the devices avoid using specially developed iPhone software and stick with e-mail, calendar and contacts, in case relations with Apple or AT&T (T, Fortune 500) go sour and they need to switch to something like BlackBerry or Microsoft. That may sort of defeat the purpose of getting an iPhone - but businesses can't afford to put all their eggs in one basket. Says Dulaney: "The iPhone does have a place in the enterprise. It just might not be as broad as something like Windows Mobile."
Will business buy the new iPhone? - Jun. 19, 2008