Apple Tweaks iPhone for Business Uses, Seeking Competitive Edge

CUPERTINO, Calif. (AP) - Apple Inc. wants the iPhone to become a
business e-mail gadget - and a portable video game machine that
might also help users manage their health records.
Cupertino-based Apple unveiled new software Thursday that
reflects its intensifying effort to court business customers and
placate third-party developers who want to build iPhone
applications but have been locked out. A beta version of the
software went out Thursday; the full version will be available in
June.
With the announcement, Apple is foraying beyond the consumer
cell phone market while simultaneously supporting innovations for
the phone that could spur sales. But not all developers will be
happy with Apple's approach, since the company will retain tight
control over what programs go on the iPhone.
To help fuel development, venture capital firm Kleiner Perkins
Caufield & Byers has created a $100 million "iFund" to support
new companies developing the next generation of applications.
Kleiner Perkins partner John Doerr, who's managing the fund,
said he's particularly interested in funding applications in health
care.
"That should be enough to start about a dozen Amazons or even
four Googles," said Doerr, who helped fund both companies in their
infancy. "And if we're running out of money we'll run around and
look for more."
Apple has forecast that it will sell 10 million iPhones by the
end of the year, giving the device roughly 1 percent of the
worldwide cell phone market. In January Apple CEO Steve Jobs said
the company has sold 4 million iPhones since they went on sale June
29.
The iPhone has claimed 28 percent of the U.S. smart phone market
since its release here in June, according to Jobs. But many
businesses have shied away because they want the device to work
better with their corporate e-mail systems.
To woo more business customers, Apple said Thursday it's
tweaking the iPhone to support Microsoft Corp.'s Exchange software,
which addresses a key weakness in the gadget and puts it in more
direct competition with Research in Motion Ltd.'s BlackBerry and
Palm Inc.' Treo smart phones.
Philip Schiller, Apple's senior vice president of worldwide
product marketing, said the software update will give iPhones the
security and integration of e-mail, calendars and contact lists
that businesses have been demanding.
"This is a great, great way to solve all those requests,"
Schiller said.
One thing noticeably absent from the presentation, however, was
support for IBM Corp.'s Lotus Notes e-mail package, another program
widely used by businesses. IBM announced in January that it was
partnering with Apple to make the software work on iPhones, but
there was no mention of the partnership Thursday.
The company's decision to allow developers some access to the
closed device represents an about-face of sorts, because developers
have been able to build iPhone applications only through the Web
and weren't given access to the same software Apple developers use.
In fact, one software update for the iPhone disabled many
third-party applications installed on the handsets.
Apple still wants to approve every new application.
Jobs said the approach could become more "liberal" over time
but emphasized that Apple's control will ensure the security and
reliability of the device.
The company will sell outside developers' iPhone applications
through the new App Store. Developers will pay a $99 fee to
register and will set the price for their applications. They'll get
70 percent of the revenue and Apple 30 percent, Jobs said.
"This is the best deal going to distribute applications to
mobile platforms," Jobs said, predicting that many developers will
choose to offer their programs for free to boost their adoption.
The event at Apple's headquarters Thursday included
demonstrations by executives from Electronic Arts Inc. and Sega
showing off video games the companies have developed for the
iPhone, plus applications like a Salesforce.com program for
tracking contacts and sales leads and one by Epocrates Inc. to help
doctors and other health care professionals find drug information
and medical news.
Other companies also are developing iPhone applications.
Germany-based business software maker SAP AG says the latest
version of its customer relationship management product already
works with the iPhone and the BlackBerry.
"(W)e want to make sure that, down the road, if the iPhone
becomes a popular mobile device for the enterprise customer, SAP is
among the first to support that outcome," the company said in a
statement.