Business - Slowly,iPhone is winning over business people

Connie Guglielmo

SAN FRANCISCO : Kevin Willis, a retired basketball center turned entrepreneur, has given up on the BlackBerry and now depends on an iPhone to stay in touch with buyers, suppliers and the high-profile clients who wear his custom jeans.
"It does everything I need a phone to do for me and my business," said Willis, 46, who left the National Basketball Association last year after more than two decades and now helps run the Willis & Walker clothing company in Atlanta.
That is exactly what Steve Jobs, the chief executive of Apple, wants to hear. After more than 30 years pitching first Macintosh and then the iPod to consumers, Apple is using the iPhone to attract a new audience: business buyers.
Jobs is trying to revive a stock that has slid nearly 48 percent in 2008 and to keep momentum after revenue almost quadrupled in the past five years. Apple, based in Cupertino, California, gets at least 80 percent of sales from consumers and half of its revenue in the United States, putting the company at risk if people cut spending, Sanford C. Bernstein said this past week.
Apple already had suffered with many of technology's highfliers as investors pulled back from stocks like Apple and Google. Continuing questions about Jobs's health also weighed on the shares. Now Apple may have to cut prices to draw budget-conscious U.S. buyers, compressing profit margins and limiting the shares in the next three to six months, a Morgan Stanley analyst, Kathryn Huberty, wrote in a recent report.

When Jobs introduced a faster 3G, or third-generation, iPhone in June, he said success depended in part on Apple's ability to win over corporate customers.
Apple added business features that mimic some functions in BlackBerry, which is made by Research In Motion and occupies more than half the market for e-mail phones in the United States.
Jobs spent much of his time on stage talking up new security functions and a link to the Microsoft business e-mail message system. Thirty-five percent of the Fortune 500 companies are testing the iPhone, Jobs said. Those companies includes Walt Disney, Oracle, Genentech and Kraft Foods.
"Not so bad," Jobs said at the event.
The challenge is pulling it off. Apple has to convince companies that the iPhone can be a serious tool for business - and not just the latest hip product. And Jobs has to sidestep a flood of competitors determined to repel his advances.
The market for smart phones that send e-mail messages and gain access to the Internet may more than double to 288 million units in 2009, according Gartner, the technology research company.
In August, Gartner hedged its endorsement for the iPhone 3G, saying it was ready as an alternative to the BlackBerry if users were willing to compromise on security and battery life.
"We've seen significant interest in iPhone from enterprises," said an Apple spokeswoman, Jennifer Bowcock.
A Research In Motion spokeswoman, Marisa Conway, had no comment when asked about Apple's efforts to win business users for the iPhone.
Threats to Research In Motion abound now. The company, based in Waterloo, Ontario, said last week that it would sacrifice profit to spend more on building lower-priced products and on marketing campaigns to stop customers from defecting to other brands.
That announcement led to the biggest drop in the shares in more than eight years last week as analysts said the iPhone's $199 price might limit how much Research In Motion could charge for its latest products, making them less profitable than older models. In June, Samsung Electronics began selling an iPhone rival called the Instinct for $130, and T-Mobile USA introduced a $179 smartphone last week with programs from Google.
Apple, which reached a record $202.96 in December, was up $3.67, or 3.7 percent, at $103.77 in Friday afternoon trading in the United States.
Research In Motion, which has fallen 37 percent this year, was up $3.41 Canadian dollars, or 5.1 percent, at 70.52 dollars, or $65.24.
"The iPhone will likely be the first Apple device for millions of corporate users," said Andy Hargreaves of Pacific Crest Securities in Portland, Oregon, one of 27 analysts tracked by Bloomberg who recommend buying Apple shares. "Positive impressions could drive stronger demand for Macs over time."
Sales of the Mac, which provides nearly half of Apple's revenue, climbed 40 percent to $10.3 billion in the year that ended in September 2007.
It would not be the first time Mac sales were spurred by demand from another Apple product. Consumers, enamored of the iPod players, are buying Macs in record numbers.
Apple overtook Acer in the second quarter to become the No.3 maker of PCs in the United States, behind Dell and Hewlett-Packard, according to Gartner.

Alan Weckel, an analyst with Dell'Oro Group in Redwood City, California, said he wanted to be able to use his iPhone at work one day soon.
"I do not use the iPhone for work, only because our company doesn't subsidize the phone or plan," he said. "If they chipped in, I would use it."
Web report jolts Apple shares
An Internet report saying that Jobs had suffered a heart attack sent Apple shares down Friday before it was quickly denied by the company, Reuters reported from New York.
Responding to the report, by "iReport," a citizen journalist Web site owned and operated by CNN, an Apple spokesman, Steve Dowling, said via e-mail, "It is not true."
The report said Jobs had been rushed to an emergency room after suffering "a major heart attack."
Asked for further details about the status of Jobs's health, Dowling repeated, "The story is not true."
The report has since been removed from iReport. A spokesman for CNN was not immediately available for comment.
Apple shares, which have in the past been shaken by the question of Jobs' health, climbed in early trading but retreated as the report gained momentum on blogs. The stock at one point was down more than 5.4 percent, and hit a 17-month low of $94.65.