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How Apple is Stealing RIM's Corporate Business

When the iPhone premiered back in 2007 it didn't make a good impression on the corporate side. It lacked the security and strong integration with standard office software offered by corporate favorite RIM (RIMM). But in the three years since, Apple (APPL) has made big gains in the business world by correcting these problems, while RIM has failed to evolve with the smartphone market.

Analysts were harsh on the iPhone's enterprise potential when it was first launched. "This is basically a cellular iPod," wrote Gartner's Ken Dulaney. "You'll have email in a place that's unsecured. There are no firewalls on the device. There's no ability to wipe the device if it's lost."

Apple responded to these problems. In 2008 it updated the iPhone so it could sync with Microsoft's (MSFT) Exchange email program and gave users the power to erase data remotely from a phone that was lost or stolen. A year after that the company added features to so users could encrypt data. As companies like Kraft (KFT) and Oracle (ORCL) embraced the iPhone, analysts changed their tune.

The results have been dramatic. RIM still holds the pole position, with 70% of IT departments supporting the device. But Forrester Research reports that 29% of corporate IT departments now support the iPhone, up from just 17% a year ago.

While Apple has made important adjustments to its product to fit the business world, RIM has failed to evolve to the demand of consumers. The web browser on its Blackberry devices doesn't come close to delivering the same full fledged web browsing experience as iPhone or Android devices. That's a big drawback for business travelers who want to use their phone in place of a heavy laptop.

Perhaps most importantly, RIM has failed to capture the interest of software developers. Apple offers over 200,000 different applications in its store and the Android market has grown quickly to boast more than 40,000. RIM, by comparison has just around 7,000 apps. Software is what really drives demand for phones, and companies are increasingly allowing their employees to decide which device works best for them.

After reporting some disappointing first quarter results last week, RIM's CEO Jim Balsillie promised the company would be releasing new devices soon that were a "quantum leap" beyond what's in the market today. It will need that to defend its prime position among business users.

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