All My Boss Wants for Christmas is a Corporate iPhone

In recent years the must have accessory for corporate exec’s has been the Blackberry. So addictive has been the pull of the Blackberry that by 2005 it displaced the iPod as the must have gadget; however times are changing and now the iPhone is out to tackle the Blackberry for its corporate crown.

Whilst the first iPhone generated much hype in the consumer market, its use in the corporate market was impacted by issues relating to data speeds, security and management. (Whilst there is no strict definition; the mobile industry tends to view organisations with > 200 mobile users as corporate users.) In the original iPhone there was no 3G capability which made downloads slower, there were few corporate standard security features and there was no way to push settings or policies down to devices, making fleet management extremely challenging for IT teams.

Since the iPhone 3G was launched in the UK in July 2008, Apple and O2 have been keen to promote their new device as a real alternative for Blackberry fans. There is no denying that the iPhone 3G is going to prove extremely popular with users and the 2.0 operating system has made up for many of the previous security weaknesses.

Unlike its predecessor the latest iPhone features push email and support for Microsoft Exchange 2007 as well Cisco IPSec VPN (to support secure VPN access to corporate IT networks) and so it is offers much greater potential for deployment into larger organisations. There is also a remote wipe facility; however IT teams need to be aware that this is not the same as the Blackberry “Remote Kill”, and requires security settings and policies to be set on the device as with other Windows Mobile devices before this can be activated.

One of the issues is that if the users choose not to accept settings sent to them or they are not configured before devices are released to users then you could find that if one of your exec’s manages to leave their iPhone in the back of a cab, then your corporate information could quite easily end up in the public domain, and with a 8Gb or 16Gb drive this could be quite a lot of information.

There are however a number of other potential issues that your organisation should consider before making a wholesale change to the iPhone 3G, which we discuss in this article.

Taxation Implications

In April 2006, the chancellor made some changes that directly impacted on the way that mobile phones are treated for taxation. The first of these was to clarify the definition of a mobile phone; this was important because if a mobile phone does not qualify as a mobile phone under HMRC definitions then it doesn’t automatically qualify for tax and NI exemption. Under HMRC definitions a mobile phone is a device whose primary purpose is to transmit and receive spoken messages. Under this definition PDA’s, Blackberry’s and iPhones are probably more likely to be defined as computers.

Whether a computer is taxable or not is quite a grey area and depends on whether personal usage of the device is significant. The significance aspect relates, in part, to whether the provision of the device is primarily for the benefit of the business. If it is, any subsequent personal usage could be viewed as “not significant” as the provisioning of the device was not designed to give rise to a benefit to the employee and would be tax exempt.

Whilst it could be reasonably argued that Blackberry’s purpose was essentially for the benefit of the business (remote access to e-mail); the extent of consumer functions within the iPhone may be the undoing of its tax free status. The consumer heritage and the inclusion of the next generation iPod within the device does give significant cause for corporates to evaluate whether the iPhone is primarily a business device or is it in part a perk?

Over time this area will become more contentious as the boundaries between different IT devices blurs. Especially if Apple continues to shout about features such as find your nearest Starbuck’s, no matter how useful such a feature may be to the individual user.

With respect to VAT, the main area to consider relates to employee’s who claim back the cost of the mobile usage via expenses. It has become common in recent years for employees to put the burden of accounting for personal mobile usage on to employees by putting the contracts/billing in the employee’s name. Under VAT rules the employer cannot reclaim VAT on the line rental change element and the employee would need to declare any payment by the company for the line rental on their self assessment and P11d declarations. As the iPhone will incur a significantly greater line rental change than stand devices, this will create an admin burden for finance who risks fines if they do not accurately declare and account for these costs correctly as well a potential tax liability.

Cost Control

The iPhone bolt-on for corporate users is £15 per device per month and for this the user is entitled to enjoy unlimited browsing, downloading, email and Wi-Fi access. In the UK, high volume users will find this offers reasonable value, and as the device screen and features are realistically usable compared to other smaller screened devices, it should remove the need to supplement users with separate 3G dongles or cards; however for lower volume users that £15 per month will offer significantly less value for money.

The access to Wi-Fi hotspots is also a useful addition to the service; and is available at BT Openzone and The Cloud hotspots, as well the wide range of free access hotspots that already exist at places like McDonald’s.

International users do however need to be aware that the iPhone does not currently offer the flexibility when roaming that the Blackberry does. Blackberry users can receive and send their mail for around £5 per day or £20 per month when roaming. On the iPhone you will have to subscribe to one of O2’s data abroad bolt-on’s which offer either 10Mg of data for £17 per month or 50Mg for £42 per month – there is currently no unlimited version. These subscriptions have a minimum period of 1 month and require 3 days notice before the start of the next billing period to be cancelled. This will inevitably lead to corporates paying for roaming bundles that are under utilised.

If however you don’t remember to sign up for the bolt-on, then you’ll be in for a surprise bill, with a 1Mb download of data in an EU country costing you £2.55 and the same amount of data in a non EU country costing £6.00. One of the elements that is likely to change with the iPhone corporate user, is that the boundary between work and personal life will become totally removed. The iPhone offers users integration to their favourite sites like facebook and such integration can only drive up data usage. Providing users with the ability to continue to use these functions whilst abroad will only result in significant unexpected increased in costs.

Usability

Apple users always seem to be more positively vocal than PC users about their devices and whilst there is no denying that the iPhone a great device, it is not without its own usability issues. AKJ has seen a number of these reported that your organisation may wish to give consideration to.

The first one relates to the battery – the iPhone battery is sealed into the unit, and so a replacement battery requires your user to send their device away for about a week to have the replacement fitted. Not only is it more costly to do this; however the time delay and hassle will become a drain for even the most tolerant of IT teams. On a day to day basis, this also creates issues for high volume users, who will have no spare battery to change at will.

Users report also that the e-mail has limitations compared to Blackberry, including no search facility or ability to select multiple items within an email folder, making day to day inbox and folder management more tedious.

Finally when browsing, there is no Java/Flash compatibility so certain content won’t be displayed, and it is not possible to set a zoom level, so you’ll find yourself having to constantly zoom in and out to be able to read pages.

Summary

Whilst there is much talk of Blackberry vs iPhone, the reality is that both can offer significant benefits for business users, and it is likely to be the PDA’s and other windows mobile devices that will lose out. Whilst some may argue that the iPhone is not yet ready to take on the corporate world, there will be many exec’s who will be demanding it from their IT teams. As a result it is likely to be a big corporate success too; however we recommend that you prepare well before letting it into your organisation if you are to avoid the potential downside of iPhone ownership.