Media, Marketers, Madison Ave Just Mad for Apple IPhone

Corporate Shift From RIM Explains Why There's an App for That

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SAN FRANCISCO ( -- If you've wondered why the marketing world is obsessed with creating apps for the iPhone, take a stroll down the hallways of Kraft Foods, Gannett and German publisher Axel Springer.

There you'll see a sea of iPhones as the brand makes incursions on RIM's BlackBerry, once acknowledged as the smartphone of choice for corporate America. In a recent conference call, Apple Chief Operating Officer Tim Cook said about 20% of Fortune 100 companies have purchased a total of 10,000 or more iPhones since the handset's release in 2007, and scores of government agencies and businesses have each purchased more than 25,000 iPhones for their organizations.

Apple Chief Operating Officer Tim Cook
Apple Chief Operating Officer Tim Cook
In many ways, the iconic iPhone is sneaking through the marketers' corporate back door: Consumers fall for it and decide they want to use it as their business phone, too. The handset's popularity among corporate smartphone users and its support of the Microsoft Exchange mail server and other enterprise requirements have forced more and more IT departments to support them, landing the iPhone on the list of company-sanctioned phones.

But consumer brand marketers are also subtly encouraging its use as they look to develop applications for the phone and seek input from employees. "Certainly for a company that says, 'We're going to put our content onto the Apple platform,' odds are that product will be supported in the organization as well," said Michael Gartenberg, VP-strategy and analysis at Interpret.

And in some cases, it's the other way around. Marketing people who are iPhone enthusiasts are likely to push apps. At Kraft, employees share iPhone best practices, favorite applications and company ringtones. As to be expected at a company that has crafted a much-buzzed-about iPhone application -- the iFood Assistant shopping and recipe utility -- there's also a repository of ideas for new-iPhone-application development. 

More than 4,500 employees, or about 5% of Kraft's staff, have iPhones that were partly underwritten by the company's stipend program, which gives eligible employees $100 toward any personal digital assistant they choose. That means Kraft would have to sell more than 450,000 copies of its 99¢ iFood app to recoup the iPhone stipend. Kraft declined to say how many times iFood has been downloaded, but it is among the top 20 paid apps in the lifestyle section of the App Store. 

Intangible benefits
According to Kraft, the iPhone delivers intangible benefits beyond the productivity gains the company is looking to reap by partially paying for employees' PDAs. "As a consumer-goods company, we want to be at the forefront in innovation and offering what our consumers are looking for," said David Diedrich, Kraft's VP-information systems. "Providing our employees with the same tools our consumers have enables us to better engage with them."

Axel Springer, Europe's largest newspaper publisher, made the iPhone its standard mobile device in July 2008. "Apple symbolizes creativity, innovation and aesthetics," said Christian Garrels, head of communications, digital and international media. "For us the shift to Apple is not only a technical [progression], it is an accelerator of the cultural modernization of our company."

Gannett, publisher of USA Today, has a branded app for the paper and gives iPhones to some of its employees. As employees experiment with apps outside the office, their fluency with the phone is generating ideas for what the company can do with the handset, said Matt Jones, VP-mobile strategy and operations at Gannett Digital. "If we didn't have that user base of people inside the company familiar with what the App Store and the power of the iPhone, at the end of the day, we wouldn't have had an app that was as successful," he said. As it is, Mr. Jones said, his whiteboard is "overflowing" with employee suggestions of iPhone apps and programs the company can build. The free USA Today app ranks No. 2 among iPhone newspaper apps, after The New York Times, according to mobile-ad-exchange network Mobclix.

Perhaps because of these companies' wholehearted embrace of the iPhone and its application platform, Apple has promoted the USA Today and iFood apps in its advertising and its stores. Kraft said its stipend program preceded the release of the iFood app. Both Kraft and Gannett said they do not pay Apple to promote their apps.

Executives at ad agencies said they see the iPhone user base expanding at their brand clients, but it's by no means the mobile standard. Agencies themselves tend to have disproportionately higher iPhone penetrations than the average business, but some are wary of iPhone myopia.

Regardless, Apple is making gains on RIM. Worldwide, its share of the smartphone market jumped to 13% last quarter, up from 3% a year ago, according to Gartner. RIM's global smartphone share last quarter edged up to 19% from 17% a year ago.

With a 3% share of the corporate installed base as of last year, the iPhone, however, despite its early success in the corporate world, still has a ways to go in unseating BlackBerry as the dominant enterprise phone. The handset remains dogged by the perception that it lacks BlackBerry's bullet-proof security. "The core IT-controlled enterprise, the classic RIM customer, is not going iPhone anytime soon," said Avi Greengart, analyst at Current Analysis. "The fact that you have a hacker community working to subvert whatever security Apple has put there is not a comforting thought to an IT manager."

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