IT departments are finally starting to buy Apple's smartphone, says a Deutsche Bank report

Click to enlarge. Source: Deutsche Bank

"There is growing evidence that the iPhone is making inroads into the Enterprise," writes Deutsche Bank research analyst Chris Whitmore in a report to clients Monday.

According to his estimates, Apple (AAPL) by the end of the year will have shipped about 2 million iPhones into corporate accounts through various routes, including internal IT department purchases and formal reimbursement policies.

That would give Apple about a 7% share of the enterprise smartphone market this year, up from 2% in 2008.

IT departments were famously resistant to the iPhone when it was launched two years ago. That resistance has begun to melt, writes Whitmore, for several reasons:

• User satisfaction. He cites the recent J.D. Power survey that named the iPhone "best in class" for both the consumer and enterprise markets
• Virtual keyboard. The initial perception that physical keyboards are critical for enterprise users has proved to be a "fallacy," says Whitmore.
• Enterprise applications. Among the 95,000 apps available for the iPhone, Whitmore estimates that 6,000 are enterprise-related, illustrating what he calls the "accelerating utility of the platform."
• Sluggish competition. The incumbents, Research in Motion (RIMM) and Microsoft (MSFT) Windows Mobile, with >60% and 20% enterprise share, respectively, "are years behind Apple," he writes, "and appear to be losing ground in Developer support / Application development."

See also:

• J.D. Power: iPhone is No. 1, again
• Top 10 reasons IT won't support the iPhone
• Forrester: Top 4 reasons IT should support the iPhone

[Follow Philip Elmer-DeWitt on Twitter @philiped]

San Francisco is using advanced technology – and the strong arm of government – to turn the city into one of America's greenest.

By David Ewing Duncan

Gavin Newsom, mayor of San Francisco

On Pier 96 on San Francisco Bay, a dirty, smelly leviathan of a machine roars and vibrates as it organizes 750 tons of refuse each day into neat cubes of plastic, paper, and metal.

It may look crude, but this three-story-high knot of conveyors, computers, bins, and gears is a central part of San Francisco's growing effort to use technology and ingenuity as the most innovative companies do: to cut costs, solve problems, and improve life for customers (or in this case, citizens).

Communities that embrace technology in this way are increasingly branding themselves "smart cities" — a fancy marketing term describing a place that strives for efficiencies in mobility, construction, energy, and transportation, usually with the help of the latest digital or green technology.

Stockholm uses sensors, software, and computer networks to monitor traffic during peak periods. Shanghai boasts the world's first low-pollution magnetic railway that transports passengers at more than 100 mph. Massachusetts plans to install 300 wind turbines in its towns and cities.

Green tech
San Francisco's major push has been the deployment of technology — high and low — to address environmental issues.

For instance, residents of this green-conscious city can hop onto a low-carbon-emission bus tracked by a GPS system; the buses wirelessly feed data to a central computer. Analytical software sends estimated bus arrival times to low-power LED displays found at a handful of solar-powered bus stops. (The city plans eventually to build these solar shelters, designed by local architect Olle Lundberg, throughout the city.)

Riders can check e-mail at bus stops with free Wi-Fi. Even rubbish has gone high tech: San Francisco, with local media design company Haku Wale, built an application for Apple's iPhone that gives users information on the nearest recycling or trash disposal facility.

San Francisco's techno-savvy — guided in part by neighboring Silicon Valley — has helped burnish its standing as a smart city. (The Natural Resources Defense Council, an environmental group, ranks it as the nation's second-smartest large city, after Seattle.) But attacking urban inefficiencies also requires aggressive lawmaking — and shrewd political skills to win citizen support.

Under Mayor Gavin Newsom, San Francisco has enacted some of the nation's toughest regulations for recycling: Non-recyclers face fines, while those who recycle get breaks on their trash pickup fees. As a result, San Franciscans now recycle 72% of their trash.

The city also has targeted a reduction in greenhouse gas emissions to 20% below the levels in 1990 — stricter than the levels called for in the year 2012 by the 1997 Kyoto Protocol — by reducing carbon dioxide output in city vehicles, enacting ultra-green building codes, and encouraging less driving.

The city has plans to expand a pilot program with rental service Zipcar, which has made hybrid vehicles available in the city. (For more on Zipcar, see "The Best New Idea in Business".) Newsom also ponied up for a scattering of charging stations for electric vehicles.

The city plans to introduce smart cars, smart scooters, and motorized bicycles in a joint project with the Massachusetts Institute of Technology's Media Lab. These electric vehicles can supplement public transit by helping get people from their homes to bus stops and train stations, says Ryan Chin, a co-founder of the smart cities project at MIT's Media Lab.

Private partners
Going green isn't cheap. San Francisco is offsetting some of its expenses by partnering with corporations: Outdoor-advertising giant Clear Channel is covering some of the costs for the solar bus shelters. But the city also dedicates ample tax dollars and city resources to green efforts.

Jared Blumenfeld, director of the city's Department of the Environment, credits residents with giving the city the leeway and funds to experiment. "We are being asked to do these things by our citizens," he says. Still, not all of Newsom's grand plans have panned out. A public-private scheme to outfit the city with Wi-Fi flopped two years ago, partly because of political infighting.

Back at Pier 96, plant manager John Jurinek is greeting a new shift of workers arriving to operate the great recycling machine. It runs 16 hours a day — the rest of the day is devoted to cleaning and maintaining the mechanical gears and computing equipment that sort and package the recyclables.

Jurinek walks on catwalks high above the machine, checking mechanisms that separate paper from glass and tin from plastic. San Francisco sells those items to help recoup the cost of the program, and Jurinek says a major part of his job is to keep track of the shifting markets for the city's refuse.

Right now he uses the usual tools — phones, e-mail, the Internet — to find customers and set prices. But if there's a smarter way to sell trash, there's a good chance San Francisco will find it.

San Francisco's smart initiatives: See how the city has used technology to encourage urban efficiency.

Verizon, Sybase and Quickcomm team up to manage corporations' mobility needs. Their service just scratches the surface

Chen wants to help your company go mobile. Photo: Sybase

Telecom giant Verizon (VZ) says it is launching a suite of services to help corporate IT departments manage their fleets of mobile devices. Corporate clients can hire Verizon to track their inventories of phones and monitor billings, add and drop devices as employees come and go, enforce security policies on phones and even remotely deliver applications and data to employees' handsets.

Verizon is partnering with software company Sybase (SY) and Quickcomm, which specializes in telecom-expense management, to offer a one-stop shop for companies looking to outsource mobile operations.

Analysts' reports suggest there's a need for such tools: Forrester Research estimates that by 2012 nearly three-fourths of workers worldwide, or nearly 400 million people, will be using mobile devices for work.

But the Verizon offering, which today focuses more on devices and enforcing a company's computer policies on mobile devices, addresses only part of the opportunity.

Mobile apps for enterprises – not as easy as it sounds

A growing number of companies are eager to move desktop applications to mobile devices, and may even want to develop new, custom applications for their businesses that take advantage of mobile networks.

Michael Marcellin, a vice president of product marketing for Verizon Business, says such application management services are under development. The company says it hopes to offer support for enterprise apps in 2010.

Delivering enterprise apps – customized or off-the-shelf – to a diverse global workforce is no easy task: Workers likely will have dozens of different handsets of varying vintages, and if the company operates in multiple countries, workers also will use different carriers' networks.

Adding to the complexity: The vendor of the application in question may or may not have a mobile version of their software. Or they may not be ready to move to delivering the software over the Internet cloud, which is the way many mobile workers want to access their applications.

Sybase CEO John Chen says his company has been working on these issues for some time now, as part of an effort to diversify the database-management company's revenue stream.

A few years ago the company began pursuing enterprise mobility in earnest with mobile device management and delivery of mobile messaging services. "Enterprise mobility opened up a whole new world for us in terms of who we partner with," Chen says. "Companies with big names and big reach are working with us, and it is creating (wireless) franchise value for Sybase."

In addition to Verizon, Chen says, the company has done wireless technology work for companies such as Samsung and Western Union (WU).

Sweet spot: Software cred + mobility experience

Chen says Sybase's experience in the software world coupled with its new focus on wireless makes it an ideal partner for companies seeking to migrate, say, SAP (SAP) solutions to a fleet of smartphones.  (SAP is a Sybase customer and partner.)

Indeed, Chen says his firm will be instrumental in Verizon's move into application management. "We can help them with that next piece, application enablement and launching new apps," he says. "We have shown a commitment to mobility, and we understand the enterprise."

Whether Sybase – and Verizon – succeed (especially in providing high-end application development and enhancement services) very much remains to be seen.

Verizon says the initial offerings from its mobility suite will be available later this month in the U.S and 19 European countries. The service is offered by Verizon Business and  Verizon Wireless, a joint venture with Vodafone (VOD).  But Verizon's Marcellin says the telco is happy to manage wireless operations for clients that have wireless service contracts with rivals AT&T (T), Sprint (S) or T-Mobile.

Box.net CEO Aaron Levie. Photo: Box.net.

Cost-conscious businesses are looking online for IT

By Aaron Levie, CEO and co-founder, Box.net

Something is clearly happening in the cloud. Two major juggernauts – the government and Microsoft – have both recently made cloud-related announcements. The government (hardly ever considered an early adopter) is planning to launch a cloud computing ‘Storefront’ to ease the federal deployment of these online services, with the ultimate goal of streamlining operations and saving money. Microsoft has finally detailed its plans to launch a web-based version of Office, albeit not until next year.

Check the press, and article after article mentions this trend: IT departments are increasingly relying on web-based shared computing and storage, rather than owning and managing the hardware and software themselves. What is pushing this forward? Let's take a look.

It starts with the bottom line. In a recession, every business wants to reduce its cost of operations. A quick review of the total cost of ownership for traditional technology includes IT personnel, data centers, servers, support licenses, and professional services – and that’s before you add in the actual cost of the software. The current economic crisis is causing businesses of all sizes and competencies to rethink where they want to invest their human and financial capital, and in most cases it's not in managing a costly IT infrastructure.

The key advantage of web-based solution providers is that they tap into true economies of scale by shouldering the infrastructure burden themselves, running technology efficiently, and passing the savings to their customers. For example, Salesforce.com manages thousands of companies' backend sales systems and requires far fewer resources than if all its customers were to host the solution themselves.

Another driver of the cloud trend is an increasingly mobile, global workforce. The culture of business has changed as laptops, wifi and web-connected cell phones have introduced more opportunities for unique work-life balance. As teams become increasingly distributed, technology must continue to empower efficiency even while spread across multiple time zones and languages.

Cloud-based services are in the best position to enable workers to stay connected at all times on day one. Whether it's through messaging, conferencing, collaboration or customer relations, businesses on varying networks can now seamlessly interact as if they were in the same building.

Of course, there are problems that threaten to slow the adoption of cloud services. At the top of the list are security and data portability.

As we saw with the Twitter-hacking fiasco, cloud solutions are only as strong as your password, and combining this with the weaker data management policies of consumer-focused web services can cause a nightmare scenario. Unlike the on-premise model of virtual private networks and tighter application privileges and permissions, users can generally register and access cloud services with a single password and email address (which is often considered a big benefit as it's easy to get started). However, these flexibilities create problems of unwieldy proportions for an IT person tasked with making sure users' data are safe and secure. To solve this, we need more centrally managed authentication systems (think LDAP for the web), application providers to provide highly-secure authentication practices on their own, and deep visibility and control into who and when information is accessed.

In addition, cloud services often lack complete data portability. Yes, there are many useful APIs that allow us to mash up various services together, but there's a clear absence of simple and obvious ways for applications to communicate uniformly and move data back and forth. When companies can securely and seamlessly move their cloud file system from one provider to another, or between email applications, or even just share data between two online word processors, we'll start to see full enterprise cloud adoption.

The good news is that fixes for these (and other) issues aren’t far off. Businesses have been building their own solutions, startups are popping up to offer better security, and many cloud companies are building this additional layer of protection themselves. The timer has been set, and it won’t be long until the whole concept of the ‘cloud’ will become dated as people will wonder how they ever did without it.

Aaron Levie is the CEO and co-founder of Box.net, a Palo Alto, CA-based provider of online collaboration tools.

The last version of Office didn't include a free online version. The next one will. Image: Microsoft

It’s too early to say Microsoft has checkmated Google in online documents – the latest version of Office hasn’t shipped yet. But the sleeping giant in Redmond has clearly woken up to the Internet threat.

Get this: Microsoft – the king of paid software – will announce today that it is going to give a version of Office away for free online. Both the online and desktop versions are scheduled to arrive in the first half of next year. Yes, you read that right. The latest version of its ubiquitous productivity software, dubbed Office 2010, will come as both a piece of software you can buy for your computer, and as a service you can access in your browser. [UPDATE: Microsoft says it will support the Firefox and Safari browsers as well as IE.]

For free. From Microsoft.

One could argue that the software giant is late to the giveaway party. Folks like Google, Zoho and SlideShare have been offering free equivalents to Word, Excel and PowerPoint for years. Unlike those companies however, Microsoft already has a very profitable $20 billion business selling desktop versions of its Office software. It would have been foolish to jump into the free game too hastily and watch that business evaporate overnight.

And that’s what makes this bold move to the web either the dumbest thing the company has ever done, or a stroke of genius. If Microsoft gets this wrong, it will cannibalize its own Office business, and investors will howl. If it gets this right, Microsoft will crush Google, Zoho, and all the other rivals who are nibbling away at Office’s dominance.My hunch is that this is a stroke of genius from Microsoft. Why? Earlier this year when I talked to Chris Capossela, the executive who manages Office, he had clearly thought hard about how to do this right.

Capossela told me that Microsoft has studied it closely, and Office Web Applications, the free, ad-supported version of Word, Excel and PowerPoint, will probably appeal to tightwads who weren’t going to buy a copy of Office anyway. This way, rather than force those folks into Google’s arms, Microsoft can hook them into its online world and tempt them with its latest technology.

And Microsoft can also tempt them to upgrade. Office Web Applications will work better if you actually purchase Office 2010. Users with the latest Office software will be able to more easily share documents and keep each other’s changes in sync. Add in the fact that the paid version of Office will come with a brilliant feature that lets Office buyers broadcast their PowerPoint presentations over the web (like Cisco’s WebEx), and the Microsoft’s online giveaway looks less like an oops, and more like an upsell.

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Cisco CEO John Chambers doesn't just talk a good game about telepresence, the videoconferencing technology that creates the illusion you're in a room with someone who's actually thousands of miles away. He's planning to install his company's high-end system in his Silicon Valley home, provided he and his wife can agree on a spot for it. "I figured we could convert one of the kids' old bedrooms," since they've grown up and left the house," he says. "She told me, 'You do that and you'll be sleeping in there.'"

Though he's not done negotiating the location, one thing that Chambers doesn't have to worry about is cost. ­As longtime chief at the networking giant, he can surely afford the installation, which can easily run north of $150,000 per room.

But can his customers? Even as Chambers and rivals such as Hewlett-Packard (HPQ, Fortune 500), Polycom (PLCM) and Tandberg tout telepresence as the perfect tech tool to reduce travel costs and boost productivity, observers have their doubts. Sure, telepresence enables meetings on three or more huge screens, in high definition with pristine audio quality. (CSCO) (HPQ) (PLCM) (T)

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Cisco CIO Rebecca Jacoby

Even in these tough economic times, tech giant Cisco offers employees some pretty sweet benefits: Employees can visit on-campus doctors and dietitians, drop off dry cleaning, or get an oil change, and now they can pick the kind of computer they want to use at work.

That's right – Cisco has started letting workers choose from a handful of laptops, including an Apple MacBook Pro. Only don't call the program a perquisite. Rebecca Jacoby, Cisco's (CSCO, Fortune 500) top information technology officer, says the initiative, launched last year, should actually save the company money. The fact that employees involved in the pilot program are deliriously happy with it – Jacoby and her peers even get love notes from satisfied road warriors – is a bonus.

Of course, that new freedom requires companies and employees alike to make sacrifices. Since Cisco began offering a choice of machines last June, roughly a quarter of employees have opted for Macs, yet they are pretty much on their own for tech support. (An in-house online community for Mac users gets a little help from Jacoby's department.) Cisco, in turn, has to make a slightly higher upfront investment for the workers who want Macs, which are pricier than PCs.

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Cisco CEO John Chambers and Intel CEO Paul Otellini (center) are flanked by other Cisco executives as they explain how the two companies will work together on servers. Photo: Cisco

Cisco's new servers use more memory and faster I/O connections than mainstream competitors, and they come loaded with management software. Photo: Cisco

John Chambers is known for delivering Cisco's sales pitch like a revival preacher, complete with a country twang – and he summoned plenty of true believers Monday as he outlined Cisco's plans to bust into the $55 billion server market.

In the Cisco CEO's amen corner were no lesser lights than Intel (INTC) CEO Paul Otellini, VMware (VMW) CEO Paul Maritz, and EMC (EMC) CEO Joe Tucci – the top guys in chips, virtualization and storage. During a 90-minute online news conference that doubled as a showcase for Cisco's (CSCO) high-end teleconference system, that CEO chorus testified that Cisco's new "unified computing" gear is the real deal: By building more memory, faster data speeds and new management features into its boxes, Cisco might shake up the status quo in corporate data centers the way the iPod and iTunes did in digital music.

Why does the world need another server technology? In a word, virtualization. Even during this downturn, efficiency-hungry companies are embracing the technology, which cuts down capital costs by squeezing more work out of less computing equipment. (For example, a single server might act like three different virtual ones.) But today's servers can have trouble pulling off the virtualization trick; split one into several virtual pieces and it's likely to run low on memory and struggle to quickly access data. Managing virtual servers is a challenge, too – you can't kick a virtual machine, or check it to make sure the right lights are blinking.

Cisco claims its new servers address these problems. Each will hold more memory than servers from competitors like Hewlett-Packard (HPQ) and IBM (IBM), and they'll use faster and more reliable Ethernet connections to move data. A control panel from BMC Software (BMC) promises to make it easier to keep track of virtual machines – the next best thing to kicking them and checking the lights.

How much will it all cost? Cisco isn't saying yet, but it won't be cheap. The company isn't trying to play in the commodity blade server market; it's going to market this product to folks like large manufacturers, healthcare providers and data hosting companies who spend a lot on servers and software.

Even if Cisco's new hardware works as advertised, it won't take the market by storm overnight. To see why, consider Bryan Doerr, chief technology officer at data center provider Savvis (SVVS). Doerr is among the first customers to get his hands on Cisco's equipment; he's been testing it for three weeks. Though Doerr says the Cisco gear has been performing well in the lab, he hasn't yet thrown real work at it to prove it can scale, and he doesn't have a detailed timetable for rolling it out in significant volume.

And while Doerr believes Cisco's gear will help him do more work without having to add more people, he also says it won't dramatically slash his costs in the near-term. After all, even if he starts buying a lot of servers from Cisco, he'll still have to run the equipment he already owns. (For the record, he bought much of that equipment and management software from HP.)

Not that the established server vendors can be complacent. Doerr says Cisco's unified computing package is the most groundbreaking new idea he's seen in the data center in years, and it he's ready to open his wallet to get it. It's still early, but it sounds like in the server world, John Chambers is already winning converts.

Jon Fortt talks to Kenworth about a practical use for cloud computing.