When Apple announced the 2.0 firmware version of the iPhone as part of its software developer kit roadmap, any real complaints from IT about its use in the enterprise appeared to be silenced. But there’s always something on the other side of the coin.

Initially, the iPhone was panned as an enterprise device. Analyst firm Gartner said the first version of the iPhone was not secure enough, and its failure to incorporate enterprise e-mail retrieval left it dead on arrival. “Originally when the iPhone was released, it was not ready for the enterprise. We told Apple that if they should support ActiveSync, that would be a good idea and give them a minimum entry point into businesses,” said Ken Dulaney, vice president and analyst at Gartner.

Apple took this advice to heart. In March, the company announced an entirely new generation of firmware for the iPhone that brings a host of enterprise-grade support features to the table. These include push e-mail, contacts, and calendar; certificates and identities; WPA2/802.1x; enforceable security policies; device configuration; and remote wipe. These were the missing elements needed to make the iPhone an enterprise contender, but some skepticism remains.

Battling BlackBerry Through the Back Door

Enterprises that use Microsoft Exchange Server 2003 or 2007 will soon be able to use the iPhone to wirelessly push company e-mail, calendar events, and contacts to the iPhone over a 128-bit encrypted SSL connection. This is the same functionality already offered by BlackBerry devices that run on the BlackBerry Enterprise Server, Windows Mobile, and Nokia’s Symbian Series 60 platform. This capability alone puts the iPhone in the same playing field as all the other smart phones used by professionals to remain in touch with their office.

With these changes, “there’s no question that Apple is targeting the enterprise now,” said Avi Greengart, research director of mobile devices for Current Analysis. “Employees want to be able to get their corporate e-mail on their device. Is Apple targeting RIM? Yes, yes it is.”

Ross Rubin, director of industry analysis for The NPD Group, takes a different tack. “For years, the inability to penetrate the enterprise has been a real growth challenge for Apple, so much so that when Steve Jobs came back, they practically abandoned the corporate market, focusing on the consumer instead.” This led many to feel the same way about the iPhone as well. “Mobile phones are far more likely to be individual purchases. This represents a second chance for Apple to have its OS platform as a client in the enterprise, without getting explicit approval from IT.”

More Security, More Control

Network security was another big beef that enterprises had with the original version of the iPhone. Firmware 2.0 addresses that issue by supporting Cisco IPSec VPN to provide the highest level of IP-based encryption for transmission of potentially sensitive enterprise data. The iPhone’s Wi-Fi radio is now less susceptible to snooping because it uses WPA2 (Wi-Fi Protected Access) and 802.1x authentication. The new firmware will allow businesses to set strong passwords and require that they be updated regularly.

What remains to be seen is how well these features will be implemented, what level of security will be available from day one, and whether they will include end-to-end encryption. These points are fairly important if you are aiming for HIPAA or Sarbanes-Oxley compliance.

Because smart phones represent such a big threat to enterprises, having tight security and policy control is an important factor. Firmware 2.0 offers IT all the control it could ever want. Admins can use Apple’s software to set and enforce policies through its Configuration Profiles tool. Configuration Profiles also allows IT to remotely configure devices, including e-mail, network, and VPN settings. Admins can even remotely wipe a lost or stolen iPhone. This alone can help enterprises sleep better at night, because they know their corporate information will remain secure.

These new network and security control changes caused Gartner to change its recommendation for the iPhone. The firm now calls the device an acceptable “appliance” for the enterprise, meaning it is suitable for e-mail, contacts, and calendars. “We told Apple the two most important things were the ability to wipe the device if lost or stolen and require a complex password. Apple met those two requirements, so we changed our recommendation.” said Gartner’s Dulaney. “By licensing ActiveSync, IT can now implement between 15 and 45 different policies.”