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Computerworld - The new iPhone 3G S boasts remote data wipe, hardware-based encryption and tethering of the device to a laptop that would seem to please business users interested in protecting data and enhancing productivity.

But no, those steps are not good enough for widespread adoption of the new smartphone inside large businesses, four analysts said today. What iPhone 3G S still needs is a system, run by the enterprise IT staff, to manage and monitor iPhones in a large business.

Large businesses "have to make sure that if they do anything, it can be audited. And to do that, they have to force things on the user to create a consistent environment," Ken Dulaney, an analyst at Gartner Inc. said.

The problem with iPhone 3G S is "that you don't have a console to enforce corporate policies across an entire group of workers," said Kevin Burden, an analyst at ABI Research.

The iPhone 3G S also doesn't allow processing in the background that lets IT departments run updates and other management tools coveted by large enterprises, especially financial firms that are bound by strict federal regulations for the treatment of data.

"Apple has not turned this [background processing] on, and without this, security will be limited," Dulaney said.

Burden said Research in Motion Ltd., maker of the BlackBerry, and Microsoft Corp., maker of Windows Mobile, have sufficient tools for managing large deployments of devices, but iPhones do not.

Steven Drake, an analyst at IDC, said that while third-party management companies are making tools to work with the iPhone in business settings, the tools are harder to implement and use. Drake said he knows of some businesses that have tried to implement the iPhone across many workers, but have backed off because of management and security worries across a large group.

Despite his reservations, Drake called the overall iPhone 3G S improvements for the enterprise "a good step" by Apple.

Since its launch in 2007, the iPhone has suffered from "enterprise envy," added Steve Hilton, an analyst at The Yankee Group. "Having been built for consumer segments, the iPhone now seeks the magic blue pill to extend into the enterprise. Remote wipe, encryption, tethering [are] necessary, but not sufficient" for enterprise adoption, he said.

The iPhone has some traction in large business settings, with companies such as Kraft Foods and Oracle Corp. But the financial services industry has been harder to convince. For example, Bank of America prefers to stay with the BlackBerry over the iPhone because of the capability of centralized management offered with the BlackBerry Enterprise Server.

While Apple said that tethering will be allowed to use the iPhone 3G S with a laptop for wireless connectivity, but some analysts said the feature will be "nice to have," but may not so popular with business users.

BlackBerry and Windows Mobile have provided tethering from its devices for a long time, but the system is not easy to set up. Based on surveys, usage of tethering is less than 2% of BlackBerry users, Burden said. "I'm assuming Apple has found a way to make tethering extra simple to set up, and it could be a nice thing, but the majority of users just don't do it," he said.

Tethering will require carrier support, and an AT&T spokesman said yesterday that the carrier will support it eventually, but he gave no timetable. Carriers typically don't want to undercut the monthly fees they can charge laptop users for a wireless air card, so it's possible that AT&T will seek some way to charge a fee, at a reduced rate, for tethering the iPhone to a laptop or other device, analysts said.

Apple officials did not respond to requests for comment.

Editor's note: This article has been changed since it was originally posted regarding comments made by Gartner Inc. analyst Ken Dulaney, who said after its publication that he misinterpreted Apple's encryption capability. Dulaney said later that on the iPhone 3G S, encryption is permanently invoked and that there is no user selection of this function available. However, Dulaney noted that Apple has not provided details on the level of encryption, which he said may or may not be sufficient for each enterprise considering the iPhone.

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