The Daily Beast: iPhone’s Bad Business

What a difference a little update makes. Users of Apple’s iPhone models 3G and earlier got a rude awakening at work this past week: Their phones no longer work with their office’s email systems.

It seems the culprit is the latest software update, 3.1, which—to make it simple—has forced Apple to now admit that it never really was compatible with Microsoft Exchange’s encryption protocols. Before, it simply acted like it was compatible, without ever doing the processor-intensive number-crunching to actually encrypt the Exchange data that it downloaded, as it promised it was doing. The iPhone worked with Exchange, that much is true. But it did so by pretending to do something it couldn’t. Or now won’t.

The rather sudden and irreversible changes to the way people use their iPhones makes Apple look like a typical bad Californian passive-aggressive boyfriend.

So now, millions of business users who finally switched from the BlackBerry or whatever other PDA they happened to be using—the ones who wanted to look as cool as all those iPhone people who didn’t work for Fortune 500 companies or big institutions and complained to their IT departments to make iPhones compatible with their companies’ networks—are back at square one. They have to go back to a less hip phone, or go back to the Apple Store for the latest and greatest iPhone, the 3GS, which really truly does have the encryption required for enterprise use. (That, or IT departments have to turn off their Exchange systems’ requirement for encryption-enabled devices, rendering their data more vulnerable.)

What’s more, the 3.1 upgrade finally kills the iPhone’s ability to be tethered to computers and used as a modem. While AT&T has always forbidden such use for fear of the burden on its network, a workaround was always a simple Google search away. But those paying full price for the phone, as well as European users, were always free to pick the carrier of their choice and then tether the phone completely legally—sometimes for an additional fee to their carrier. Now, presumably in an effort to prevent users from exploiting the workaround and getting modem service from AT&T, Apple has blocked tethering completely for everyone.

Apple is, no doubt, preparing a statement as I write this—something explaining that their phones really did work with Exchange all along. It’s just that these new ones work with Exchange even better. And that their phones never really were supposed to be tethered, so this update doesn’t cripple any documented capability. And, to their credit, Apple’s update is at the very least fessing up to reality.

But for those who were hoping that Apple might be finally graduating from consumer products to genuine business capabilities, these latest switcheroos are sure to feel like a betrayal. Yes, their IT departments should have done more research into how the phones worked before approving them as Exchange capable. Or perhaps Microsoft should have risked the bad publicity and more rigorously researched the iPhone’s compatibility with Exchange before issuing signed certificates to Apple for their phones. And anyone buying a phone to use an undocumented feature like tethering should understand they’re in for some obstacles down the road.

Still, the rather sudden and, I might add, irreversible changes to the way people use their iPhones makes Apple look even more “like a typical bad Californian passive-aggressive boyfriend,” in the words of one developer friend of mine. “They talk nice to get you in the sack, but then do all sorts of abusive stuff once they have you.” Once you have upgraded your phone to 3.1, there is no going back. It’s like one of those STD’s that keeps on giving. Downgrading to 3.01 doesn’t restore tethering capability or Exchange.

Like a lecherous boyfriend, Apple gives a wink and a nod to users, acting as if the company is on their side against Exchange or AT&T, but then shows its true colors once we’re in bed with them.

The irony is that Apple is, for once, trying to play by the rules. The corporate rules, that is. Their Microsoft Exchange hack was not responsible networking, and led less-competent IT managers to sacrifice the security of their systems. Likewise, it’s Apple’s effort to make good on its promises to AT&T that has led it to cripple its phone’s tethering capability, protecting one corporate alliance over all of its other consumers.

Update 3.1 may be remembered as the moment Apple chose sides. The company thinks it’s ready for the big time, and hopes these moves will demonstrate its willingness to move like a player capable of delivering enterprise-scale solutions and hacker-proof protection for its corporate partners. In doing so, however, Apple may succeed in alienating its core consumers, and tarnishing its brand as the “people’s” technology.

In fact, all these shenanigans are actually starting to make people wonder about what Microsoft, the apparent underdog, is working on. The new Zune may not be an iPod killer, but it does offer a clean interface, great industrial design, HD radio, and a subscription model for music, making it significantly less expensive for big users. And Microsoft’s new OS, Windows 7, may finally be a worthy successor to XP, eliminating the clutter of Vista and letting users get to what they want to use without the fuss. All this, while remaining compatible with their IT departments’ demands for scalability and custom implementations. It may prove easier for a company that knows enterprise software to provide consumers with what they want, than for a consumer company to meet the demands of enterprise users.

Or maybe Apple’s users will rise to the brand’s new mandate, stop thinking so “different,” and just use the stuff the company makes for them as they’re supposed to.