After three weeks of testing and reviewing Apple's new iPhone, analyst firm Gartner has cautioned that the device only has a narrow set of uses within the large enterprise.

Gartner evaluated both the new iPhone 2.0 firmware and the new 3G iPhone for use in large businesses. It said the device can be supported by IT shops - but only for a narrow set of uses such as voice, email, Web browsing and the storage of personal information.

The reason for the restrictions? Security concerns.

The newest iPhone "does not deliver sufficient security for [running] custom applications" commonly used on handhelds in enterprise settings, Gartner analyst Ken Dulaney wrote in a nine-page research note. The report, "iPhone 2.0 Is Ready for the Enterprise, but Caveats Apply," concludes: "Enterprises should approach expanded use of the iPhone slowly and with close examination."

Users considering adoption of the device should also be aware that iPhone data usage can incur high international roaming charges, Dulaney said. Also, the iPhone 3G's battery might not even last through a full day of email use, he added.

Dulaney made the security warning despite Apple's inclusion of password controls and a "remote wipe" capability. Remote wipe enables an IT administrator to wipe data on the device from a remote location should an iPhone carrying sensitive data be lost or stolen.

Dulaney noted a concern other analysts have raised: Data apparently cannot be encrypted on the device itself, even though he said Apple officials assured him that there is an API in the firmware to provide encryption. The problem seems to be that third-party software vendors need to write such an encryption application; the vendors have complained about blocked access to the iPhone API needed to build such a product, Dulaney said.

If such an encryption application is available, Dulaney said he has not been able to judge whether it is viable or how much it uses the iPhone's processor or drains the battery.

Apple officials have touted the iPhone 2.0 firmware update and the iPhone 3G, launched 11 July, as offering business-ready features, including access to Exchange email. But Gartner's analysis seems to indicate that the device could be business-ready under the right circumstances. In general, the new Gartner analysis is not aimed at small-business users of the iPhone or prosumers who might need both personal and business functions on one device.

Gartner's advice is primarily targeted at IT managers of larger organisations who may be asked to distribute and support hundreds or even thousands of iPhones to workers while following corporate security policies and government regulations designed to keep data out of the wrong hands.

Dulaney also noted that iTunes must be installed on end-user desktops to receive firmware updates for the iPhone. But automatically allowing firmware updates to be installed that way means an IT manager would not be able to verify what Apple has delivered.

While Apple offers an iTunes registry update to control the functions the application can perform, Dulaney "strongly" suggested that enterprises instead use existing management tools to lock down the registry and disable firmware updates and file transfers that "could inject unwanted content into the enterprise."

Dulaney suggested that in the future, Apple should create processes for managing the iPhone as Microsoft and Research in Motion did for Windows Mobile and BlackBerry devices, respectively.

Dulaney also urged IT managers to warn users who might sign up for a two-year commitment to the product to assess several factors - including how much they travel internationally, since international roaming rates for data usage could be high. Data-roaming costs have become an issue for at least one major global manufacturer who found that because the iPhone makes browsing and data usage so easy, travelers can incur thousands of dollars in data costs on a single trip.

Another concern is battery life, Dulaney said. In Gartner's testing using default settings on the iPhone 3G, the battery "seldom experienced a full day of use," he said. That happened while using Exchange ActiveSync, some limited browsing and no telephone calls, he said. The drain on the battery may be caused by using the iPhone in a Wi-Fi network, or it might be Apple's implementation of ActiveSync that requires more power to stay constantly connected to the network to deliver new mail.

Also, users might like to know that the iPhone does not support the ability to edit attachments in email and that attachments take time to download, he said. And he noted that email users can't cut and paste details from an email into an appointment application. "The quickest way to do this on the iPhone today is to write the details down on a piece of paper and re-enter them," Dulaney wrote.