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Apple tweaks iPhone to better compete in business

CUPERTINO, Calif. - Apple Inc. wants the iPhone to become a corporate e-mail gadget - and a portable video game machine. It's also teaming with a prominent venture capital firm to offer a substantial kitty - $100 million - to lure developers to the iPhone.

The Cupertino-based company unveiled new software Thursday that reflects its intensifying effort to court business customers and placate third-party developers who want to build iPhone applications but have been locked out. A beta version of the free software update went out Thursday; the full version won't be available until June.

Apple's requirement that it approve every application for the iPhone is likely to turn off some developers, however.

Its decision to allow developers any access to the closed device represents an about-face for Apple, which previously allowed developers to build iPhone applications only through the Web and didn't let them use the same software Apple developers use.

Apple is tweaking the iPhone to support Microsoft Corp.'s Exchange software, which addresses a key weakness in the consumer-oriented gadget and puts it in more direct competition with Research in Motion Ltd.'s BlackBerry and Palm Inc.'s Treo smartphones.

The iPhone has been popular among consumers, but businesses have largely shied away because they wanted it to work better with business e-mail software.

Philip Schiller, Apple's senior vice president of worldwide product marketing, said the software update will give iPhones the same security and integration of e-mail, calendars and contact lists that businesses have been demanding.

'This is a great, great way to solve all those requests,' Schiller said.

Apple also said it was opening the iPhone to third-party developers and will sell the applications they create for it through the App Store, a new vehicle to approve and distribute games and other iPhone programs. Until now, only Apple could create and deploy applications directly onto the iPhone.

The event at Apple's headquarters Thursday included demonstrations by executives from Electronic Arts Inc. and Sega showing off video games developed for the iPhone,

plus applications like a Salesforce.com program for tracking contacts and sales leads.

Apple is partnering with venture capital firm Kleiner Perkins Caufield & Byers, which is offering a $100 million 'iFund' to back new companies developing applications for iPhones.

Kleiner Perkins partner John Doerr, who backed such companies as Google Inc. and Amazon.com Inc. in their infancy, was on hand to announce the creation of the fund.

'That should be enough to start about a dozen Amazons or even four Googles,' Doerr said. 'And if we're running out of money we'll run around and look for more.'