Users are reporting that iPhone 3.1, which just dropped Wednesday, won't sync with some Exchange servers—in particular, any that ask for full device encryption. Which quite a few do! Apple's official note on the change:

iPhone OS (beginning with the iPhone OS 3.1 update) can enforce the Exchange ActiveSync mailbox policy requiring encryption on the device. If your Exchange Server administrator has selected this option, only devices that support device-level encryption are allowed to sync Mail, Contacts, and Calendars.

So in a direct way, the iPhone has actually increased Exchange support, in that it honors Exchange servers' requirements for device-level encryption, and won't connect if the device doesn't meet them. Since they don't support hardware encryption at all, the iPhone 2G and 3G can in no way meet these requirements, so blocking them from connecting is just good security policy.

Here's the problem: Before 3.1, firmwares just falsely reported that a user's iPhone supported device-level encryption. To frame this change as a bugfix is basically dishonest, since this "bug" was intentionally planted by Apple in order to rush full Exchange support out the door on devices that, by their very nature, can't have it. Now, anyone who bought an iPhone 3G under the (reasonable!) impression that they'd be able to use it to connect to their company's security-enabled Exchange server now can't. Oops? Sorry? Both?

Apple's solution: Convince your company to slacken its security demands, or just buy a 3GS. Thanks dudes, I'll look into that. [Broadband Reports via TUAW via AppleInsider]

You may recall that a month ago, I told you about a free third-party contact syncing app for Android. TouchDown, which costs $30, is a little more involved:

• It works with Microsoft Exchange Server 2007 SP1 and "most" online Exchange hosts.
• You can compose, send, reply, reply-all, forward and delete emails.
• You can add, delete or edit contacts from the phone, updated two-way to your Exchange account.
• It doesn't require an app running on your computer to serve the stuff to the phone.

Here are some screens: We're probably not going to test the app straight away, but if you happen to give it a run, please comment here for the benefit of others. [Press Release; TouchDown Product Page]

Although the updated OS features such as Exchange Sync and MobileMe are only good for a portion of iPhone users, the addition of the iPhone App Store makes the phone almost infinitely expandable, allowing third-party software developers to cover up whatever holes (MMS, voice dialing, instant messaging) the default OS has. Let's start with what's new in the operating system.

Like Jesus saw in an earlier version of 2.0, it contains big features like Exchange support, the App Store, parental controls, CISCO VPN and mass email deletion. There are also little features that make your general experience a bit nicer if you've been used to the old firmware versions.

• "Contacts" application. This is basically the "contacts" portion of the Phone app split off into its own. Both it and the original phone contacts have the ability to search for entries by directly typing their name in via the search bar. Why do we need a second app that does what we can already do in the Phone app?

• Multiple "Calendars" differentiated on the phone. Previously, iTunes merged all your iCal calendars into one big calendar on the iPhone. When you created a new event, it would go into one default calendar of your choosing. Now you can see exactly which calendar what event belongs to by the little colored dot, plus you can insert events into the correct cal directly on the phone.

• Better password fields. Instead of displaying all stars (*'s) when you're typing into a password field, the iPhone now displays the last letter you typed in clear text so you know if you've made a mistake, rather than having you erase and start over when the wrong password is rejected.

• When triangulating your position on Google Maps, the locator circle zooms out further than before, throbs, then zooms in as it figures out your location more accurately. Interesting change, but we're not sure if it's any more accurate than before.

• The calculator switches to scientific when you go to landscape mode.

• Photos are now geo-tagged using location services.

• A global option under system prefs for turning on/off push. So far Exchange, Yahoo and MobileMe (including .mac addresses) have push email capabilities, with Google and your other random email addresses are still lagging behind with manual fetch.

• A global location services switch can be turned on to signify that you want location in your apps. But the problem is, each individual application still asks you to give permission to use your current location. We wish there was a way to just grant blanket permission to everything.

• International keyboard support. Once you have more than one keyboard language activated, there's a globe icon that shows up next to the space bar on your keyboard so you can toggle languages. The foreign language support seems really great too. We started typing a word in Chinese, and the phone kept guessing what subsequent word we were going to follow it up with. Most of the time it was right.

And now the big three.

App Store: You know the App Store is going to bring lots of applications for you, and the ones we've seen so far are already of higher quality than most of the stuff on Installer.app. Stuff like Super Monkey Ball, Dice Game and the Remote App are indicative of the level of quality you're going to see coming from the store. Add to that future GPS applications, voice dialing and other semi-OS level software suites and you've got the framework for building a fantastic phone.

On the other hand, the background notification service so you can receive AIM messages while doing something else isn't coming until September, so some apps are kind of crippled until then. We've also noticed that syncing your iPhone when you've got a lot of applications installed takes a really long time. A lot of this seems to be from backing up the apps—which are installed, not just transferred—so be aware of the new increased sync time.

MobileMe: Because of its $99 a year price, MobileMe is only really useful for people who never sync their phones, have multiple computers to keep in check or need other people to be always aware of their schedule. What it does do, it does very well. Push Email is so fantastic that it's a BlackBerry killer. Live push syncing of contacts and calendars makes it transparently easy to keep your stuff always in sync between your desktop and your phone. As strange at it is, some people never sync their iPhones manually.

We won't go into too much depth over the other MobileMe features, since you're pretty much familiar with it from its .Mac incarnation, but you're getting a rich web-based portal with your email, calendar, contacts, photo hosting and web disk as well as the ability to sync files between different Macs. The bonus for business users who have to use Exchange is that with MobileMe, you can keep both your Exchange contacts and your home contacts (synced through MobileMe) on your phone. If you don't have MobileMe, you can only have either Exchange or your own contacts.

Exchange: This is the one big feature (beyond better VPN security, the ability to deploy enterprise apps internally and remote wiping) that will get the iPhone into business use in a big way. Although we don't have Exchange servers at Gizmodo, we did test it with the free Exchange account at mail2web, and everything worked as it should. Emails came in pushed and contacts/calendar entries synced on the fly. There are free exchange servers like this one around the web if you don't want to pay the not-so-terrible $100/year for MobileMe.

Between the iPhone Apps and OS updates, the iPhone just got a whole lot better. But there's still features missing from iPhone 2.0 that we still want to see—stuff that can only be added by Apple. Video recording, which should technically be possible with the correct drivers and right encoding and acceleration software, is one of the big ones. There's also over-the-air Wi-Fi syncing of your music library, a feature the Zune 2.0 has had since last year. Cutting and pasting is yet another OS-level feature that needs to be integrated into every application that contains text. We're sure you can come up with a few features you really wanted in this version.

Even if you're not getting an iPhone 3G, original iPhone owners and iPod Touch owners are getting a significant upgrade in functionality for a free (or nominal) price. In fact, if you don't need the faster speeds or slightly better location services that GPS brings, you're fine with sticking with the first gen. If you're still getting a new iPhone, you're getting a fantastic OS upgrade along with it.

Update: We've learned a bunch of stuff since the review a week ago after heavily using the iPhone 3G/iPhone 2.0 this past week at E3.

• A lot of the apps aren't incredibly stable. Developers only had a couple months of play time with the platform, so stuff isn't nearly as stable as it could be. Most of the time when an app crashes it won't take down the system, but we've had our share of having to hold down the power and home buttons simultaneously to hard reboot.
• Apple hadn't really allowed developers to chat with each other because of the NDA, so they couldn't share notes on how to do this function or that function in a smart way. So, the quality of apps will go up starting now.
• Only about 20% of the apps are good. I'm not sure what people were expecting from the iPhone App Store, but like any open or semi-open development platform, there's going to be a lot of garbage apps that either aren't well made or are so niche that only a handful of people would use them. This is like that.
• Because Apple has to hand-review every update to the App Store, it takes forever for developers to patch their software. Many apps like NetNewsWire have a handful of point-releases that fix bugs already done, but are waiting on Apple to approve them.
• The "backup" portion of a sync takes a really long time if you've just made any changes to your applications. iTunes is taking a snapshot of your phone for restoring purposes (you get all your apps back when you do a restore). So keep that in mind if you want to do a really quick sync and get out the door.
• There's a new URL trick as well, adding various domains automatically to the end of your URL instead of just .com.
• Safari also shows YouTube clip links so you don't have to go into the YouTube app manually and search for that video you wanted to see.

Sprint Mobile Email Work Gives Sprint Customers Access to Business Email on Instinct by Samsung and Other Non-PDA Phones

Access to Microsoft Exchange Server and IBM Lotus Notes Through Sprint Mobile Email Work Gives Sprint Customers More Device Choices for Checking Corporate Email on the Go

OVERLAND PARK, Kan.—(BUSINESS WIRE)—June 19, 2008—Customers of Sprint (NYSE:S) can soon get mobile access to their corporate email accounts on select non-PDA Sprint phones such as the new Instinct by Samsung. Easy access to Microsoft Exchange Server and IBM Lotus Notes accounts will be available through Sprint Mobile Email Work, as an extension of Sprint Mobile Email's existing access to personal email accounts from popular Web-based providers such as AOL, Gmail, Windows Live and Yahoo! Mail. Sprint Mobile Email Work will allow users of the Instinct and other non-PDA phones, such as flip phones with more consumer-oriented features, to access both their corporate and personal email in one easy-to-use application, included at no additional charge in several Sprint pricing plans.

"Sprint Mobile Email Work will allow customers to read and respond to their business email and look up work contacts from a wider variety of Sprint phones, including the new Instinct," said Kevin Packingham, senior vice president of product and technology development for Sprint. "With combined access to corporate and personal email in a single application on popular consumer-friendly phones, Sprint customers can increase productivity and stay connected whenever and wherever they want."

Sprint worked with SEVEN to create Sprint Mobile Email Work, which allows customers to access Microsoft Exchange Server 2000, 2003 or 2007 accounts, or IBM Lotus Domino accounts. The service features an easy, one-time setup process: Sprint Mobile Email Work is preloaded on the Instinct, so customers simply select Email on the main Menu to get to Sprint Mobile Email, then click the Work tab and enter their server information, user name and password. Emails are then pushed to the user's phone as they arrive in their desktop mailbox. Users can read, delete, respond to and compose new emails. All changes made via the Sprint phone are automatically synchronized with the user's desktop mailbox.

Sprint Mobile Email Work is included at no additional charge in Everything plans starting at $69.99, Talk/Message/Data Share plans starting at $129.99 for two lines, and the $30 Sprint Pro Pack data plan. With all other plans, Sprint Mobile Email Work is available for $9.99 per month, in addition to voice and data charges (taxes and surcharges excluded).

In addition to the Instinct by Samsung, Sprint Mobile Email Work will be available in the coming weeks on 11 other popular Sprint phones, including the Rumor(TM) and Fusic(TM) by LG(R); the RAZR, RAZR2 and KRZR by Motorola; the A900, A900M and M500 by Samsung(R); and the Katana(R), Katana(R) II and 8400 by Sanyo(R). Sprint plans to extend the service to additional phones in the future.

Sprint Mobile Email Work will be provided as a software update in the coming weeks to customers with Sprint Mobile Email on compatible phones. To download Sprint Mobile Email, customers should go to the mobile Web on their phone and select Downloads, then type "email" in the search box. Once Sprint Mobile Email is downloaded, compatible phones will allow the customer to install Sprint Mobile Email Work through a software update when available. Customers should check with their IT department prior to accessing Sprint Mobile Email Work to verify company policies.

About Sprint Mobile Email

Sprint Mobile Email provides easy access to multiple email accounts in one place, from well-known providers such as AOL (includes AOL and AIM Mail), Windows Live (includes MSN and Hotmail), Gmail, Yahoo! Mail and more. Sprint Mobile Email is available on more than 35 Sprint phones as a free download for Sprint data subscribers. With Sprint Mobile Email, customers can:

* Compose, read and manage email on their phone from anywhere, with the ability to work in off-network situations - even on airplanes
* Get alerts when new emails arrive
* Automatically synchronize email on their mobile phone with online mail accounts
* Look up online contacts and address books

For more information on Sprint Mobile Email, please visit www.sprint.com/mobileemail.

[Sprint via Phone Scoop]

• They like the idea of being in the iPhone with Silverlight instead of Flash: "Silverlight for the iPhone is of course interesting," he said. "I can't say there's been extensive discussion with Guy's old boss [Steve Jobs]."

• Far from being non-profit, he accused Apple to take a too-large slice off the developer: "grabbing 30 percent of every bit of revenue, it's a good business if you can make it."

• This model may limit the royalty free distribution of Silverlight: He failed to notice that 30% of zero dollars is zero dollars.

• The Exchange connection was not a surprise for Microsoft: "We've licensed ActiveSync for a while. That's been an option that's been available to Apple. It was certainly an option we knew Apple might take advantage of."

• The scream reprisal is not a joke, as this video shows.

On his defense, someone asked him to do it. Actually, forget about the defense. No wonder Bill is divorcing him. [Georg Holzer via ISS via Cnet]

Apparently the date was finalized after Apple pulled out of the National Association of Broadcasters show, which means they might save the Final Cut Pro server announcement (if there is one) for the Feb 26 event as well. Remember, no one can confirm what Apple's announcing until they announce it, but this is what we know so far. [9to5Mac]

HELIO LAUNCHES MAIL FOR MICROSOFT EXCHANGE

Wirelessly Sync Ocean with Microsoft® Office Outlook® Email, Calendar and Contacts

LOS ANGELES, CA - July 25, 2007 - Helio Ocean's expansive messaging capabilities just got more versatile with the launch of Mail for Microsoft Exchange. Adding to Ocean's already comprehensive messaging line-up including a single hub for all text messages, picture messages, Instant Messages and emails from the major portals and ISPs, Helio members can now mix business with pleasure through Mail for Microsoft Exchange. This new application lets users wirelessly synchronize Microsoft® Office Outlook® email, calendar and contacts from their companies' Microsoft® Exchange Server so they can use Ocean to keep in touch with friends and family, as well as staying on top of business.
"Ocean has already made staying in touch with friends easier than ever with the ultimate messaging dashboard for all email, IM, picture and text messages, something nobody has ever done before," said Doug Britt, Sr. Director of Content and Messaging Services at Helio. "Now we're bringing the business user into the fold with the addition of corporate email, calendar and contacts, all from the same great messaging interface. Combined, this solidifies Ocean as an ideal device for keeping in touch with friends, family and business associates."

Business + Pleasure
Mail for Microsoft Exchange is Helio's new downloadable client that uses the Microsoft® Exchange ActiveSync® protocol to let users remotely synchronize and access business email, contacts and calendar data from their corporate Exchange Server. Ocean users can wirelessly download Mail for Microsoft Exchange to their device and after a brief set up, send and receive email, create and send calendar appointments and access corporate contact lists. Once Mail for Microsoft Exchange is downloaded, it is also easily accessible through Ocean's messaging home screen aside the full suite of Ocean's messaging capabilities.

Helio will also soon launch Helio File Viewer in conjunction with Mail for Microsoft Exchange. When available, Helio File Viewer will allow users to view documents including .doc, .ppt, .xls, and .pdf files.