Version 4 now can encrypt all e-mail and attachments, unlocking them with a user-entered pin code. This "sandboxing" will protect e-mail even if a lost or stolen is accessed. Among the 1,500 new APIs Apple has packed into the firmware, due for release this summer, are those for developers to encrypt data inside their applications.

Enterprises also will be able to wirelessly distribute an app from their own servers, according to Apple. But executives said users won't be able to distribute other apps outside of Apple's App Store. "Apps have to be code-signed via enterprise distribution," according to Scott Forstall, senior vice president of iPhone software.

Jack Gold, principal of J. Gold Associates, a technology research and consulting firm, pointed out that this will enable companies to upload and update apps from corporate systems without going through iTunes. "This is a big deal. You no longer have to 'side-load' [these] devices through a PC," he says.

The new OS version will also support "mobile device management" but Apple didn't describe how that would be done. "The new management APIs sound like a major upgrade," says Gold.