The latest version of Windows Mobile contain an architectural security flaw that is likely to be a turn-off for enterprises, a wireless analysis firm has said.

In a report published last week, analyst Jack Gold of J. Gold Associates said the way Microsoft Exchange and Windows Mobile 5 handle data transfer leaves sensitive corporate data inadequately protected. The software can only transfer unencrypted data to devices, and Windows Mobile doesn't provide any encryption options on the device, Gold said in the report, called "Microsoft's Direct Push Insecurity".

That leaves only a password mechanism between unauthorized users and corporate data, which is unlikely to satisfy many companies' requirements, he said. In particular, companies such as financial services firms and health-care organizations, which operate under tight regulatory restrictions, are likely to need on-device encryption.

Competitors such as Good Technology, Sybase and Research In Motion allow users to encrypt files on their devices.

The problem lies with AirSync, a derivative of ActiveSync used to transfer data to devices, Gold said. ActiveSync and AirSync can only transfer datasets with specific types of formatting, meaning encrypted data can't be transferred from Exchange Server to Pocket Outlook.

The data is encrypted while in transit, via an SSL link, but not on the device. "We believe that companies considering the use of Microsoft Direct Push Exchange technology should be very cautious," Gold said in the report.

Just two weeks ago, Kaspersky Labs reported that a flaw in Windows CE meant that mobile operating system was at a particularly high risk of attack.