04/23/2015

Xplore Technologies and Motion Computing: Austin Neighbors Get Cozy

The news that Motion Computing was acquired did not come as much of a surprise, nor the fact that it was acquired by the ever-opportunistic Xplore Technologies. What was striking, however, were the terms of the deal - $9 million cash and assumption of $7 million of Motion Computing’s liabilities. Motion’s struggles with profitability have been widely rumored within the industry, with uneven performance resulting in substantial market share erosion. Motion's share of the growing rugged tablet market shrank by nearly one half over the past 4 years to the low teens in 2014. However, the extent to which it was leveraged and its narrowing margin for error – resulting in such an abrupt deal – came as a shock. Thus, the impact of the Hydis plant closure (Hydis was Motion’s single source supplier for daylight viewable displays) was a critical blow that stopped the company in its tracks as it was unable to fulfill orders for a large share of demand, especially its released - and increasingly popular - R12. With no inventory on hand or opportunity to place a “final order” (as plant workers immediately went on strike following the announcement that the plant was being shuttered), this was ultimately crushing to Motion.

VDC analysts explore the ramifications of this deal and the impact of the consolidating rugged mobile vendor landscape in a recently published VDC View. VDC clients can access the document here

 

Mobility is Driving Enterprise Collaboration Innovation

Long a bandied-about buzzword, collaboration has gotten an enterprise makeover in recent years in integrating chat and content sharing. The market has emerged from its roots in consumer-grade social networks like Facebook and Twitter to incorporate established enterprise players like IBM, Oracle and SAP, especially after Microsoft’s acquisition of Yammer in 2012. Since then, enterprise-specific social networking products have transformed from more consumer styled chat tools to fully fledged business collaboration platforms that have the potential to replace not only intranets, but knowledge management systems and corporate portals as their features and functionalities continue to expand. The main driving force behind this explosion in innovation has been mobility, both on the consumer and the enterprise front, as the impact of mobile-native millennials entering the workforce grows.

Differentiation in a crowded market

Companies are increasingly coming to understand the value of employee collaboration and of enterprise social networks (ESN), particularly as social media becomes a more integrated part of professional and personal daily life. However, the low barrier to entry has meant that there is an abundance of options available, ranging from consumer-grade chat options to Tier-1 solutions and everything in between. The result is a crowded market with considerable overlap, making it difficult for vendors to differentiate themselves. Although many companies faced with a plethora of options turn to existing solutions providers like IBM, Oracle and Salesforce, there has been room for innovators to disrupt the marketplace. These include companies like Atlassian, Slack and Zimbra, who offer a streamlined, mobile-first approach to collaboration. The sheer number of market players and the stratospheric levels of funding mean that the playing field is wide open with no apparent winners, which in turn is putting pressure on big name vendors to bring powerful collaboration tools to the table.

Appealing to a workforce that spans multiple generations

While the millennial generation has proved to be a significant driving force behind the adoption of more consumer-like collaboration tools in the enterprise, there is a challenge in getting older employees to adapt their work habits to embrace a more fluid approach to work and collaboration. For companies like Tangoe, considering the requirements of an inter-generational workforce has been central to the design and development of their product. In order to overcome resistance to new work processes and collaboration tools, vendors have the ability to introduce adaptive elements that can learn from end-users’ habits, although this presents privacy and security issues that would need to be addressed by the vendor.

Seamless integration is key

There is definite value in areas like user-defined contact preference, one-on-one and group chats, and content sharing, particularly when combined with a mobile-first, device-agnostic approach. This is increasingly becoming the norm across enterprise productivity applications and products. However, to be truly powerful, these solutions must be able to provide a user experience that meets the high expectations of a user base accustomed to consumer products and seamless integration. In an era where many longstanding productivity applications like email are undergoing significant revamps, a lack of integration could lead to a glut of programs and unnecessary app-switching, which is inefficient and cumbersome. Any shortcomings in either category can result in a lack of employee buy-in, or worse, employees resorting to workarounds using consumer-grade programs that lack the necessary security features and risk data leakage. Major players like Microsoft, Salesforce and SAP have done well in integrating their collaboration tools into their portfolio, but the bar has been set high to meet expectations. Given the growing market for enterprise collaboration, however, it is a challenge that a growing number of vendors are willing to accept.

with Kathryn Nassberg, Analyst

04/16/2015

Could the Apple Watch be a tipping point for enterprise wearables?

In the days before the official launch of the Apple watch on the 24th and Apple counting nearly a million pre-orders since last Friday, much of the tech world is abuzz with talk about the newest smartwatch to hit the market and the impact it could have on wearables as a genre. Although wearable devices have been on the market for some time, they have failed to garner any notable traction in the consumer market. The question remains as to whether the pricier, designer Apple Watch can be the catalyst for widespread adoption the way its predecessors were for smartphones and tablets and pave the way for greater integration of wearables in the enterprise.

The slow climb towards enterprise acceptance

Despite the current focus on smartwatches, the wearable form factor represents a broad spectrum of devices, particularly in the enterprise, where less consumer-oriented devices like wrist- and hip-mounted computers and ring-mounted scanners are more the norm, as well as head-mounted displays like that of Vuzix and the much-maligned Google Glass. However, the majority of the deployments for these wearables have primarily been for relatively niche applications that have traditionally revolved around data collection-intensive environments like the warehouse, where the benefits of hands-free devices are more immediately tangible. However, with enterprise mobility reaching even the most conservative of companies, interest in wearables is spreading across industry verticals. Notable examples include the healthcare industry, as well as logistics and field services where the benefits of being hands-free are becoming increasingly apparent. While many of these developing use cases have been for head-mounted displays like Google Glass (particularly in logistics and warehousing for vision-based picking applications), it has made enterprises take a more creative approach to equipping their mobile workforce and the benefits to be gained. Data from VDC Research shows that a growing number of industries are evaluating wearables, although the lack of a clear ROI remains one of the primary barriers to adoption.

Finding the killer app

The primary challenge in bringing wearables like the smartwatch into the enterprise is that, unlike other mobile devices, the wearable is not typically a standalone product, but is tethered to another device – usually a smartphone. By acting as a complementary device, it brings up the question as to whether it is truly needed in line of business applications. However, the ISV and development community is bullish on the notion, as evidenced by the growing number of solutions that incorporate smartwatches: last month Good Technology became the first enterprise mobility management (EMM) vendor to support wearables with Good Work, while Salesforce launched Salesforce Wear in the summer of last year as a platform to encourage app development for the form factor. Many of the emerging use cases revolve around hands free notification and ID functionality through NFC and BLE, although EMM vendors like Good Technology see potential for data security through the use of the device in dual-factor authentication and access control. Nevertheless, many of the gains are viewed as incremental and complementary rather than revolutionary, as the introduction of the smartphone and tablet into the workplace has set the bar high.

 Awaiting the tipping point

With thought leaders across the board predicting the explosion of wearables and IoT both in consumer and enterprise markets, it is only a matter of time before wearables as a whole gain more widespread acceptance and, once again, all eyes are on Apple. If the company succeeds as it has in the past in capturing the imagination of the public and the developer community alike, this month’s launch will likely prove the much-anticipated and talked about tipping point for wearables. This, in turn, will bring forth new layers of complexity regarding BYOD and security policies to an already complex environment, especially as the vast majority of devices will be personally-owned for the foreseeable future. In the meantime, April’s launch will determine whether wearables can finally make the transition from consumer trend to enterprise-ready. 

(Research and contributions from Judy Zhang)

04/10/2015

Why Content is King on Mobile Platforms

VDC's recent conversations with CIOs indicate that a shift in thinking is underway; organizations recognize that they need to expand their security focus beyond their users and their device(s) to the data both the users and devices have access to. This data-centric security model is helping CIOs and IT leaders to exert greater control and increase their level of comfort with their mobile policies. While protecting data on a server has become par for the course in the enterprise, protecting data in motion is a whole other kettle of fish. The increasing use of mobile devices in the enterprise has employees carrying around (and potentially exposing) more information than ever. A typical mobile device is likely to contain both personal and work-related data – including emails, email attachments, voice mails, text messages, and potentially private corporate data.

 

Providing access to corporate content is game-changing

 

The ability to provision and control access of corporate content to mobile platforms represents a significant area of growth, as evidenced by how vendors such as DropBox and Box have seen their subscriber numbers skyrocket as they have made it easy for consumers to access their personal photos, files, and videos on all platforms, regardless of device. However, there are many scenarios for these types of services to be extended into the corporate world so that users have perpetual access to their data and content. What continues to change is the type and volume of content, as well as the places in which content needs to travel to enable business processes. Most large organizations have invested in Enterprise Content Management (ECM) infrastructure, and have terabytes of content siloed in those systems. Mobile access to these repositories has been possible for some time; however, only recently have we seen CIOs feeling more confident in allowing mobile access to this content. This is primarily due to the enhanced security features that mobile-first vendors have implemented in the past 12 months. These vendors have integrated elegant containerization solutions that feature sophisticated authentication mechanisms that can easily interface with existing identity management solutions. Furthermore, the native mobile VPN capabilities on both the iOS and Android platforms continues to improve and evolve, enabling vendors to further enhance the security posture of their solutions and giving the C-suite the peace of mind they require for more advanced mobile enablement.

 

  Content is King_image

Smaller vendors are leading the way

 

While EMM vendors have made great progress in integrating robust MCM capabilities into their EMM suites (successful examples include AirWatch (Content Locker), MobileIron (Docs@Work), and Good Technology (Good Share) and innovative startups such as Big Tin Can, Egnyte, and OwnCloud have proven their mettle in the market, it is only a matter of time before large vendors like IBM and Microsoft enter the arena in a meaningful way. Both of these firms have not only made clear intimations on enterprise mobility, but are ready invest significantly to ensure their position; despite progress with Lync and Delve, Microsoft may need to acquire in this space in order to bolster their offerings. Meanwhile, IBM has made strides in MCM with MaaS 360 to provide scalable enterprise mobility solutions. The question remains, however, as to what the impact large vendors will have on smaller, more agile EMM vendors looking to innovate in this space.

 

 Providing the tools towards a Post-PC era

 

A variety of tools and solutions have emerged to help address the new mobile workforce challenge ― vendors know a problem exists, as they hear their customers asking for help to deal with the onslaught of data and new forms of mobile content (such as work products from new mobile applications that include forms or images, audio, and video content) that are increasingly common in their organizations. While the ability to discover, search for, view, edit, and annotate an increasingly broad range of content from a mobile platform moves us closer to what many refer to as the post-PC era, it is the incorporation of enterprise features like granular policy control, auditing, and traceability of documents and business content that will give CIOs the peace of mind they need to open up databases and content management systems to their mobile workforce.

 

 with Eric Klein, Managing Director

 

 

04/06/2015

Rugged Mobile Market Entering 2015 With a Head of Steam...Sort of

It has been undeniable that the rugged mobile computer market has lost its way over the past several years. Be it the competition from lower-cost consumer devices eroding opportunities or the overall economic malaise, the headwinds facing this sector have been palpable. In 2011, VDC Research published a report suggesting that one-fourth of the rugged market (especially the handheld segment) was at risk from the onslaught of consumer smartphones and tablets. Although the market outcome followed the narrative, the analysis did not fully take into account the market dynamics and the degree to which the market has transformed over the past three years. From sweeping consolidation to massive changes to device design and mobile OS bets, the market has fundamentally changed. 

VDC just published its Q4 2014 and fully year 2014 shipment figures for rugged mobile computing solutions. The highlights from the research include:

  • The overall rugged handheld market was flat in 2014 in comparison to 2013. However, revenue shipments were up 4% in the second half of 2014 and Q4 2014 were up an even more impressive 8.9% over Q4 2013. Although the rebound has been fueled almost entirely by the US market with several large-scale rollouts in the retail and transportation/logistics sectors, we are beginning to see positive momentum in other regional markets. Rugged Android has been a key storyline with major enterprise customers overcoming their tension by placing big bets on these solutions. We anticipate more OS see-sawing in the rugged handheld space, However, with the absence of a viable Microsoft alternative (until Windows 10?), we do expect Android-powered handheld devices to account for more share moving forward.
  • Rugged smartphone shipments grew by 9.8% in 2014 with growing demand in various field mobile segments including construction, utilities, manufacturing and others. Opportunities in public safety are expected to become especially interesting with increasing demand for broadband applications. Specialized solutions with Band 14 support and PTT functionality are starting to show real traction.  
  • The rugged tablet market grew by 17.5% in 2014, recording especially strong growth in Q4 2014. The opportunities were very diverse with strong investments in embedded manufacturing applications and also as a notebook alternative for first responder solutions. A challenge for some of the vendors in the first half of 2015 will come from the closure of a Hydis display factory, which had been providing daylight viewable displays. Navigating this supply chain issue will likely cause some disruption in the first half of the year. 
  • Q4 brought 2014 to a solid close for notebooks with the third consecutive quarter of growth after heavy contractions in 2013. However, with much of the 2014 momentum powered by XP migration initiatives, it will be interesting to see how the market tracks in 2015. So far, we are seeing generally positive indicators for this segment.

Our outlook for rugged mobile solutions through 2015 is generally positive and certainly an improvement over previous years. The market has clearly changed and what will be especially critical for vendors and solution providers that amid the growing noise surrounding enterprise mobility is maintaining focus on the markets and applications where the value proposition of rugged technology can be clearly articulated and supported. 

 

03/17/2015

Does the New SecuTABLET Foreshadow BlackBerry's Transition to Software?

Following a turbulent year which saw sizable contractions and the launch of two new devices, the BlackBerry Passport and the Classic, the company once again made headlines this week with the announcement of its first foray in years into the tablet market after the failure of the ill-fated PlayBook with the unveiling of the SecuTABLET, a high-security tablet based on the Samsung Galaxy Tab S 10.5. Presented in collaboration with IBM at CeBIT 2015, the device is squarely focused on security, with the public sector and security-minded enterprises as its target market. Aiming for the highest levels of security, the device, which has been designed with European governments in mind, is currently undergoing certification for a German VS-NfD (classified – for official use only) rating, making it one of the most secure tablets to enter the market in an era where concerns around data leakage and breaches continue to grow. The tablet marks a notable departure for BlackBerry, as this represents the first device from the company that does not feature proprietary hardware or OS. 

A powerful enterprise partnership

As noted in BlackBerry’s press release, a study from IBM’s Institute for Business Value (IBV) found that 63% of public authorities want mobile access to mission critical apps, but the level of security required through legally mandated restrictions towards data privacy present a considerable obstacle. As a result, there is a dearth of solutions that fit a “government-grade” level of security demanded by the public sector. To address the gap, BlackBerry has worked to form a partnership with some of the best-in-class solutions providers to create a turn-key, secure tablet solution that meets stringent security requirements. The device features recent acquisition SecuSmart’s security architecture and secure SD card and driver, in addition to the trusted execution environment protections from Samsung’s KNOX platform, and is complemented by Apperian’s secure app store and app-wrapping capabilities. The latter’s app management, which has proven itself to be best-in-class and speaks to the firm’s strength in the MAM category. Meanwhile, IBM brings considerable industry-specific expertise to the table, as well as the ability to bring mobile solutions to a wide array of both regional and vertical environments.

Embracing the niche

Despite a high price point of €2,250 (US$2,380), the move represents a smart and positive development for BlackBerry, which has struggled to maintain enterprise relevance in the face of steep declines in market share against Android and iOS devices. By teaming with Samsung, not only can BlackBerry offload the hardware requirements in bringing the SecuTABLET to market, it also can take advantage of a considerably larger user and application base than would be available to its own proprietary OS, whose market share has dwindled to single digits in recent years. If anything, this strategy holds significantly more potential as it allows BlackBerry to pivot away from its hardware roots While it is still too early to tell, preliminary guidance reveal tepid adoption rates of its smartphones that mean any attempts to regain general market share will be an uphill struggle at best. By focusing on the niche that is government and high-security enterprise, BlackBerry can leverage its differentiation through high-level security to its advantage, especially with its acquisition of Secusmart. However, while there have been competing solutions from the likes of Motorola’s AME 2000 and Apple, through its collaborations with KoolSpan and its own Root of Trust to provide similar hardware-based solutions, BlackBerry’s traditional strength in the public sector and the sophistication of the SecuTABLET solution will offer a meaningful point of differentiation to help it withstand the competition.

With Eric Klein, Managing Director

Realizing the New Normal at Zebra Technologies

Zebra Technologies announced its Q4 2014 earnings today for the first time since its acquisition of Motorola Solutions’ enterprise business officially closed. The results included two months of the enterprise business in addition to Zebra's existing operations. Zebra’s core printing and consumables business has been on a tear of late hitting record numbers on a consistent cadence. Q4 2014 was no different with the company reporting YoY sales growth of a strong 10.6%. The Enterprise business, conversely, was flat on a nominal currency basis (up a couple of percentage points on a constant currency basis). However, on a sequential comparison, the Enterprise business was up approximately 14%. While this is a positive number and may signal a strengthening of the core Enterprise business, it is somewhat misleading as the 4th quarter represents one of the strongest quarters in the year and the 3rd quarter one of the weakest. In addition, as Zebra absorbed the Enterprise business, gross margins predictably took a hit, declining by 700 basis points to 42.6% for the quarter.

So what is the new normal for Zebra? Clearly its core printer business cannot be expected to sustain its recent torrid run rate(VDC is projecting this market to grow by 5-7% annually). . However, the printer business does appear to be the early beneficiary from the sales synergies from this merger. The acquisition has provided a significant boost to Zebra’s cross-selling efforts, enabling it to proactively position its offerings as a complete data capture solution set as opposed to an ad-hoc aggregation of a broad range of devices.  Moreover, from a market/competitive perspective we do not anticipate any major technology disruption or new vendors dethroning its leadership position. On the enterprise side the dynamics are vastly different with the disruptive impact of consumer (mobile) technologies, lower barriers to market entry and a much more fragmented competitive landscape. Pricing pressures have mounted leading to a lack of pricing discipline and opening the door to margin erosion. That said, we do see the market dynamics for ‘enterprise-focused’ mobile solutions improving in 2015 with Zebra well positioned to take advantage. So while the new normal for Zebra is certainly one of lower top line growth rates and margin compression, it is also operating at a significantly greater scale with a substantially higher upside.

Some of the comments made by Zebra’s leadership team during the earnings call that we found most compelling include:

  1. Emphasis on rugged Android. As VDC has mentioned in previous discussions, rugged Android hit critical mass in 2014, accounting for approximately 15% of overall rugged handheld market. Previously a Europe and emerging markets trend, major deals with Home Depot and a tier one North America logistics carrier provided a much needed boost. While growing pains persist, there is today a viable alternative to Microsoft for rugged handheld devices and Zebra arguably has the strongest portfolio to address this opportunity.
  2. Major issues impacting the Enterprise business in 2014 were directly addressed with strong comments by Zebra. Specifically these included commitments to improve service levels and SLA performance by the service center in Mexico and addressing/reducing the inventory issues in Asia. Moreover, in Asia, Zebra’s sales leadership is expected to drive renewed engagement, especially in China.
  3. Zebra had a phenomenal year from the barcode printer perspective with record sales for desktop printers and resurgence in the tabletop printer segment. Desktop printer sales were particularly strong in the Transportation & Logistics segment, and mobile printers fulfilled large orders in retail. The company released several new printers over the year, which highlights its efforts to introduce updated models to better meet the demands of today’s business environment. By their own admission, what also significantly helped Zebra in the printer market following a lackluster performance in 2013 was its acquisition of Motorola Solutions’ Enterprise business unit, which served to make the two organizations exclusive with each other.
  4. Addressing the recent pricing pressures – particularly in Europe – Zebra commented that they are “actively looking at adjusting list prices”. While it is clearly too early to tell what this means, the sentiment among channel partners following the recent wave of consolidation creating two mega AIDC vendors in Zebra and Honeywell was that many anticipated much greater pricing discipline moving forward and focus on key business performance metrics. VDC has been very vocal about this issue and the perception that vendors/solution providers have left money on the table with its aggressive pricing practices and deal rationalization. Yes, the market has changed with (lower cost) consumer devices eroding some of the traditional market potential. However, not all opportunities are worth chasing and it will be important for a successful Zebra to realize that delineation.

Investors have not taken too kindly to Zebra’s earnings miss with the stock down by almost 4.5% since market opening. With much of Q1 2015 already behind us, Zebra’s guidance for the quarter was YoY growth of 6-8% on a constant currency basis (or 1-3% on a nominal basis), representing a strong start to the year. Ultimately this deal is about creating synergies throughout all aspects of the business and providing customers and partners with a stronger technology and solution value proposition. 

With Richa Gupta

03/10/2015

The EMM Pivot is Upon us #MWC15 EMM Recap

Mobile first EMM vendors know they must evolve — and they are ...

As one might expect, the high profile handset refreshes from Samsung (Galaxy S6), HTC (M9) and LG (G Flex 2) and the notable (and well timed) acquisition announcements (NXP acquiring Freescale, HP acquiring Aruba Networks, and Mitel's acquisition of Mavenir) garnered the lion share of the post MWC media coverage. However, there was something different at MWC this year. There was a "new partner" sitting in on several of the briefings we had at MWC.

Google sent several senior executives to Barcelona (Sundar Pichai, Rajen Sheth, and Andrew Toy were the most visible)  either Rajen or Andrew was present (and actively participating) at several of the meetings we attended at MWC the exception? Our meeting with Good Technology. Why? Read on.

Android for Work is Legit and KNOX is Not Dead (yet)

Every prominent enterprise mobility vendor has moved quickly to completely integrate with the Android for Work platform.

Android_for_work

Good is negotiating with Google and is likely to join the other prominent vendors listed above who were quick to announce their integration with the Android for Work Platform however, it appears as though Good (and SOTI) have forged strong(er) partnerships with Samsung. Both seem to have gone further than their peers in integrating with the company's KNOX platform (which is not just a container). While all of the vendors listed above have been working with Samsung's KNOX platform; after speaking with several Samsung executives, the level of integration with KNOX is varied. Good and SOTI have seen traction from their partnership with Samsung and have figured out creative ways to go to market (one sure fire method is to give away the device  while not sustainable, it appears as though Samsung is willing to do so). Here's what my colleague David Krebs wrote in his MWC Event Recap post:

KNOX
In summary, we see both Good and SOTI benefiting by working with both Google and Samsung. Both vendors have a sizable footprint in both government and financial service industries. We expect that Good will formalize its partnership with Google soon.

ACE to the Rescue

The launch of App Configuration for Enterprise (or ACE) was timed for MWC. Five prominent enterprise mobility vendors (AirWatch by VMware, Box, Cisco, Workday and Xamarin) have collaborated on the standard which aims to simplify and scale the deployment of apps in the enterprise. The benefits are clear and straightforward (see below).

Ace_benefits

There is no question that enterprises are challenged by app provisioning and distribution. Considering that multiple versions of the same app (built with different SDKs) is now normal, the standards-based platform agnostic approach (thanks to the ability to seamlessly invoke both the latest iOS and Android   APIs) will be welcome. However, the consortia needs to get other important vendors on board (Citrix, IBM, Microsoft, Oracle and SAP come to mind). 

EMM Evolution

My next report (scheduled for May) will focus on the evolution of EMM. I'm seeing some interesting (and consistent) thinking from prominent EMM vendors on how they intend to evolve and differentiate their platforms moving forward. Key initiatives that are in development and on most road maps include:

  • Split billing
  • Unified Endpoint Management
  • Enhanced email clients
  • Architecture enhancements
  • UX / Console optimization

I'm actively scheduling briefings to discuss the evolution of EMM and the pivot that I anticipate. If we didn't meet at MWC, I'd welcome to opportunity to discuss this topic with you in the next few weeks.

Kudos to GSMA for hosting another top-notch event. See you at MWC 2016!

 

MWC 2015 Recap

Although the Mobile World Congress event we just attended in Barcelona is still largely a carrier show – as measured by the audience it attracts and the general lack of attendance by enterprise IT decision-makers – the roster of vendors on display is remarkable. VDC spent three agenda-packed days at the show meeting with a variety of enterprise mobility and IoT-focused solution providers. Some of our team’s observations are summarized below:

Samsung Galaxy S6: Back to Basics? Our week kicked off on Sunday evening with the Samsung Unpacked Event and the anticipated unveiling of the Galaxy S6. First things first – the device is absolutely stunning. Beautiful build quality with a gorgeous display, including the unique Edge option. However, the unveiling of the device felt flat. Clearly we are spoiled today with the expanding capabilities of smartphones; thus, the bar is set extremely high for each device with all of the upgrades needed for it to be considered a success. Moreover, today it is much more than device features that make a launch compelling; rather, what’s important is how those features enable use cases. However, with Samsung’s focus on features and specs, the company missed a real opportunity to translate these capabilities into meaningful value for everyday – or new – applications.

This was especially evident with the introduction of Samsung Pay, which leverages NFC for tap-to-pay in addition to the integration of technology Samsung recently acquired from LoopPay (Magnetic Secure Transmission) which enables the devices to be used with magnetic stripe readers. This is truly differentiated in that it enables the Galaxy S6 to be used as a mobile wallet at approximately 90% of merchants or 30 million payment terminals worldwide. Although this technology conceivably fills a temporary gap while retailers in the US rush to meet the end-of-year mandate to support chip and pin requirements, magnetic strip readers are not disappearing from the retail landscape anytime soon. Thus, with payment infrastructure access meaning everything when it comes to mobile payment acceptance, Samsung has a strong competitive advantage with this technology, especially over arch-rival Apple. Too bad they spent all of 30 seconds covering it during the unveiling.  

Coming off an extremely challenging 2014 with slowing shipments and massive profit erosion, much is riding on this release. It is widely known that Samsung’s leading smartphone position is being challenged by Chinese upstarts on the low end, and with the iPhone 6 Apple now has an answer to Samsung’s larger display differentiation. In this context, it was perhaps important for Samsung to “revert to the basics,” focusing on device functionality and features and the “language of engineering” they have mastered. However, the decision to enclose the battery and remove the microSD card will be seen as a significant departure for many and will eliminate some much-needed differentiation, especially against Apple. 

Wearables and the Smartwatch Use Case Conundrum. On the wearable front, both LG and Huawei made headlines with the introduction of their respective smartwatches. This represents Huawei’s first foray into the wearable market, and rather than take the low-cost approach for its smartphones, the Chinese manufacturer has opted for a more fashion-forward device that runs on Android Wear and boasts the most impressive smartwatch display. However, LG’s upcoming Urbane seeks to push the boundaries a bit further by being the first offer a 4G LTE-enabled watch that also features NFC capabilities. Another unique attribute is its interface, which – based on recently acquired WebOS – is markedly more intuitive than Android Wear alternatives. Moreover, Google’s Wear platform does not currently support cellular connectivity. While these smartwatches are essentially consumer devices, enterprise opportunities are beginning to emerge, especially around notification and alerts for line workers. However, enterprises will need to be prepared to “manage” these types of devices as their employees bring them to work and look to connect them to corporate networks. In discussions with EMM vendors, who are increasingly extending support to wearable end points, an interesting use case emerged that leveraged the smartwatch to support two-factor authentication. Ultimately this category – especially from an enterprise perspective – remains very much a work in process. Even with Apple’s pending smartwatch (available this April) today’s products still lack in overall functionality – particularly battery life – and meaningful use cases to justify their expense.

Samsung KNOX: Dead or Alive? The exclusion of Samsung’s KNOX platform from Google’s Android for Work was, for many, the death knell for KNOX. The message we got from Samsung and its partners at MWC contradicted this scenario and pointed to the progress Samsung has made over the past year. Although the volume surrounding KNOX turned down significantly in comparison to the fanfare at MWC a year earlier, it is becoming more clear where KNOX fits. Ultimately we do not see KNOX and KNOX Workspace as a volume play across most of the enterprise or government organizations. That would be too limiting in today’s multi-platform/multi-vendor reality with Android for Work representing the more viable option in that scenario. However, in highly secure/regulated environments (government, financial services, etc.) we do see a real play for KNOX. Whether that is too limited given Samsung’s investment in KNOX remains to be seen. Other KNOX developments include the collaboration with Microsoft and the integration of OneDrive, OneNote, and Office 365 with KNOX Workspace. Although smartphone end users dislike the amount of pre-loaded software they receive on their devices, this one makes sense and is in direct response to the availability of Google’s productivity apps on its Android for Work platform.

Wireless Charging: Ready for Prime Time? Another bet placed by Samsung with its Galaxy S6 is around wireless charging. While this feature has been available as an aftermarket capability for previous devices, it will come fully integrated with the S6. What is perhaps most unique about Samsung’s approach is that it integrates two of today’s more common wireless charging standards: WPC’s Qi and PMA. While Samsung is making a bold bet by integrating this functionality, the technology from a performance perspective is impractical and not ready for prime time. Challenges with charging speed and charging range (relative to mat placement) remain real concerns. An interesting development from our perspective is the shift from today’s magnetic induction technology to solutions leveraging magnetic resonance. The Alliance for Wireless Power (A4WP), which recently announced its intent to merge with PMA, is introducing Rezence, which addresses many of these issues, supporting a superior charging range and multi-device charging. Although still in the specification stage, support from Qualcomm, Intel, Samsung, and others will make this a very interesting technology to follow. Is 2015 the year of wireless charging? In our opinion, no. However, significant strides are being made.

IBM & Apple: 3% closer to home! IBM and Apple announced the “next three” IBM MobileFirst for iOS Apps at MWC, bringing its total to 14 against the stated goal of 100 by the end of 2015. At the end of the day the numbers are somewhat meaningless, especially considering the number of mobile apps already developed by many of IBM’s closest competitors. However, as this is their stated goal, it is something they will inevitably be reminded of. What struck us as especially compelling was not so much the apps themselves – many of these are IBM versions of mobile apps that have already been created. Rather, it was how Kathryn White, IBM VP of Marketing and Head of Sales for the Apple partnership, conveyed the process through which they identified mobile use cases. Starting with an acute industry pain point – for example, the $20 million airlines lose each year by improperly calculating excess fuel requirements – IBM’s approach is to focus on analytics, identify a feature that “changes the moment” and ultimately develop and app that empowers the employee to make meaningful decisions. This a low-risk win for Apple with no real skin in the game on application development and access to IBM’s enterprise channel, which – especially for the lagging iPad – could provide a nice boost. Among the potential issues we are tracking is the ability of the IBM sales force to effectively “sell” enterprise mobility solutions (we are seeing similar sales cycle issues with Oracle and SAP). In addition, the critical aspect of professional support services for enterprise customers surrounding the mobile device (provisioning, depot services, advanced exchange, maintenance, white glove, etc.) represents a potential gap or vulnerability to the existing model.

The Windows 10 Wedge. That Microsoft or its Windows platform is on the outside looking in when it comes to enterprise mobility should come as no big surprise. That said, Windows remains extremely critical for enterprises, especially in the more traditional PC, server, and embedded endpoint domains. One of the more interesting questions will be the extent to which Windows 10 changes Microsoft’s fortunes, especially considering mobile devices. Today’s Windows smartphone marketshare is negligible at less than 5% globally. However, and especially in markets that lack strong BYOD momentum (i.e. outside the US), the recent trends have been encouraging. Surprisingly where Microsoft has done especially well in the enterprise is in the lower-end tier of the smartphone market with its lower-cost Lumina devices. With the launch of Windows 10, Microsoft is undergoing a rebranding effort, emphasizing a singular platform/store/Microsoft experience. While Microsoft does not have an answer today for more BYOD-centric environments, we do see an opportunity for Microsoft to take advantage of the continued enterprise uncertainty surrounding Android and wedge itself more firmly back into the enterprise mobility discussion. 

with Kathryn Nassberg

02/27/2015

Event Recap ― IBM InterConnect

I had the opportunity to attend IBM's InterConnect event earlier this week in Las Vegas; the event was well attended (20K+ attendees) and showcased the depth and breadth of IBM's Cloud, Mobile, Security, and DevOps capabilities. The inaugural InterConnect event combined three previously separate IBM events (Pulse, Innovate and Impact). IBM's executives were successful in articulating the progress the vendor has made in the key strategic areas the company has focused on (analytics, mobility, security and cloud computing).

Robert LeBlanc, the company's SVP of Cloud, kicked off the event with a discussion of the importance of hybrid cloud. LeBlanc made is clear that progress was being made and that IBM was dedicated to "breaking down the barriers between clouds and on-premise IT systems, providing clients with control, visibility and security as they use the public clouds. Data location across an ever-growing number of clouds is an increasing concern for customers, and we are unveiling new application portability and developer services to make this easier to manage."

Interconnect2

While IBM had (arguably) the earliest vision for cloud computing, they needed to go big with their cloud messaging based on the visible traction that others have achieved (predominantly Microsoft and Amazon); in fact, the company's CEO, Ginni Rometty, spoke just yesterday at the company's annual investor briefing and made clear that she expects that the nexus of cloud, big data/analytics, enterprise mobile/social, and computer security would add promised to grow these businesses from $25B to $40B by 2018 (or ~40% of the company’s revenues in 2018).  

Holding out on Mobile

Interconnect1

While IBM revealed it had enhanced (and modularized) its MobileFirst Platform at InterConnect, it felt as though they were holding out on revealing key details on their partnership with Apple. However, with Mobile World Congress right around the corner, this makes sense, especially as IBM informed analysts/press/media that a press conference on the IBM/Apple partnership would take place at MWC on Monday, March 3.

The MobileFirst Platform enhancements provide enterprise-grade capabilities specifically aimed at:

Continuous Improvement: Collecting in app usage and feedback for enhanced sentiment analysis and crash analytics; more easily manage app iterations and release cycles.

Security: Protecting enterprise data from exposure through mobile exploits using advanced user authentication and supporting app authenticity, encrypting local data and performing app scanning.

Contextualization and Personalization: Developing proximity-aware mobile apps to create relevant, contextual mobile experiences that connect insights from digital engagement and physical presence.

Enabling Data Rich Apps: Providing mobile data through the platform's Cloudant module that allows organizations to store, sync, scale and connect to data in enterprise systems.

IBM had several of its prominent mobile customers (Bancroft, Comdata, ICICI Bank, and Kohl's) share their stories on how the mobile application(s) they have developed have transformed their workflows and day-to-day routines. What I found to be most impressive was the user adoption the companies achieved (and how quickly the apps were embraced).

Partner Enablement (Mobile Perspective)

The MobileFirst Platform Foundation 6.2 has created far-reaching opportunities across a broad spectrum of industry verticals. One such application is CSC’s integrated digital Electronic Patient Record (EPR) solution, Lorenzo Mobile. Through the use of Worklight, the EPR is a platform- and device-agnostic solution that meets all relevant health care IT standards. Key security features include SSL-encryption, dual-factor authentication through NFC and PIN, and IBM’s MaaS360, while also enabling PAC integration and unified push notifications and offline capabilities. While the soon-to-be launched solution will likely remain UK-only for the foreseeable future, rather than taking on health care giants like Siemens and Cerner, Lorenzo Mobile nevertheless represents the potential for the industry-changing potential of emerging solutions providers.

The VDC Mobile Team is off to Barcelona this afternoon - we're looking forward to hearing more details from IBM at the show. Be sure to follow us on Twitter for coverage of #MWC15!

With Kathryn Nassberg, Analyst

 

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