Event Recap – AirWatch Connect

Blending virtualization w/ EMM + some software defined security on the side

I had the opportunity to attend AirWatch's Connect event this past week in Atlanta, Georgia. The event was well attended and featured a nice mix of vendors on the show floor that ranged from small innovative mobile-first startups to industry heavies, such as AT&T, CDW, LG, F5, Sprint and Verizon.

As would be expected, AirWatch broke some news at its event:


Here's our takeaways:

Samsung: AirWatch announced an expanded reseller arrangement with Samsung—this is notable, as it shows that Knox is not dead (as some have declared). The two vendors may find opportunities to collaborate through Samsung's enterprise mobility services initiative, which continues to ramp and has a strong industry focus. This formalized partnership also shows that you can “have your cake, and eat it, too” (the company has also partnered w/ Google on its Android for Work program).

Mobile Security Alliance: AirWatch is demonstrating industry leadership via its Mobile Security Alliance; the firm had already had formalized partnerships with 9 of the 10 founding members (Proofpoint is the most recent vendor the company is partnering with). Each of the founding members (Appthority, Check Point, FireEye, Lookout, Palo Alto Networks, Pradeo, Proofpoint, Skycure, Veracode, Zimperium) is integrating more deeply via AirWatch's console and/or via AirWatch's device side agent (through APIs). The partners each bring very specific enterprise-grade security enhancements that are complementary to AirWatch's EMM value play. Alliance partners span three categories: device, application and network-focused protection.

ACE: AirWatch announced that the App Configuration for Enterprise (ACE) initiative that it is driving has grown to 44 members. Several notable vendors with innovative solutions around enterprise email (Nacho Cove), mobile application modernization (Star Mobile), and split billing (Movius) have joined the roster, but the addition of key SAP properties (Concur and SuccessFactors) were without question the most notable and important. Both of these applications are widely adopted and can now be seamlessly provisioned to AirWatch customers. It remains to be seen is ACE will propel the prepackaged application market—continuing to expand the ISV roster will certainly help.

Privacy First Initiative: AirWatch announced their Privacy First Initiative—the offering will help educate customers on privacy issues and provide end users with greater transparency on how their device (and applications) usage is being monitored. This is smart, and a capability that EMM vendors who compete with AirWatch possess. However, AirWatch is first to market with clear messaging and productized capabilities here. An example that was provided at the event was a scenario whereby IT wanted to ascertain an employee's location-going forward, this type of event can be fully audited/logged. More importantly, such events cannot be executed without informing the end user (policies are in place to information other LOBs, such as HR as well). The privacy feature will be available via AirWatch's console in Q4.

Platform Evolution: Supporting Windows 10 is a requirement; Microsoft's APIs have made it relatively simple to integrate with their Azure Active Directory product, which can streamline self-service device enrollment. AirWatch (along w/ competing EMM vendors) can also offer bulk provisioning for Windows 10 devices and support Win32 and Universal apps straight away. The company's integration also includes device management policies for native email configuration, per-app VPN connectivity and enforcement of enhanced security functions.

On the Same Page—Integration on Track. Still Plenty of Runway Left for EMM Vendors

In speaking with both VMware and AirWatch executives, it is clear that the companies are on the same page in their messaging—products such as NSX (more on this below) also show forward progress on integration. I also made sure to engage with several of AirWatch's prominent customers at the event—I was somewhat surprised by the slow progress in adopting mobile applications by several of the company's largest customers; however, overall, I got the sense that initiatives to expand applications were underway—many customers mentioned that they were busy in migrating/modernizing their legacy applications for mobile platforms.

Recognition that Mobile is Just Another EndpointUEM Strategy Required

The influx of new devices will require IT departments to reconsider how they deliver critical IT services to their internal end users, as the lines between personal and mobile computing will continue to blur and the number of “non-Windows” endpoints continues to expand. Device diversity is now common in most organizations and makes implementing solutions that have the flexibility to streamline the management of all devices, ranging from the ruggedized device deployments that are common in distribution centers, warehouses, and factories to consumer-grade devices that are finding their way into every business. AirWatch’s move into unified endpoint management (UEM) earlier this year shows that the vendor has been preparing to support the increasingly diverse range of non-traditional endpoints (e.g., ATMs, kiosks, smart vending machines, parking meters, POS devices etc.—as every EMM should be), but this has also signaled that the market has matured. Going forward, EMM vendors like AirWatch will be competing directly with much larger vendors (e.g., Accelerite, IBM, LANdesk, and Microsoft) as they begin to pivot to next generation UEM vendors. This will be a fascinating transition. 

Gelsinger Brings Executive Gravitas

VMware's CEO Pat Gelsinger attended Connect for the first time, adding some VMware executive "heft" (even though Mr. Gelsinger is svelte ) to the keynotes. Gelsinger is clearly pleased with the AirWatch acquisition, and spoke at length about security: specifically on how VMware's virtualization orientation enabled enhanced "built-in" security opportunities. The need to enhance security, compliance, and auditing capabilities is required for most large customers, and is a key driver behind the company's foray into Identity Management and its Workspace Suite. VMware is placing a big bet (R&D and marketing $'s) on both of these initiatives.

VMware's Sanjay Poonen who heads the EUC division spoke about the company's "Switzerland Status"—its ability to work across the ecosystem and how its Workspace Suite solution could simplify application delivery (native, SaaS, Windows, or web apps) on any device with robust security. The Workspace Suite marries Horizon, VMware's Identity Management solution, with AirWatch's Content Locker and its ability to unify app delivery. VMware can also offer additional security options by combining their NSX solution (a network virtualization platform), which offers granular application level virtual network policy controls with AirWatch's per-app VPN capabilities. This brings an opportunity to virtualize data center components, using a software-defined approach, along with the potential to reduce hardware costs by decoupling compute, network and storage functions. The security benefit is the ability to restrict application access to specific segments within a network.

Kudos to AirWatch for drawing a critical mass of enterprise mobility—oriented vendors to Atlanta—the event's Expo felt like what CTIA's event's used to be.


Hip to be Enterprise: New Enterprise Focused Tablets Stealing the Show

With the broader tablet market in the midst of an identity crisis one segment receiving increased attention are enterprise end users. VDC’s recently published 2015 Enterprise and Government Tablet analysis confirms this opportunity, forecasting annual growth of enterprise tablets – which represent approximately 15% of the overall tablet market – at 12.1% annually through 2019. A flurry of new products targeting the enterprise user from mega-brands Apple and Microsoft and specialty rugged mobile vendors Zebra and Xplore are directing the spotlight on this segment.

In comparison to other mobile form factors, tablets are an increasingly popular selection for enterprise line of business (LoB) applications. According to recent research conducted among enterprise mobility decision-makers, tablets are selected 33% of the time among devices issued to employees by enterprises in support of LoB applications. As the number of mobile deployments in LoB workflows continues to grow, consumer mobile devices are setting the benchmark for what any mobile device should look and feel like, resulting in the emergence of a new breed of enterprise tablets. Beyond enterprise-focused rugged OEMs, consumer-grade vendors are also turning their attention to the enterprise market through both their consumer portfolios and the introduction of more durable, enterprise-minded devices.

Enterprise Issued Mobile Devices Used to Support LoB Workflows by Form Factor

   Tablets 1

New Rugged Tablets from Zebra Technologies and Xplore Technologies

Tablet 2

Zebra Technologies held its much anticipated Tablet Plus launch announcement on September 15 during which it unveiled the details of its new ET 50 and ET 55 tablet computers. As Zebra’s first new tablets to be released since the launch of the ET1 in 2011, notable features included support for both Windows 8.1 and Android Lollipop 5.1 in addition to Wi-Fi and/or LTE connectivity. Designed with a consumer feel and equipped for the enterprise, the tablets look to penetrate a still unsaturated enterprise tablet market. With a rugged design, comprehensive accessories to meet industry demands and unique scanning capabilities the ET 50 and ET 55 look to address a number of business use-cases, most notably those in the direct store delivery (DSD), field service, and retail verticals. However, a challenge for Zebra in our estimation will be aligning their tablets with the most appropriate use cases and target industries. Although tablets are being widely adopted in markets Zebra typically serves, these are mostly lower priced consumer devices. Demand for rugged tablets with the specifications and price points featured by Zebra’s new products is mostly concentrated in public safety, utilities, telecommunications and manufacturing environments, segments outside of Zebra’s traditional “sweetspot”. Another challenge, not uncommon in the rugged mobile market, will be the price points of the ET 50 and ET 55 which are $1,850 to $3,000, depending on the configuration. Although the benefits of rugged mobile devices are calculated by their lower failure rates, higher reliability and ultimately lower cost of ownership, even these target prices are high when compared to competitive rugged tablets.

Tablet 3Not to be outdone, Xplore Technologies unveiled the XSLATE B10, a fully rugged 10.1” tablet running Windows 8.1 (Windows 10 upgradeable), also on September 15th. The device is a fully featured tablet with multiple I/O and configuration options targeting field worker applications in transportation, manufacturing and telecommunications segments.  Xplore has undergone some significant changes in 2015, none more impactful than its acquisition of Motion Computing’s assets in April. According to VDC’s most recent rugged mobile research, boosted by the Motion acquisition and strong performance of its existing business, Xplore was the leading rugged tablet supplier in Q2 2015. Now with the target on their back Xplore will need to provide staying power and consistency in performance – especially surrounding support services for its increasingly global customer base – in order to build on its recent successes. 


Not the only new tablets in town

Tablet 4

The Zebra and Xplore announcements comes on the heels of Apple’s release of the iPad Pro on September 9. The iPad Pro makes a stronger enterprise use-case argument as compared to Apple’s past consumer-focused tablets. Features including a large 12.9” display, the new A9X chip for increased speed and responsiveness and new iOS capabilities such as split screen viewing. In addition, accessories such as the new Apple Pencil and Smart Keyboard enable the device to more adequately serve end-users in corporate environments. Borrowing liberally from Microsoft’s playbook (which will be introducing the Surface Pro 4 in October), this device is Apple’s first foray into the rapidly growing 2-in-1 market. However, at the end of the day the iPad Pro is an iPad running iOS at a price point that makes it competitive with Apple’s MacBook Pro. While iOS9 does introduce some interesting features that make the platform more friendly to corporate users – for example, multi-tasking and app management including app-specific VPN management – it cannot be considered an enterprise alternative to Microsoft’s Surface Pro or other 2-in1s powered by big OS/x86 architectures.  

The enterprise limitations of the iPad Pro when compared with PCs is clear including the lack of file management capabilities and scripting technologies designed for PCs, compatibility with most productivity applications, lack of AD support and limited I/O options to name a few. At the end of the day this is just another, somewhat larger, iPad, albeit with a high end active stylus (pencil) at a higher price point.  While one could argue a future where iOS or other lightweight OSes become the enterprise OS of choice and laptops are promoted to the same architecture and framework as the rest of the mobile eco-system, that is a generational change and not one just around the corner. That said, Apple is not standing still and is clearly serious about the enterprise opportunity. Initiatives with IBM and Cisco are breaking enemy barriers and compelling use cases for iOS devices (especially tablets) are being created, often transforming existing workflows.  However, even with all of these enhancements, the iPad Pro is not a general purpose PC and cannot be considered a direct competitor to other two in one products like the Microsoft Surface Pro. Therefore we do expect Apple to encounter a bit of a positioning dilemma with the iPad Pro relative to existing iPads, 2-in1s and its own MacBooks.

What Makes a Tablet Enterprise Friendly?

According to a recent survey fielded by VDC Research among over 650 enterprise mobility decision makers, when evaluating mobile devices for line of business applications, battery life ranked predictably high on the list as did price and overall quality and reliability. With many of these tablets used in the field, wireless options—including embedded cellular capabilities—are critical (one key pain point for many enterprise and government tablet deployments has been sub-optimal GPS quality). In addition, overall ruggedness of the device—in terms of drop and water/dust protection—are key decision criteria for many applications. Surprisingly, however, security features such as integrated biometric capabilities did not crack the top five in overall importance.

However, tablets are often best characterized as a marriage of compromises. Therefore, for many enterprise line of business applications, of equal importance is the accessory and peripheral eco-systems developed by tablet OEMs and their partners. According to our research, protective cases lead the list of accessory requirements, in addition to solutions like payment and scanning sleds, multi-bay charging docks and vehicle mounts. In addition, highly application specific functionality, such as Zebra’s wireless DEX Bluetooth FOB (which addresses the huge headache and point of failure of cabled DEX solutions in the Direct Store Delivery market) often represent the keys to a well designed mobile solution. 

Mobile Device Requirements for Devices Supporting LoB Applications

Tablet 5

The tablet form factor has unique appeal for mobile workers supporting a variety of enterprise and government workflows and applications. While the overall tablet is going through its most recent identity crisis, opportunities for business and public sector applications remain strong and robust annual unit growth (for both rugged and non-rugged tablets) is projected by VDC through 2019. The tablet form factor addresses mobile workers’ need for a portable mobile device while providing sufficient display real estate to support meaningful applications. From forms-based inspection and data collection applications to using the tablet as a customer engagement tool in high value retail environments, the opportunities for these devices are substantial.

To view our recently released report on the tablet market please click here.

Written by Matthew Hopkins and David Krebs (EVP)


It’s a Topsy Turvy World: Rugged Mobile Market’s Wild Ride Continues

VDC Research’s recently published Q2 2015 Rugged Mobile Market Analysis provides further evidence that the rugged mobile market is anything but predictable. Performance varied considerably by both mobile form factors and regional market with continued turbulence expected through the end of 2015.

Strong Boost to Rugged Handheld Market in Q2 2015

  • The global rugged handheld market appears to be overcoming many of the obstacles – especially around OS migration and application modernization – that had led to fluctuating demand over the past 18 months. One clear recent trend has been the continued share consolidation among the top two vendors as Zebra and Honeywell significantly outperformed the rest of the market. Competition from consumer smartphones continues to present challenges. However, vendors have rationalized their market positions to focus on sectors and applications where they can offer significant value add.
  • At the regional level there is a significant contrast in performance. In the Americas – and particularly the US – the investment environment for rugged handheld solutions continues to gain momentum, with North America closing out its fourth consecutive quarter of sequential YoY growth. Europe by contrast paints a bleaker picture, as sluggish economic figures and a still-weak euro against the US Dollar have erased gains and placed increasing pressure on vendors to adjust prices as the currency fluctuates at near-historic lows. Demand in Asia has again picked up, moving into the second consecutive quarter of double-digit growth with many international vendors making inroads against local-vendors.
  • 2015 is continuing the transition that finally took hold in 2014, particularly in regard to mobile OS. With Zebra’s deployment of one of the largest Android roll-outs to date in the Americas with Home Depot and an impending rollout for the UK’s Royal Mail in 2015, the market seems well-primed for further deployments among tier-1 companies this year. However, the greatest question market in 2015 will be the impact of Windows 10 beginning in 2016 and whether the OS will manage to garner a critical level of demand to upset Android’s upward trend. Moreover, rugged Android demand has been concentrated in several large deals with little run rate traction, especially in the warehouse/DC sector.

Rugged Notebook Market Stalls as Market Leader’s Revenues Drop Considerably

  • The rugged notebook market closed out the first half of 2015 with a whimper, sliding further from 2014’s gains and towards some of the form factor’s lowest levels of revenues. Overall revenues dropped by 20% in the first half in comparison to the first half of 2014.
  • While Dell and Getac, fueled by several new product announcements and investments in their market development and sales teams, posted the strongest gains while market leader Panasonic’s position took a hit with a substantial decline to their rugged notebook shipments.
  • Performance in the second half of 2015 is expected to improve somewhat with strengthening demand in the public sector and the anticipated Q3 federal buying season. However, the final tally for 2015 will likely show a YoY revenue contraction of around 10%.

 Although Q2 Rugged Tablet Performance Slowed, Market Remains on Track for Record 2015

  • Unlike the recently sluggish consumer tablet market, performance in the rugged tablet market remains strong with overall revenue shipments increasing by 25% in the first half of 2015. However, on a quarterly basis, Q2 shipments slowed, particularly in the Americas region.
  • Market leader Panasonic has maintained its momentum largely on the back of strengthening sales in EMEA and APAC, lifting global revenues by 21% over Q2 2014.  The FZ series and the G1 remain squarely at the top of the pack, accounting for nearly 60% of all unit shipments for tablets.
  • Following the headlines in April with the announcement of the acquisition of rival Motion, Xplore recorded blistering high levels of growth that topped 175% over Q2 2014. Already, the company appears to be leveraging Motion’s partner network on the global market with considerable success that will propel growth well into the second half of 2015.
  • Competition in the enterprise tablet market is expected to intensify with several new entrants announcing product launches over the past quarter. Dell introduced its long awaited rugged tablet while Zebra Technologies added a Android and Windows powered tablet. In addition, Apple’s introduction of the iPad Pro and Microsoft’s anticipated release of the Surface Pro 4 in October is driving a lot of attention towards enterprise opportunities for tablets. 


BlackBerry Acquires Good Technology: Keeping Your Enemies Closer

Last week, BlackBerry made headlines with the announcement of its intent to acquire Good Technology for $425M in cash. The move follows a string of mobile-first EMM acquisitions that began with Citrix acquiring Zenprise in late 2012, followed by IBM’s acquisition of Fiberlink in November 2013, and VMware acquiring AirWatch a mere two months later. BlackBerry’s move will undoubtedly help the beleaguered company continue its transition from hardware to software, help them reach their stated SW revenue targets and address some of BlackBerry’s more glaring EMM portfolio gaps. BlackBerry will also inherit Good’s 6,000+ customers, 2,000+ Good secured applications and over 16,000 Good Dynamics developers. In many ways the transaction is complementary in that it consolidates similar target customer segments and enhances the combined solution portfolio. However, beyond the surface level alignment, several key considerations emerge.

Security is Great, but at What Price?

BlackBerry and Good have both built businesses focused on developing best in class mobile security solutions. This has translated into leadership positions in segments where security is a premium, especially regulated industries such as healthcare, financial services and insurance and government sectors. From Good’s EAL4+ certification for both iOS and Android and BlackBerry’s footprint among 16 of the G20, their combined credentials are equaled by none.

However, targeting these “regulated” sectors also limits your target market to 30-35% of today’s workforce (according to US Census data). That said, demand for robust mobile security extends well beyond the so-called tightly regulated industries. As any recently conducted enterprise mobility research will reveal, security requirements clearly trump all other factors when making enterprise mobility investment decisions and is not unique to “regulated” industries. However, security requirements do differ by market segment with many organizations not opting for the premium services offered by Good and BlackBerry. The recognition of its security cache is in a way a double edged sword in that the value of the company’s offerings are so strongly associated with particular industries such as financial services, healthcare and the public sector that organizations in other sectors may not acknowledge these solutions as viable options for their business.  

The challenge for BlackBerry and Good is scaling this opportunity in the broader “un-regulated” market where security requirements are equally acute but not all encompassing and focus on capabilities such as user experience (not Good’s forte) may be greater. To maximize their opportunity, the consolidated company needs to ensure it does not compromise its leadership position in the premium mobile security solutions while expanding its portfolio to deliver more price/performance competitive solutions.  

Sleeping with the Enemy

The competition between both companies has been fierce with Good successful at convincing many legacy BlackBerry customers to migrate to their solution. The effort expended at positioning their solution as superior and pointing out clear deficiencies of the other’s solution (Not “Good” Enough) has been immense with both CEO’s not being shy about publically calling out the other. This is certainly not the first time a competitor has been eliminated through acquisition (see Oracle and PeopleSoft) and the benefit of removing the distraction created by the incessant mud-slinging cannot be understated. However, this introduces an especially interesting dynamic with many legacy BlackBerry customers coming full circle. One of them offered the following comment on a blog post announcing the deal by Good CEO Christy Wyatt.

“Many of the Good customers I speak to have moved to Good specifically to get away from the failing (financially and strategically) Blackberry. This will undoubtedly trigger a re-evaluation of our own commitment to Good. I am very disappointed by this announcement.”

Addressing Good customers – especially those that switched from BlackBerry – will be challenging. Yes, BlackBerry intends to maintain Good’s solutions for several years until it figures out how to integrate both solutions. However, Good customers need to be reassured that there is a clear roadmap and dedicated R&D for the mobility solutions they have invested in and that the integrated solution provides credible value for them. Rebuilding trust will be necessary as Good customers need to understand why they should believe that the vendor Good sales and marketing summarily slammed now represents a favorable go forward option for them.

During his tenure as BlackBerry CEO John Chen has made several interesting acquisitions including Secusmart, Movirtu and WatchDox. John and his team have done a good job at folding these solutions into the BlackBerry portfolio, adding to their already strong reputation at integrating acquired businesses. Clearly the Good integration presents an entire different challenge. BlackBerry is addressing many of the gaps in its stagnating EMM/MDM business (its closest competitors are significantly outpacing them in top level revenue growth), attempting to provide a more comprehensive EMM solution. Ensuring that it maintains competitive status quo as it integrates Good’s solutions over the next two years will present the greatest challenge.  

Putting the Pieces Together

Good has had its eye set on an IPO for a while now to provide a much needed infusion to its business. However, with the calamitous conditions in public markets and the recent performance of publicly traded competitor MobileIron, these doors were closing quickly for Good, if had not closed completely. The cash position at Good when compared to their trailing cost of revenues effectively removed much of their negotiating leverage. That said the deal that the Good team was able to secure – while nowhere near the multiples reached by AirWatch – is fair for both parties.

In a recent interview posted on BlackBerry’s blog with Christy Wyatt and BlackBerry COO Marty Beard (John Chen must have been busy) both made some very interesting statements (concessions?). Marty acknowledged that the Good acquisition will mean the “end of compromise for customers” while Christy countered that “customers have been asked to make tough choices: do they want deep management, deep security, and great user experience or enterprise scalability?” suggesting, perhaps, that they had been mutually exclusive. Clearly with Good, BlackBerry addresses some key issues, especially multi-platform support (leveraging Good’s strong iOS and growing Android installed base), container capabilities and the development partners leveraging Good’s SDK.

However, while BlackBerry is shoring up its EMM and cross-platform support capabilities through this acquisition, to what extent is BlackBerry equipped to fully address the growing requirement to support customers efforts as they move beyond addressing BYO support requirements and look to truly transform their businesses through the application of mobile solutions? This is what many of its competitors are focused on today. BlackBerry has been playing catch-up for a while now. What it deeply needs is for this transaction to leapfrog the competition. 

With Eric Klein, Director, Enterprise Mobility Software


The Rise of the Rugged Enterprise Smartphone

Smaller form factor devices—namely rugged handheld computers and smartphones—remain among the most common device types that support line-of-business (LOB) workers across nearly all industry verticals. VDC estimates that manufacturers will deploy a total of 3.4 million rugged handheld computers and 32 million smartphones in 2015. While there is some overlap between use cases for rugged handheld devices and for smartphones, the latter are more aligned with highly business- and mission-critical applications, which place a premium on reliability and have unique data capture requirements. However, the rugged smartphone has emerged as a new form factor in recent years. These devices are similar in design and user experience to the consumer-grade smartphone, but they feature enterprise-grade levels of ruggedness and improved daylight readability. The rugged smartphone caters to end-users who want a more ergonomic and touch-centric device with integrated data collection options.

 Green field opportunities for an emerging device category

Despite concerns of erosion from consumer-grade devices and the recent but strong emergence of the rugged smartphone into the marketplace, VDC believes the new form factor will serve primarily as a complement rather than replace the traditional “brick-style” rugged handhelds, which cater to a core group of end users for data collection-intensive applications in areas where data entry via touchscreen remains impractical. 


The rugged market, despite its recent return to growth and inclusion of the rugged smartphone, will face numerous challenges ranging from shifts in consumer demands to macroeconomic trends. While the Americas remain the primary engine for growth throughout 2015 and onward, this growth will largely be overshadowed by a weakening European market that has been exacerbated by Greece’s economic instability and a weakening euro that has dropped to historic lows in much of 2015. Additionally, the impending release of Windows 10 on rugged devices could see many companies opting to extend their replacement cycles, which could depress rugged handheld sales in 2016 and provide consumer-grade devices with additional opportunities to expand their enterprise presence. 

Growing competition from consumer-grade manufacturers

The broader non-rugged or consumer smartphone opportunity in the enterprise is expected to exceed 200 million units, representing 14% of total smartphone shipments. The growing availability of peripherals and to augment the functionality of consumer devices and provide better protection are further opening the opportunity for consumer smartphones in the enterprise, especially for line of business applications. In addition, leading vendors such as Apple and Samsung are now actively targeting the enterprise, looking to develop new and higher value-adding opportunities, particularly as consumer sales have begun to peak. Their addition to the enterprise market has the potential to have a significant impact on how organizations choose to mobilize their workforce, affecting not only price sensitivity, but OS choice, application development, and replacement cycles. 


How Apple and IBM are Changing the Face of Enterprise IT

A Continuing Partnership

Over the course of the past decade, Apple has come to epitomize the consumer side of technology, from the iconic iPhone to the Mac, which has made significant progress against the once-ubiquitous PC. In the enterprise, however, Microsoft’s legacy as the de facto OS for business remains a significant barrier that Apple continues to chip away at by virtue of its massive consumer appeal. Under CEO Tim Cook’s stewardship, there has been a notable shift to prioritizing the OS enterprise – take, for example, the partnership with onetime rival IBM in July of last year. Following the acquisition of EMM vendor Fiberlink, IBM has continued to enhance its enterprise mobility portfolio. Since announcing its partnership with Apple, the firm has been able to develop strategic and vertical-specific mobile applications for its clients while continuing to pursue its unified endpoint management initiatives by becoming more expert in managing both Apple’s mobile OS (iOS) and desktop OS (OS X).

Capitalizing on an increasingly Apple-friendly work environment

At face value, Apple’s products appear to be designed with the consumer squarely in mind, rather than the enterprise. However, with each successive OS update, key security and IT-friendly administration features continue to improve the company’s security posture, and have led to the expanded use of Apple products in business settings. In fact, IBM has been deploying iPads to its sales force since 2014, and has seen the number of Apple devices (iPads, MacBooks and iPhones) under management expand to 110,000 through the Mac@IBM program. The company expects the number of internal MacBook deployments to grow and is taking what it has learned from the experience to the enterprise market. Through its Mac at Work service offering, IBM will begin to support large scale Mac deployments as a managed service. (The company had been providing this service on a custom-basis for some time, but only recently extended the offering to all companies as a standardized service.) While PCs will remain dominant in the enterprise space for the foreseeable future, IBM recognizes that Macs are gaining traction in the enterprise, particularly among those now entering the workforce. As a result, not only will the demand for Macs in the enterprise grow, but tools to ease the process of deployment and management will be required. IBM has wisely partnered with JAMF Software for its Mac at Work offering, as JAMF’s Casper Suite is a widely used solution automating the deployment and configuration of OS X and iOS devices.

The Enterprise is Microsoft’s to Lose

IBM’s partnership could help Apple increase its presence in the enterprise beyond the mobile space to become a truly viable business OS. However, the recent release of Windows 10 could sap some of Apple’s momentum, since Microsoft’s next-generation OS has the potential to shore up its PC business while expanding its mobile presence. Beyond bringing back the Start button, the new OS allows applications to run seamlessly on all Windows devices, a capability that Apple has still not incorporated despite the similarity of iOS and OS X. The benefits of such compatibility from an enterprise perspective remain fairly ambiguous, as PCs tend to be used in a more isolated manner. However, the move could make mobile devices (especially tablets, given their larger screen size) more capable of handling business tasks. Furthermore, both Windows 10 and the growing role of Macs in the enterprise have implications for the endpoint management market tasked with managing the growing number of heterogeneous devices and operating systems used in businesses today.

The fact that IBM and Apple continue to expand their partnership is notable, and it places considerable pressure on Microsoft to evolve its enterprise mobility strategy – particularly its unified endpoint management products (SCCM and Intune) and Visual Studio tools for mobile application development tools. As the divide between consumer and enterprise becomes less and less distinct, the power of partnerships like that of IBM and Apple grow in significance. The days of Microsoft as the lone enterprise juggernaut are over, and the market – both partners and competition alike – is taking notice.

With Matthew Hopkins, Research Associate 


Samsung Unpacks Potential with Samsung Pay and Note 5

Yesterday, the heads of Samsung took to the stage at Lincoln Center in New York to announce its latest devices – the S6 edge+ and the Note 5, as well as the release of its new payment system, Samsung Pay.  With the advent of the iPhone 6 Plus, Samsung has had to work harder to differentiate its product beyond being the default Android counterpart to Apple. The Note 5 manages to accomplish this handily with the newest iteration of the S-Pen, which provides substantive enterprise functionality. The Edge +, on the other hand, relies more on aesthetics diversity, as the functionality of the edge, while somewhat improved over the original S6 with the introduction of app shortcuts, remains limited and somewhat uninspiring. Although many reviewers have focused on the incremental nature of the developments of the devices and how they fare compared to the iPhone 6 Plus, the larger, more compelling story for VDC is the potential for Samsung Pay to dominate the mobile payment market and the continued evolution of Samsung into a much more enterprise-focused OEM. 

The potential for Samsung Pay’s “Universal Availability”

Originally announced at Mobile World Congress, Samsung Pay emerged once again to take a prominent role in yesterday’s Unpacked event, complete with launch dates for the US and Korea. While Apple Pay succeeded in raising the general public’s awareness to NFC payment capabilities, its impact on retail has been limited to date. Despite steadily growing numbers, access to NFC-enabled payment terminals has been limited to a select group of partners and has encountered considerable opposition from major retailers, notably the Merchant Customer Exchange (MCX), which includes major chains like Wal-Mart, Best Buy, and Dunkin’ Donuts – forcing retailers like CVS to back down from unofficial support of Apple Pay following its announcement.  In the aftermath of the initial dust-up, NFC payments have gained ground, but are far from mainstream at this point. Samsung Pay, on the other hand, nimbly sidesteps many of these issues from through technology it gained from its acquisition of Loop Pay in February of this year, which can be used with both NFC and traditional mag-stripe devices. As a result, Samsung Pay can be used with nearly all devices capable of taking credit card payments (including smaller peripheral devices like Square), giving the payment system tremendous reach and potential for widespread adoption. Samsung has further upped the ante by partnering not only with major credit card providers, but also enabling store-branded credit card, membership cards and gift cards, bringing the idea of a truly digital wallet that much closer to reality. With its backwards-compatibility to traditional payment systems, Samsung Pay is poised to leapfrog Apple Pay to dominate the growing digital payment market, providing Samsung’s flagship devices a much-need element of differentiation.

Balancing enterprise-readiness with consumer appeal

The delicate act of balancing a much more enterprise-focused device with consumer desires was clearly visible at the Unpacked event, where much of the attention centered on the new devices’ media capabilities, like its improved VDIS for video stabilization, and the introduction of Live Broadcast, which competes with real-time video streaming companies like Periscope and Meerkat.  Although both devices feature enterprise-ready capabilities (like the integration of KNOX on all flagship devices) and the use of SideSync 4.0, it is the Note 5 that stands out as Samsung’s Flagship enterprise device. The Note series, more than other series, is designed with enterprise at the forefront, given its emphasis on multitasking and the use of stylus with the integration of the S-Pen. In addition to the ability to sign and print documents on the Note 5, BlackBerry’s aesthetics appear to have rubbed off on Samsung, as the company unveiled its first-ever physical keyboard accessory, which attaches to the screen to facilitate data entry.

Following the showmanship of the main event, it was the later, smaller B2B event that revealed the extent to which Samsung has devoted its attention to the enterprise. Despite the relative lack of fanfare, EVPs Injon Rhee (Enterprise Business Team) and Joe Stinziano (Samsung Business) discussed the strides made with the integration of KNOX 2.5, which further enhances the security elements of 2.0 from a carrier and IT management standpoint, to the Edge+ and the Note 5. KNOX, as Stinziano emphasized, remains their dedicated brand and its identity is built squarely around the enterprise and, when used in conjunction with Samsung Business seeks to provide end-to-end mobility solutions and security. As he aptly noted, having a smartphone is increasingly an indispensible element of mobility.  Samsung also emphasized its partnership with Red Hat, which helps to provide industry-specific applications and mobile solutions. The latter is an important step for Samsung as it looks to counter the much-touted partnership between Apple and IBM’s MobileFirst which was announced last summer.  With demand for consumer devices cooling, the pressure is on – not just for Samsung, but for the entire smartphone market to provide enterprise-grade, IT-friendly devices that also have consumer appeal.

The potential for Samsung to go from enterprise-grade to mission critical

With the rugged handheld market only now emerging from a protracted period of uncertainty, there is considerable opportunity for consumer-grade devices, particularly when complemented by a full suite of enterprise services and industry-specific know-how. The lack of success from the launch of Windows Embedded 8.1 Handheld as the next generation Windows OS opened the door for Android and Apple alike, as many decision makers have opted to postpone refresh cycles and are evaluating less traditional options, including consumer grade devices. Most rugged OEMs have been quick to fill the gap with smartphone-like handheld devices that feature Android, but there has been a notable degree of erosion in favor of consumer devices. This, when paired with the green field opportunities of smaller organizations mobilizing for the first time presents a tremendous opportunity for companies like Samsung and Apple, which can capitalize on decision-makers’ and end-users’ familiarity with the devices and UI. To do so successfully, however, requires a level of dedication to the enterprise that goes beyond hardware to include services and industry-specific expertise and applications. VDC will be taking a more in-depth look at what this means for Samsung in our upcoming VDC View. 


Zebra Ups OS Migration Ante with ITR Mobility/iFactr Acquisition

Zebra announced its Q2 2015 results today. Although the top line results mostly were in line or slightly beat expectations, the same cannot be said of EPS which significantly missed expectations. The gross margin hit was explained by various non-recurring events such as the cost of re-branding. However, looking a little closer, the numbers are also suggestive of a change to business mix with a larger share of revenues being derived from Tier 1 deals which inherently carry lower margins when compared to the run-rate or channel business. Put another way, the run rate business is showing signs of weakness. A lot of time during the Q&A on the earnings call today was dedicated towards the state of Zebra’s mobility opportunity and their customer’s migration from legacy Windows platforms (Windows Mobile/Windows CE) to Android, iOS and potentially/eventually Windows 10. With an installed base of almost 15 million rugged mobile devices that will require upgrading prior to the 2020 support deadline, this represents both a massive challenge AND opportunity for vendors like Zebra and its peers moving forward. However, given these solutions are tied to work flows that are critical to an enterprise’s operations it is not a decision organizations are taking lightly (or in some cases are waiting to the absolute last possible moment to deal with it). Given that a large share of Zebra’s business is in essence “upgrade” or “brown-field” opportunities this makes it especially challenging and confounding from an operational perspective.

 With a vested interest to accelerate the decision process, Zebra has been aggressively expanding its software portfolio to support its customers and partners with their migration efforts. Although Zebra remains OS agnostic, with no current viable Microsoft alternative this has meant focusing on Android. With the many challenges – real and perceived – facing enterprise decision makers about the stability of Android as a platform for its business critical applications this has been a tough sell. To its credit Zebra has recorded some significant recent momentum and major wins with Home Depot (2014) and Royal Mail (2015) delivering substantial legitimacy to its Android efforts. Moreover, among its direct peers, Zebra is the clear Android leader and increasingly embracing the more open approach to development that this platform promotes.  However, Zebra’s early Android wins have been concentrated among large accounts with run rate traction of Android devices in the channel still limited (especially in North America and for warehouse applications). According to research VDC is currently fielding, approximately 22% of respondents with existing Windows Mobile/CE solutions are migrating to Android, another 20% plan to remain with Windows and leverage Windows 10, 10% indicate a transition to Apple/iOS devices and the balance (48%) undecided and taking a wait and see approach.

The key to Zebra’s success will invariably be tied to its ability to enable partners with the appropriate tools and services to support migration efforts. This clearly influenced their recent decision to acquire ITR Mobility and its iFactr platform.  A challenge for them – and something they encountered with other SW investments – is encouraging partners to leverage these tools without them feeling forced to do so.  Zebra also needs to mindful of striking a balance to maintain its ‘partner-first’ model without crossing the traditional ‘partner domain’ threshold. In addition, with much of the market still undecided on their OS direction, Zebra needs to be sensitive to and counter the perception among partners that their roadmap does not include a Microsoft option.

That does not take away from the growing reality that a significant number of legacy solutions will need to be modernized and applications recoded – irrespective of the final OS destination.  The trick will be doing this without substantially disrupting current operations and in a manageable time-frame. In addition – and this is really the counter to postponing decisions – is that virtually all the enterprises going down this path that VDC has spoken with is taking this opportunity NOT ONLY to leverage the capabilities of modern mobile devices in their updated applications BUT ALSO to take the opportunity to refine and often revise their mobile workflows to drive even greater efficiency, enhance customer engagement and further transform their businesses.   

However, hearing of mobile development budgets in the tens of millions of dollars and time-frames exceeding three years to update 20 existing apps (only to reach functional app performance parity) has decision makers understandably tentative.  What the iFactr solution is designed to provide organizations with is a more manageable transition from legacy to updated applications. The iFactr app virtualization solution enables organizations to seamlessly achieve functional app parity of legacy apps on a modern platform relatively quickly with the opportunity to incrementally add new functionality while reusing upwards of 80% of existing code. Claims that the benefits of the iFactr solution can only be realized with well-coded applications were refuted by the iFactr team who acknowledged that while this may have previously been the case it has completed been addressed by their recently released virtualization solutions. While no silver bullet exists that addresses this very real issue – and enterprises and their partners will take various approaches to navigate this transition – capable and viable approaches exist today.

As mentioned by Zebra executives on their earnings call, this current OS migration represents a significant “jump ball” for the rugged mobile market. VDC will be dedicating significant research resources into legacy application migration and modernization best practices. Please reach out to us to share your opinions. Eric Klein, our Director of Mobile Software research will also be hosting a round-table discussion on this topic at the upcoming M│Enterprise event in Boston this fall. Please also reach out for more information about this exciting event. 


Split-Billing Heating Up

A Growing Importance

Split-billing, the process by which mobile phone charges are divided based on certain criteria and paid separately by the employee and employer, is a capability that is increasingly attractive due to consumerization trends. Companies providing mobile solutions to employees face a growing challenge in identifying and separating corporate and personal use; this is especially difficult in a bring-your-own-device (BYOD) or corporate-owned, privately enabled (COPE) environment. The issue remains divisive, with some employers expecting employees to pay for all mobile use—both corporate and personal—while others have implemented stipends, corporate phone plans, or reimbursements for corporate use. All of these methods have evident drawbacks, often forcing either the employee or employer to pay a disproportionate amount of the mobile costs. This issue became even more relevant in August of 2014 when the California Court of Appeals decided in Colin Cochran v. Schwan’s Home Service, Inc. that if employees must use their cell phone for work-related calls, then they must be reimbursed a reasonable portion of their cell phone bill. Under this ruling, companies in California will need to implement a strategy for reimbursement if they have employees using mobile devices for business purposes; failure to do so could result in costly litigation.

While California Labor Code Section 2802 may be unique in its wording and differ from labor codes in other states (with the possible exception being Massachusetts), the ruling could set a precedent that will entail a more national focus. In this vein, VDC urges companies who are moving forward in implementing BYOD policies to develop defensible ways to reimburse their employees. Unfortunately, split-billing technology by and large does not adequately address the needs of companies; however, some vendors have made significant progress in developing solutions that will solve employer mobile billing headaches.

Solutions Remain Few and Far Between

VDC Research has identified seven key players in the split-billing space and analyzed their solutions to determine which vendors will likely have the most success going forward.

  • AT&T: The company's attempts to develop a split-billing solution have come in fits and starts. While AT&T’s Toggle solution has continued to evolve along with the company’s AT&T Work platform, the company has yet to deliver a fully functional product (thus far).
  • BlackBerry: The acquisition of Movirtu in 2014 gave BlackBerry the technology to develop its WorkLife solution which elegantly separates voice, SMS, and data. (Samsung is also participating in this market via its partnership with BlackBerry).
  • Good Technology: By acquiring Macheen last October, Good has been able to quickly build a split billing solution that separates corporate app data usage from personal activity.
  • Movius: The company’s CAFÉ (Communications Applications Framework Engine) platform enables service providers with a means of quickly deploying applications to complement their core functionality of enabling users to have separate personas and different phone numbers for voice, messaging, and data (Movius has partnered with virtualization specialist Cellrox for this capability).
  • Mast Mobile: The company leverages Oracle’s billing and revenue management solution to provide a unique and comprehensive solution that allows an employer to implement split-billing for voice, messaging, and data. Founded in 2013, Mast is a young company and is quickly evolving its solution to include stronger enterprise-grade features.
  • OpenPeak: The company recently secured a patent in January for its split-billing technology. The technology enables companies to pay separately for data used through secure or enterprise applications in a container. OpenPeak white-labels this technology to AT&T.
  • Syntonic: Like Mast, Syntonic is also a young company (founded in 2013). The company’s DataFlex platform provides core split-billing and data usage analytics capabilities.

Foreseeable Change in the Near Future

As BYOD and COPE trends continue to grow and companies evolve their mobile initiatives and implement new applications, VDC expects demand for split-billing solutions to increase. Enterprises have struggled to catch up to mobile technology and have focused primarily on ensuring the security of their data and finding use cases for the technology both in terms of increasing consumer engagement and improving employee productivity. The issue of paying employees for their mobile phone use has been largely overlooked, with many companies hoping to avoid the conversation altogether. However, with California’s court decision setting a strong precedent, this period of blissful ignorance is quickly drawing to a close.

Unfortunately, the solutions available to companies to effectively identify and split personal and corporate mobile use remain slim and incomplete. This is due largely to the heterogeneous nature of mobile devices and their operating systems, as well as the need to work with both the organization and telecommunications providers. Consequently, vendors in this space have developed unique technologies that offer vastly different experiences and varying levels of split-billing competency.

The vendors, broadly categorized, fall into three categories: EMM providers, telecommunications providers, and split-billing-first providers. Firms that fall into the first two categories have largely either partnered with other companies with split-billing capabilities or acquired smaller firms with the technology to provide the solution. Predictably, split-billing-focused firms, while small, have had the most innovative solutions and have become acquisition targets for larger EMM and telecommunications providers looking to expand their offerings to compete with other firms who have developed the technology. VDC sees Mast Mobile and Movius as the best near-term targets for acquisition, given their comprehensive solutions, small size, and innovative technology. There is a broad range of vendors that that could fill the role of suitor, including Citrix, Microsoft, IBM, and VMware would all benefit by acquiring a split-billing solution as the capability would expand and complement these firms' mobile solution range. VDC expects rapid growth and consolidation in this small segment of the enterprise mobility market as companies look to further expand mobile initiatives while reigning in the costs.

VDC will take a deeper look at these trends in an upcoming VDC View. 

With Eric Klein and Kathryn Nassberg

 *Correction (8/10/15): This post was revised to note Movius' ability to provide split-billing services for data as well as voice and messaging. 


No Margin for Error for Windows 10

All eyes are on Microsoft with tomorrow’s much-anticipated and written-about release of Windows 10. This next generation of Windows could prove a key turning point for the rugged market – and the rugged handheld market in particular, which has seen fluctuating demand in recent years due in large part to OS uncertainty following the lack of success with Windows 8.1. The launch of Windows Embedded 8.1 Handheld as a successor to the popular but aging Windows CE and 6.x began inauspiciously with delays and lack of device support from market leaders, with the result that the only devices available supporting the OS were from vendors limited market share.  Unsurprisingly, Windows Embedded 8.1 Handheld’s market share has mirrored that of Windows Phone in the consumer market by languishing in the single digits behind Android and iOS. More significantly, however, the rocky launch has altered enterprises’ perception of Windows as the de facto operating system for line-of-business mobile deployments.

Microsoft’s stumble becomes Android’s opportunity

In the aftermath of Windows Embedded 8.1, organizations faced a difficult choice – undergo the migration to Android, or delay refresh cycles of their aging installed device base in the hopes of a better rollout with the subsequent iteration. Such a decision has serious implications for how front-end systems running on devices interact with corporate back-end systems. Rugged devices effectively facilitate the transfer of data between front and back-end systems, with the latter running on Windows; a transfer to Android complicates the relationship and requires additional coordination. This added layer of complexity has served to dissuade more conservative companies from migrating to Android. Organizations unencumbered by legacy systems, however, are looking increasingly to Android for its lower cost devices and familiar user interface. As a result, VDC’s data shows that Android has come to represent roughly 15% of the rugged device market, with growing levels of acceptance in the United States from larger organizations. A key turning point for the operating system came with the decision by Home Depot in 2014 to select Android for its latest mobile deployment, marking one of the first Tier-1 companies to forgo Windows for a large-scale deployment.

Success lies with the ISV community

One of the key factors that will ultimately determine the fate of both Android and Windows in the enterprise will be the reaction from the ISV community that supports them. While Microsoft has the advantage of scale and legacy to assist development for Windows 10, and seems to be positioning itself as a cross-platform productivity solutions company, it still needs active and engaged developers. Much of the development community has shifted towards the volume opportunity that comes with the popularity of the dominant mobile platforms (Google’s Android, and Apple’s iOS).   This makes partnering with key ISV critical for Microsoft going forward – for this reason, VDC believes that it is likely that the company will pursue an acquisition of a rapid application development vendor with a robust developer community.

Time is not on Microsoft’s side

Although Windows remains the predominant OS in enterprise by a considerable margin, the gap has steadily narrowed in recent years with the growing emphasis on mobility and the explosion of bring-your-own-device (BYOD) as a viable option among smaller and mid-size organizations. The ability of consumer-grade devices to work in the enterprise has opened the door to Google and Apple, who have made significant investments in showing enterprise support through strategic partnerships. A majority of respondents to VDC Research support multiple operating systems for their line-of-business applications, and increasingly, the focus of development is for Android and iOS. Putting an end to Android’s recent success in the enterprise-rugged space and regaining market share will depend largely on Microsoft’s ability to ensure that the OS is implemented quickly in business environments. Time is not on their side, with patience increasingly running thin and adoption rates growing for Android as it shows it suitability as an alternative OS. To quickly integrate the new OS, Microsoft will need to work tightly with OEM and ISV partners to ensure rugged devices work effectively with the new OS and applications are supported. Zebra, a dominant player in the rugged space, announced that it will have several products running Windows 10 by the end of 2015. However, these products will be joined by others running Android; illustrating the company’s effort over the past few years to incorporate both operating systems so as to meet various industry demands.

A last chance to dominate?

Windows 10 represents a key turning point for Microsoft, particularly as the company is doubling down on software, given its most recent round of layoffs that cut 7,800 jobs from the phone business and writing off nearly all of the value from its Nokia acquisition. After considerable pushback on Windows 8.1 and Windows Phone from the consumer and enterprise markets, Microsoft can ill-afford another misstep. Any further stumbles will place the OS in jeopardy of losing market dominance and leave the playing field wide open for the competition in both the rugged and enterprise-issued markets. 


With Matt Hopkins, Research Associate


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