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

Is Augmented Reality Primed for Warehouse Automation?

The trend of augmented reality (AR) has been picking up steam. Much of the recent hype stemmed from the Microsoft announcement of its HoloLens last month, where there was considerable buzz surrounding consumer applications for the device that bordered on the futuristic appeal of 1950’s world of tomorrow. However, the more grounded applications for Augmented Reality that are emerging are firmly planted in the realm of enterprise. Warehousing and logistics have long been a hotbed of activity for portable and wearable technology, where the opportunity to free up a workers hands has immediate productivity benefits and a strong ROI profile. Wearable voice-enabled picking solutions and wrist and finger mounted scanning solutions have been successfully used in these environments for over a decade. These early wearable logistics solutions, however, have also not changed materially opening the door for innovation.

 Much of the recent wearable technology attention has been directed towards heads up displays and smart glasses. What became evident very early was that this technology was not suitable for mass market consumer applications. However, in the enterprise for B2B applications, the barriers regarding aesthetics and implications for social interactions can more easily be overcome. Therefore it is not surprising to witness the level of interest and evaluation these solutions have garnered for workflows in logistics, field service and others where the benefits of hands free operation could be clearly articulated.  The question, however, is whether these next generation wearable solutions are ready for prime time and whether they significantly improve workflows – and/or lower cost of ownership – when compared to existing automation solutions.

There have been several prominent and well designed demos designed to show the potential smart glasses and AR overlays in the warehouse. VDC recently had the opportunity to speak with a prominent Tier-1 logistics company to understand what its early-stage technology incubator was doing with its AR evaluation efforts.

The future isn’t quite here

Although the application of AR and smart glasses could support various workflows across operations, the firm in question focused its initial evaluation on the most approachable opportunities in warehouse operations and, more specifically, picking, packing, and sorting applications. The higher level objective was to test the overall viability of these solutions and also measure the results against traditional RF scanning solutions. At the end of the day the key takeaways suggested that picking productivity improvements and picking accuracy improvements were very real in addition to ancillary benefits from employee satisfaction and paper reduction. However, what was also clear was that the underlying technology was not sufficiently mature.

While smartglasses and AR overlap technology was clearly easy to use and employees took to it fairly quickly, key challenges surrounding scanning functionality (i.e. using a scanner integrated with the glasses), severe battery life limitations, unstable connectivity and price point of some of the options represented real issues.

However, the bigger question for us was WHY? Not so much why the company was testing smart glasses and AR overlays, but rather why was its picking workflow so inefficient and error prone to begin with. The use of (error prone) paper pick lists, handheld RF scanners and other process inefficiencies could (or rather should) all be mitigated with the adoption of other technology best practices widely accepted for these workflows, namely wearable voice-based solutions.

Existing solutions today – either purpose built from vendors like Vocollect (Honeywell) or multi-modal solutions from vendors like Wavelink – have proven themselves as especially effective for applications such as high speed picking. Recent research conducted by VDC reveals that end users of these solutions experienced at least a 10% increase in picking productivity and 10% increase in picking accuracy after deploying these solutions. If cost remains a reason why many warehousing operations have opted to remain with handheld devices over voice-based solutions, AR will do little to alleviate the issue. At the end of the day, technology should serve as a means to an end, rather than serving as the end itself. While the pace of innovation in enterprise mobility is continues to pick up speed and organizations should constantly be pushing themselves to do better, often times the “shiny new toy” does not quite live up to expectations and the “tried and true” represents the better option. 

 

With David Krebs, EVP

02/26/2015

MWC 2015: Pre-Show Expectations

Barcelona is again set to become the epicenter of all things mobile with MWC 2015 upon us. A team of four VDC analysts will be roaming the exhibit floors at Fira Gran Via - not to mention the odd Tapas bar in Barcelona's Barrio Gotico. With our calendars maxed, we are eagerly anticipating this year's story-lines. Using our 2015 research calendar as the backdrop, some of the themes we will be following closely include:

1. (Non-iOS) Mobile Device Announcements. Clearly what creates the most greatest buzz at these shows - and MWC 2015 won't be any different - are the mobile device announcements. Minus Apple, MWC represents the launching pad for other OEMs, especially those running Android. With the massive success of Apple's iPhone 6 and widely circulating reports of Apple's share of smartphone profits reaching almost 90% (astounding considering its market share of ~15%), this will be a VERY important show for Android OEMs (and more specifically Samsung). All eyes will be on Samsung on March 1st when it is expected to release its flagship S6 smartphone. While there is not much expected in terms of real innovation (rather incremental improvements), we should expect substantial improvements in build quality, a much more seamless OS stack (less bloatware) and some gimmicky functionality like wireless charging. Although it is premature to suggest this as a "make or break" device for Samsung, the pressure is certainly mounting as the company is increasingly vulnerable with marginalized competitive differentiation. 

2. Windows 10. Although under Nadella Microsoft is becoming more adept at competing without the benefit of OS dominance, it sure would enjoy the fruits of a successful Windows 10. While it is unlikely for Windows 10 to substantially move the needle for Microsoft in terms of smartphone OS share, many of VDC's enterprise mobility clients are rooting for a strong showing. Several OEMs are using the crowded Android landscape as an opportunity to differentiate through Windows 10. We will be very interested to see how the vision of Windows 10 translates across all form factors. 

3. Enterprise mobile apps and the IBM-Apple alliance. Apple's absence from IBM InterConnect this week certainly did not go unnoticed, prompting many to question the strength of the relationship. Although Apple is not exhibiting at MWC, a IBM press conference that will cover the "next chapter of their relationship" will be compelling. While not a top-line needle mover in 2015, this relationship is perhaps even more important for IBM as it looks to offset the challenging outlook for its overall business and as it looks to transition its revenue base to cloud services, analytics technology, security and businesses related to mobile devices and social networks. Beyond IBM, messages from other enterprise IT stalwarts SAP and Oracle and their mobility initiatives will be important. With more organizations eager to provide mobile access to key enterprise applications and to transform existing workflows, these vendors need to be doing more - and have the opportunity to do more. 

4. No more secrets: mobile security is no joke. The recent cyber attacks at Sony and hacks/compromises at Gemalto (cracking encryption keys in SIM cards) as well as Home Depot and Target compromises only scratch the surface about the extent to which information can be compromised. This cannot be the new normal. Secure communications is becoming much more critical and not only in the highly regulated, highly sensitive market segments. Start-ups such as Blackphone and USMobile are expected to play an increasingly prominent role. In addition, Blackberry, long the torchbearer for best in class mobile security, is teaming with Google to do what others have failed at, legitimizing security for Android devices in the enterprise. Secure mobile browsing and secure messaging are two of the areas driving significant requirements.

5. Creation of meaningful value.  It is high time to shift the conversation from technical capabilities to the creation of tangible business value. Avoiding the inevitable spec sheet comparison, it is time to pressure vendors on how the solutions are being applied to derive real benefits. From an enterprise mobility perspective, this can be measure in terms of workforce performance, customer satisfaction, employee satisfaction and retention, asset cost of ownership, among others. With a large share of enterprise mobility investments still being influenced by "employee convenience," the time is ripe to place greater emphasis on how these solutions can benefit real business outcomes.

These are among the many topics we are looking forward to hear more about at MWC next week. Looking forward to seeing you there!

02/19/2015

Mobile Payments Race Heats Up with Samsung’s LoopPay Acquisition

Samsung announced yesterday its acquisition of the Burlington, MA-based startup LoopPay Inc. for an undisclosed amount after reports of the two companies working together a mobile payments solution in late 2014 towards. The announcement heralds Samsung’s entry into the mobile payments fray, pitting it squarely against Apple and Google Wallet as the market for the digital wallet continues to evolve.

Making a digital wallet retailers will work with

The mobile payment market, particularly in the US, has undergone considerable change in recent years although much of the progress has been dependent upon both the cooperation from banking institutions and retailers’ willingness to adopt newer point-of-sales terminals. The latter in particular has been a key stumbling block for NFC-enabled solutions, like that of Google Wallet, which launched in 2011. Although the announcement of the iPhone 6 and Apple Pay did much to raise general awareness to the technology, its impact remains somewhat limited. Estimates from Apple from its Q1 earnings call show that less than a quarter of a million retail outlets out of a total numbering in the millions have the ability to accept Apple Pay. While this obstacle will eventually overcome as the migration continues from traditional the magnetic stripe to the EMV chip and PIN system, the tipping point for a major revamp to the greater retail market likely will not occur for at least another year, despite liability dangers looming on the horizon. Samsung’s acquisition of LoopPay helps to bridge the gap by offering a system that uses Magnetic Secure Transmission (MST) technology that that functions with existing point-of-sale infrastructure, which means it can be used with some 90% of existing credit card terminals, although the system requires the purchase of either a card case or fob in addition to the download of the app – an approach similar to that of Square. As some note, while pertinent now, the migration towards EMV could mean that Samsung is providing a solution to a short-term problem with the acquisition in a market that is rapidly evolving.

No mobile payment solution to rule them all

In addition to facing off against Google Wallet and Apple Pay, Samsung will be pitted against other emerging services, like that of CurrentC. While many retailers have sought less cost-intensive mobile payment solutions through proprietary apps using QR codes, retail giants Wal-Mart, Target, CVS and others formed the Merchant Customer Exchange (MCX) in 2012 to create a merchant-owned mobile payment system. The system gained notoriety when participating companies sought to block the implementation of systems like Apple Pay and Softcard and fell victim shortly thereafter to a sizeable security breach in which the email addresses of participants of the pilot program where accessed. In addition to claims of collusion, CurrentC has been lukewarm given the multi-step payment process using QR codes versus NFC’s more streamlined contactless payment method. As a result, the mobile payment market is becoming increasingly fragmented as it has pitted consumers who are seeking convenience against retailers who want to maintain greater control over transactions without having to adopt costly point-of-sale technology.

Balancing convenience and security 

The recent and high profile security breaches that have occurred at some of America's largest brands (Anthem Healthcare, Target, and the Home Depot) demonstrated that breaches can not only be expensive (several retailers we're forced to pay some $200M each in damages in the past 12 months alone), but can harmful to brand loyalty. Consumers disclose a treasure trove of identity theft information with each transaction they consummate. This makes finding the right balance between security, privacy and convenience a key priority for mobile payment vendors. While security remains paramount, consumers won't adopt a payment solution that is cumbersome. While PCI-compliant (and sophisticated encryption) is embedded into every payment solution, moving forward, VDC sees a key challenge for vendors to work with experts (i.e., the credit card industry, as well as privacy advocates, cybersecurity experts, government agencies – following the more military-oriented path towards security forged by JP Morgan) to draft, implement and enforce rigid sets of cyber protections across a fragmented payment market with significant “co-opetition” and channel conflict. 

With Eric Klein, Senior Analyst 

02/13/2015

Revamping the Enterprise Inbox

Email, which has long been an established piece of enterprise productivity and at the tail-end of innovation, has received a considerable makeover in recent months. An increasingly mobilized workforce in recent years has meant that the majority of emails are now read first on a mobile device. The result is a palpable trend in the market to revamp email where ease of use and productivity is maintained in a cross-platform and touch-centric format. Many of these innovations include more seamless calendar integration, improved triage, search, and archiving functions, as well as enhanced communication tools that integrate chat and voice that are particularly well-suited to mobile platforms like the smartphone.

 

Major players, including Google, IBM, and Microsoft have worked to further integrate email into their mobile offerings and acquiring firms to help bolster their position. Recent acquisitions by Microsoft and HP of Accompli and Voltage respectively, as well as the emergence of companies like Mailpile, ProtonMail and Nacho Cove lend credence to this trend towards a more mobile-first experience for enterprise email. Even companies that have traditionally focused on consumer markets are throwing their hat into the ring: last month, Amazon announced its own email service, WorkMail, to be powered by the increasingly popular Amazon Web Service. Thomas Döhler, General Manager of the WorkMail team, notes that enterprise is at the point where email is now part of the business process. Rather than a simple communication tool, it has become an integral part of general business processes and a receptacle where critical business information is stored and controlled. Email, without question, is the most ubiquitous means of enterprise communication, despite the recent rise in popularity of social collaboration and texting. While newer iterations will look to integrate these social features into the mix to enhance productivity, email will remain the primary means of enterprise communication for the foreseeable future.

 

It is worth noting, however, that this is not the first time that email has undergone a significant revamp. Over the years, numerous companies have tried to reinvigorate email, but failed to fundamentally alter the nature of the inbox. However, the growing importance of mobile platforms in business has meant that mobility has forced a willingness to change among companies in how they treat email. The result has been a rethinking in how email is accessed and integrated into a cross-application and cross-platform ecosystem. 2015 will mark a watershed year in which there is a growing willingness to change how companies treat email and could see a fundamental change to the nature of the inbox if the challenges surrounding privacy and security can be sufficiently addressed.

 VDC will be taking a closer look at the challenges faced in this month’s VDC View. Stay tuned for more information.

 

with Eric Klein, Senior Analyst

02/06/2015

How Quickly Will DYI Mobile Initiatives Give way to Mobile Managed Services?

Mobile device proliferation has IT departments reconsidering how to best deliver increasingly business-critical mobile IT services.

While business analysts are now more experienced with identifying the right use cases and design requirements for mobile applications, designing, developing, integrating, managing, and maintaining these apps remains a significant task. Mobilizing and integrating manual business processes and workflows with modern mobile platforms is not only complex but costly, particularly when considering that many legacy applications and systems are not being abandoned. Creating new mobile applications to integrate with legacy systems requires both a high degree of specialized skills and additional software. As a result, enterprises are quickly discovering that mobile enablement is not only costly and time-consuming, but that managing and maintaining their deployment environments may be best handled by an external 3rd party.

VDC sees expanded usage of mobile devices to facilitate day-to-day business as an enabler for IT to reassert the importance of its role in digital transformation initiatives. However, considering that these initiatives are (likely) already underway, selecting the right partner(s) to deliver a suite of more reliable and robust mobile IT services will become increasingly important – particularly for organizations where mobile initiatives have become business-critical. VDC's research shows that even the largest enterprises are inadequately staffed with the mobile expertise required to properly manage and maintain a rapidly growing mobile deployment environment. Professional services vendors have proved their ability to deliver strategic business impact to their customers, not just operating cost reductions. Additionally, these vendors are increasingly well equipped to help their customer implement mobile innovations with more speed and less pain.  

That said, end-to-end “as a service” mobility solutions will ultimately be the de facto choice for many enterprises going forward. Considering the early stages of true mobile enablement in enterprise, managed mobility services from managed service providers (MSPs), communication service providers (CSPs), and systems integrators (SIs) are poised to benefit from the current mobile boom. Due to limited mobile IT support capabilities, VDC expects organizations to expand their relationships with third-party solution providers that specialize in mobile solution support and integration. The services opportunity will expand well beyond traditional mobile hardware support and break-fix services that are common today. Mobility-oriented services to support expanding deployment environments, application and database integration, as well as security, asset management and logistics services will be key areas of focus for professional services firms going forward.

VDC has just released a comprehensive Report on the market opportunity for Mobile Professional Services. Vendors were profiled in this Report include:

CSPs: AT&T, Sprint, Verizon Business, and Vodafone Global Enterprise
SIs: Atos, Cognizant, HCL, IBM Global Services, and Infosys
Mobile-First Solution Providers: DMI, Enterprise Mobile, Stratix, Vox Mobile and Zebra Technologies

Click here to download the Executive Brief, or email me for more information.

 

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