VDC Research: Enterprise & Government Mobility Market Blog

M2M Channel Matchmaking at MWC

M2M is increasingly the hot topic at events like this week's Mobile World Congress 2013 in Barcelona. Technology vendors across the spectrum - from device and chipset hardware vendors to ISVs, mobile network operators, systems integrators - took this event as an opportunity to announce new partnerships in the M2M space.

Today's M2M ecosystem is messy.   It is fragmented, complex and - to a large degree - undefined.  We are just at the tipping point of recognizing the full implications M2M technology will have.  Thus the startlingly long list of M2M partnerships announced this week indicates a clear M2M strategy by today's technology vendors.  

Vendors such as Jasper Wireless,  Deutsche Telekom and RACO Wireless are looking to establish themselves as early leaders in the evolving M2M market.  In another sense, these vendors' partnering frenzy highlights the fear of falling behind as the M2M market evolves.  2013 will see the M2M market and vendor ecosystem slowly begin to fall into place.  

Partnerships Announced at MWC 2013 - Barcelona

• Axeda - Wipro
• Deutsche Telekom - Axesstel
• Deutsche Telekom - Qualcomm
• Device Cloud Networks - Orange Switzerland
• Ericsson - SAP
• Ericsson - Germalto
• Jasper Wireless - Mobily
• Jasper Wireless - Optus Business
• Jasper Wireless - Claro Brazil
• RACO Wireless - Sprint
• RACO Wireless - Telefonica

Mobile and Channel First

As I began tracking and following the evolution of mobile-oriented solution providers and their channel relationships, I quickly recognized that co-opetition was a fact of life for many market participants. This has historically been the case for rapidly expanding high-tech market segments (just think back to the ecommerce and dot-com boom in the late 90’s). This trend is unmistakable in today’s rapidly expanding market for enterprise mobility solutions. I see competitors that are cooperating to integrate their solutions, collaborating to help set new industry standards, and/or even co-innovate to develop new solutions.

When considering both the current evolutionary stage of today’s IT organization and the state of the Fortune 1,000 supply chain, it is clear that mobile-oriented vendors increasingly will need to partner in order to reach these organizations – direct selling is essential, but is costly and not easily scaled. Today’s organizations are “more global”, they recognize IT as a differentiator, and are beginning to make meaningful investments to modernize their IT infrastructures – for forward thinking organizations, mobile solutions are playing a key role. Another important trend to be mindful of is that most large organizations are more than willing to outsource significant elements of their IT infrastructure and work with numerous channel partners. In summary, in order to capitalize on the opportunity in front of them, companies participating in the mobile ecosystem must partner – often with their competitors.

In this vein, we expect to see several important partnerships announced in the near term – both at RSA and at MWC. Key themes will be partnering for solution enhancement and better positioning to attack specific markets such as government and regulated industries. This has begun in earnest, with many more announcements to come next week.

For example, just yesterday, Fixmo announced partnerships with both AirWatch and MobileIron, and Air Patrol announced it was partnering with Fiberlink.

Looking forward to MWC next week – if you are making the trip, please stop by the AirWatch booth (Hall 3) to see my presentation on the future of mobile application management at AirWatch Connect!

Ping me on Twitter (@eakleiner) to meet at MWC next week ― I'll be in town until Thursday.

Will AT&T's Attention to Mobile Developers Pay Dividends?

AT&T held the 8th iteration of its developer summit this past January in Las Vegas. The event kicked off with the company’s first “hackathon” of 2013 (AT&T held 28 of these in 2012) and offered attendees a full day of mobile-oriented sessions, ranging from technical deep dives to go-to-market strategies for enterprise-oriented developers. This was my second year attending this event, and I came away with a very positive impression of AT&T’s commitment to fostering its community of developers. It is clear that the company is raising the profile of the event. Not only was the attendance up from 2012 (with ~2,700 developers on hand, this was the largest event to date), but AT&T has also added executive presence to the event. Ralph de la Vega, the President and CEO of AT&T Mobility, typically keynotes this event; however, this year he was joined by other key executives, including the company’s CTO and CMO. AT&T also landed Cisco’s Chairman and CEO John Chambers as a keynote speaker and “rock stars” in developer circles like Christian Heilmann from Mozilla to lead breakout sessions. Scheduling the event ahead of CES was a smart move, as it gave the event a good representation of both the media and analyst communities (as well as a critical mass of mobile-oriented developers).

Click here to read this entire research note.

NRF 2013: Translating the interactive online experience into the store...and other observations

NRF 2013 certainly lived up to its “The BIG Show” billing and delivered an extremely well attended trade show by both retail technology vendors and investors. From mobile payments and POS innovation to retail analytics and concierge programs, one key theme throughout NRF was the desire by retailers to replicate – if not improve – the interactive experience enabled through online channels. The  growing threat of trends like show-rooming and from e-tail powerhouse Amazon.com and continued inability of traditional retailers to more effectively integrate their online and in-store experiences are leaving retailers predictably nervous.

The recent holiday retail sales figures published by NRF are proof positive as sales through ‘stores’ rose by 3% - down from 5.6% in 2011 – while online sales grew by 11.1%.  While these channel patterns are not expected to change dramatically, what we are beginning to see – as evidenced by a number of innovative releases at NRF – is that solutions to deliver a true integrated omni-channel solution for retailers are increasingly viable and that retailers are serious about delivering this experience. To that effect, some of the key themes and unique announcements observed during NRF 2013 include:

• The power of the associate. Retail associates represent one of – if not THE – key competitive
  advantage of traditional retailers. Yet they frequently not treated as such. Clearly high turnover of associates contributes to retailers challenges. However, retail associates need to be better leveraged – and trained – to support the increasingly educated consumer. This means equipping retail associates with solutions to enable real time access to critical product and inventory data and communications and collaboration capabilities within the retail setting. Innovative solutions such as Motorola’s SB1 smart badge are a cost effective example of how retailers can empower and support their associates.
• The integrated retail experience. The industry has been discussing omni-channel retailing for several years. However, the reality never quite lived up to the promise. What we are starting to witness, however, is that for select items – such as apparel or DIY products – fulfillment from store locations is gaining a lot of attention by retailers. Moreover, the seamless integration of the online store-front with the in-store retail solutions is delivering the capability where, for example, Home Depot can fulfill an order it received within 20 minutes by an in-store associate.
• More actionable analytics. For an industry with such slim margins it is incredible how little retail decision makers really know about their operations. Ask how long it takes to run a price mark-up/down and a blank stare will be a common response. Workforce management analytics and the dashboards that make the data readily accessible are the often overlooked, yet exceedingly important tools for retailers in today’s hyper-competitive climate where decisions need to be made spontaneously, often in a highly distributed manner. Solution providers
  such as Kronos and their recently introduced Workforce Tablet Analytics will assist retailers in deriving real value from Big Data.
• Store format changes. One of the biggest changes we are in the midst of witnessing is the dramatic shift in POS infrastructure. While traditional ‘fixed’ POS stations remain the defacto solution, the rate at which retail organizations are investing in mobile POS and payment solutions and, equally importantly, the rate at which they are NOT upgrading legacy POS solutions. Unique solutions from established payment vendors such as Verifone and Ingenico that enable secure payment across a variety of mobile devices – such as tablets and smartphones – and the integration of new payment types with existing retail infrastructure (thing PayPal and NCR) is driving massive change. While mobile POS offers some clear benefits in the form of improved service quality, speed of sales process and personalization of shopping experience it is not until this year when we expect a fundamental shift towards mobile payment. One major question, however, is whether mobile can sufficiently withstand the rush of a seasonal shopping season such as end of year holiday season.
• Store format changes, part II. One of the other developments and trends we discussed and are tracking is related to the fluidity of the retail operation and the ability for retailers to more rapidly respond to quick shifts in the market. An impact of this is the shift to smaller footprint store formats and larger warehouses or more warehouse space. Technologies that allow retailers to be more responsive to rapid changes in demand or product mix and do so on a
  individual store basis are increasingly critical.
• Microsoft’s Windows 8 Embedded Handheld. While there has been much anticipation and
  debate leading up to Microsoft’s official release of their next generation OS for enterprise/ruggedized mobile devices, the cat is finally out of the bag. Among other developments, Microsoft is delivering UI upgrades to bring this platform on par with modern mobile platforms and some of the prototypes we previewed were truly transformational. As expected, there is a clean break from the existing Windows Embedded Handheld 6.5 – which Microsoft will continue to support through 2020. What was perhaps not expected was that the launch will be coordinated with a select group of OEM partners, unlike the broad availability
  of existing solutions. Microsoft is clearly taking a page out of the Windows 8 launch program. While the volume hit will be negligible – launch partners account for approximately 60% of rugged handheld shipments – in the case of the niche-oriented and still fragmented market, this may backfire. 

Integrated or À La Carte Enterprise Mobility Solutions



Established mobile software categories such as mobile device management (MDM) and telecom expense management (TEM) have not only matured, but are being blended with “new” mobile categories such as mobile application, security and content management. These formerly adjacent enterprise mobility solution areas are being integrated by an increasingly broad range of vendors, and are marketed as enterprise mobility management or EMM.

While point solutions for mobile management have proven to be adequate for many deployment environments, they are beginning to give way to more sophisticated solutions that have emerged in the market as integrated end-to-end enterprise-grade mobility management.  However, the diversity and variability of mobile requirements in enterprise environments make an a la carte “enterprise mobility bundle” approach viable and often desirable. We identifed and wrote about this trend earlier this year, as carriers and systems integrators continued to demostrate their channel strength in reselling mobility solutions. Both integrated EMM solutions and point solutions will see success in the market as vendors continue to architect solutions that can integrate well with existing technology infrastructures as well as with complimentary (and often competing) mobile solutions – additionally, larger organizations with more sophisticated/mature mobile strategies will demand an integrated mobility approach due to these solutions ability to reduce support and maintenance costs.

The roster of vendors offering EMM solutions has expanded well beyond the mobile-first MDM vendors like AirWatch, Boxtone, MobileIron and Zenprise, who began expanding their solution range in 2010. Prominent participants cross the entire spectrum of technology-oriented vendors, including: mobile OS vendors, hardware OEMs, large ISVs, carriers, systems integrators, and mobile first ISVs. The solution range being offered is wide, with competing paths to secure mobile applications and platforms – indeed; EMM is shaping up to be one of the most competitively fought software markets in enterprise mobility.

Honeywell's Intermec Acquisition Reshaping the Competitive Landscape of the Rugged Mobile Market

After monitoring the rugged mobile market and witnessing the consolidation trend that has been taking the market by storm for the past few years (e.g. Honeywell's acquisition of EMS Technologies, Inc and Motorola Solutions' acquisition of PSION), here at VDC Research, we were expecting 2012 to bring us more in terms of acquisitions - and the month of December did not disappoint us. On Monday, Honeywell International Inc. (NYSE: HON) announced that it would acquire Intermec Inc. (NYSE: IN) for about $600 million in cash ($10 per share).

Despite maintaining its competitive position, Intermec, the workflow performance company that develops, manufactures and integrates technologies that identify, track and manage supply chain assets has been going through restructuring and was in search of a new CEO in addition to evaluating its alternatives. In addition to being a key manufacturer of rugged mobile computers, RFID, barcode scanners and barcode printers, the company is a turnkey solution provider with offerings in hardware, software, services and integrated solutions.

In this blog post, we are going to be looking at Honeywell's acquisition of Intermec and its impact on the enterprise mobility market.

Sign of the Times*:The rugged mobile market - and more specifically the rugged handheld market - is at crossroads. In fact we appear to be entering a phase of lower growth. Some of this can be attributed to consumerization and increased market erosion by smartphones. In addition, macro factors such as the weak economic climate in Europe and the soft recovery in North America do not bode well for higher growth dynamics. What is increasingly clear for participants in this already wildly fragmented market is that without scale - or an extremely focused niche position - one's ability to compete is compromised. Although Motorola - fresh off its recent acquisition of PSION - remains the clear leader in the rugged handheld market with over 40% share, combining Honeywell (LXE) and Intermec creates a more viable "number two" with a market share reaching 20%. This substantially broadens the gap with the rest of the market as the next closest competitor's share hovers around 5%.

Portfolio Fit and Mix:Honeywell's enterprise mobility and AIDC products are part of its Scanning Mobility unit within its ACS division. From a hardware perspective, Intermec expands Honeywell's rugged handheld and forklift mounted portfolio, especially around devices for field mobile and logistics solutions. In addition, through Intermec's printer and media division Honeywell has effectively expanded its TAM by several billion. Moreover, with Intermec's Vocollect division (Vocollect is the leader in voice solutions for mobile workers) Honeywell is further enhancing its warehouse capabilities, a critical market for rugged mobile and data collection technologies. What is likely especially appealing to Honeywell, is access to Intermec's installed base - particularly in markets like DSD, industrial warehousing, logistics and field service. Beyond core hardware, Intermec also has some interesting capabilities around professional services - through its Enterprise Mobile business unit - and software. These could be critical as Honeywell explores possibilities to enhance its service footprint and scale its service offerings.

Consolidation Trend and Honeywell as a Serial Acquirer:Consolidation trend has been a common theme in theme in the enterprise mobility market over the past couple of years and VDC expects this trend to continue in areas where the market has reached a certain level of maturity. Honeywell has excelled as an acquirer of companies as the company acquired Hand Held Products, Metrologic, EMS Technologies and Intermec since 2007. PSION's acquisition by Motorola Solutions earlier in the year shook up the competitive landscape as the consolidated company is better positioned in the market with its expanded product portfolio and market share gains. While the overall tendency in the market might suggest being more cautious giving the economic uncertainties and volatility, Honeywell once again focused on the potential opportunities associated with it and decided to move forward with the acquisition. The company continues to focus on mid-market deals (under $1 billion) and use consolidation as a way to support its organic growth. Honeywell's expertise in consolidation perhaps gives the company a significant leverage over its peers as the company perceives these acquisitions as a safer way to grow its business.

Despite its large installed base of customers and devices and its strong position with its partner ecosystem, Intermec has been having some challenges over the past couple of quarters. It would be interesting to see how Honeywell successfully integrates the company and turns its business around. The impact of this acquisition on Intermec's employees and product lines is also yet to be seen.

*The figures reported in this section are from VDC Research's Strategic Insights 2012 Enterprise & Government Mobility Hardware Mobile Devices Report and references to consolidated companies when mentioning Motorola Solutions (includes PSION) and Honeywell (includes Intermec).

P.S. Since the announcement of the acquisition, multiple law firms announced that they will be investigating the acquisition as a result of the potential claims against the Board of Directors of Intermec, Inc. We will update this blog post as more information becomes available.

Sprint Bets on "Everything is Connected" with Velocity

On November 29 at the L.A. Auto Show, Sprint announced a new product dubbed Velocity that is an in-vehicle communications platform for automotive manufacturers. The in-dashboard product will have capabilities to deliver music, news, weather, sports and other infotainment features, security, navigation, remote connections for mobile devices, emergency services and engine diagnostics. Sprint will support global deployment via its many partnerships with multiple network providers, and let a customer connect an embedded head unit or mobile phones to applications like voice-activated texting and e-mail. Automotive OEMS will have the option of taking either a modular approach to meet custom needs, or use the product as a turnkey solution.

By partnering with technology providers such as Airbiquity and Wireless Car, Sprint is significantly reducing the development, integration, and selection requirements faced by an automotive OEM for this type of technology. It also opens up the range of products that Sprint offers in the machine-to-machine segment and positions itself at the high end of the value chain among the technology providers supporting the Velocity product.

For automotive manfacturers, it really provides three key opportunities:  the potential for higher margins for vehicle dealers; product differentiation; reducing the complexity of supply chain; and utilizing a business model that delivers effective cost and quality for the product.

As a network provider, Sprint expands its product line-up with a higher value machine, and positions itself well in the market and supply chain as well as providing another revenue stream via a billing service to the machine. In addition, the product aids automotive OEMs by reducing complexity in the supply chain. However, this does bring to the forefront a question of how many subscription services is the "connected" customer willing to pay? As consumers or enterprises continue to acquire and support multiple devices, the burden of paying for service on these devices is going to increase. In most scenarios, these different subscriptions are using data for various services. Network providers need to evaluate their business model, and think about billing based on access versus billing by each individual device. Future service plans need to be built around network access and data consumption versus device connections.

Similar to the product Sprint is bringing to the market, in 2007, Ford Motor Company launched a factory-installed, integrated in-vehicle communications and entertainment system called SYNC. The SYNC system runs on the Windows Embedded Automotive operating system designed by Microsoft and consists of applications and user interfaces developed by Ford and third-party developers. SYNC is only available in Ford products, and some features of the product are limited in markets outside the United States due to compatibility issues, in particular, voice command services such as turn-by-turn directions in Canada.

Sprint's new product certainly reflects the future of "everything is connected", and is a glimpse of what the world of machine-to-machine may deliver. To be competitive the product needs to ensure  seamless integration:  the ease of upgrading operating system software for vehicle radio, and navigation systems as well as applications; a high level of functionality; and supporting features and functions of mobile field workers in different industries. If Sprint can deliver the highest level of functionality in areas such as navigation and web browsing, it has an opportunity to edge out current technologies such as Bluetooth that many drivers employ to access some of the same functionality provided by in-vehicle communication platforms, and users that have been accessing similar capabilities via mobile phone or tablets in their vehicle.

Consolidating in Transportation Market - Trimble Acquires TMW Systems for $335M

 

On Monday, Trimble announced its agreement to acquire TMW Systems, a vendor offering transportation and logistics software, for $335 million in cash.  The two companies have worked closely in the past, integrating their solutions for many customers – this acquisition will see Trimble expand the overall reach of TMW’s transportation management software to its global customer base. 

 Over the past few years, transportation and logistics firms worldwide have struggled with decreased demand, challenges reaching full capacity, and increasing volatility in fuel prices.  These variables have weakened profitability for many vendors, driving substantial industry consolidation.  This has been especially notable in the trucking space (largely dominated by owner-operator firms), where we are seeing smaller companies struggle to remain profitable, with many exiting the market or facing acquisition. 

 In July of last year, Trimble announced a similar acquisition, purchasing fleet management vendor PeopleNet, a provider of onboard computing and mobile communications technologies for transportation and logistics firms in North America. Trimble’s acquisition history suggests the company is intent upon developing a strong portfolio of transportation solutions to serve a global audience.  The company’s purchases of companies including Punch Telematix in Europe and Tata AutoComp Mobility Telematics in 2010 provide strong support for this argument.  Given the evolving landscape of governmental and regulatory hurdles facing transportation organizations across the world, having a clear understanding of customers’ regional-specific requirements is critical. 

 While transportation companies are looking hard for opportunities to cut costs, mobile technology investment will not be a primary target for most organizations.  The potential cost benefits in productivity and time-savings far outweigh the investment required for transportation vendors looking to mobilize their workforce.  With software vendors increasingly employing a subscription-based pricing model, the transportation market is due to see continued strong investment in mobile technologies.

 These issues will be explored further in VDC Research’s Transportation, Logistics, & Warehousing report – due to publish in August 2012. 

T-Mobile Plays the Pawn in Verizon's Latest Attempts to Push Approval of its SpectrumCo Deal

On Monday, Verizon Wireless and T-Mobile announced that the two companies have agreed to a spectrum sale/swap arrangement.  Awaiting FCC approval, this deal would enable the vendors to swap portions of their spectrum in the AWS (Advanced Wireless Services) band, while also seeing “an overall net transfer of spectrum from Verizon Wireless to T-Mobile and a cash payment from T-Mobile to Verizon Wireless.”  From the outside, this appears to be an attractive deal to all parties:

•  T-Mobile gains licenses covering approximately 60 million people (facilitating LTE network build-out).
• The swap/sale of these spectrum licenses may facilitate more efficient spectrum usage, with each vendor increasing its amount of contiguous spectrum.
• Verizon will increase its AWS spectrum holdings, allowing build-out of its LTE network in this spectrum block.
• The deal appears to enhance the level of competition in the wireless market (clearly an FCC concern considering the controversy around AT&T’s failed acquisition of T-Mobile in December 2011), with the nation’s fourth-largest cellular firm attaining network coverage from Verizon Wireless.

And yet, a closer look into this deal tells an entirely different story…

This agreement between Verizon and T-Mobile is merely a piece of a much larger puzzle – one that commenced in early December 2011, when Verizon made a $3.6 billion deal to purchase SpectrumCo (a joint venture between Comcast, Time Warner, and Bright House).  This deal also contains:

    “a cross-resale agreement, in which the cable companies can resell Verizon-branded service, and     Verizon Wireless stores can sell cable service. In four years, the cable companies will be able to     launch wireless service under their own brands in a more traditional wholesale agreement. In     addition, the companies will also create a joint innovation initiative to better integrate wireless and     cable services.” (CNET) 

This purchase has yet to receive approval from the FCC and DoJ, who must evaluate the impact of this deal on competition in the wireline and wireless network markets.  Aside from these government bodies, this prospective purchase by Verizon has drawn considerable criticism from other interested parties – the Alliance for Broadband Competition formed in mid-May 2012 to oppose this purchase.  Members of this alliance include Public Knowledge, Rural Cellular Association, Sprint, and T-Mobile.  T-Mobile had – until yesterday – been one of the most vocal opponents to this purchase.  With this new deal between Verizon and T-Mobile conveniently “contingent” upon the FCC’s approval of Verizon’s SpectrumCo purchase, T-Mobile has withdrawn its objection to this purchase.

This is not the first attempt by Verizon to draw FCC approval of the SpectrumCo deal – in April, Verizon proposed that it would run an “open sale” of many licenses the company holds in the 700MHz A and B blocks.  This proposition was, of course, contingent on the close of its deal to acquire spectrum from the cable companies. 

While the motives driving this deal between Verizon and T-Mobile are clear to all sides, DoJ and FCC regulators will have to re-consider Verizon’s SpectrumCo purchase in light of these changes, and their impact on the entire wireless market.  The Alliance for Broadband Competition (minus T-Mobile) remains fiercely opposed, noting that "While it's nice that Verizon will cede a small portion of its vast spectrum holdings to T-Mobile, that does nothing to mitigate the fact that Verizon and Cable want to stop competing, stop investing, and stop innovating to the great detriment of consumers and the American economy."

 

Customer Closeness to Become Increasingly Important for Managed Services Vendors, as Competitor Landscape Evolves

 

As VDC prepares for publication of the Managed Services & Hosted Applications report in late May 2012, our team conducted a survey of IT decision makers regarding their firm’s perceptions and overall adoption of mobile managed services.  Over 400 respondents across a range of vertical markets participated this survey, which yielded interesting findings.  As the landscape of mobile managed services solutions and solution providers continues to evolve, study of respondents’ perceptions around these providers (e.g. SIs, OEMs, mobile ISVs, carriers) is one of the key objectives for our research of this market.  

As shown in the chart below, VDC asked that respondents rate the importance of several key decision-making criteria in influencing their selection of a mobile managed services partner.  While the market has seen numerous mobile ISVs (e.g. Airwatch, Zenprise, Mobile Active Defense) enter the market with compelling solutions to address evolving mobile requirements, we see many organizations favoring companies with whom they have already established a relationship – whether it be SIs, OEMs, or other vendor partners – to provide their organization mobile managed services.  As mobility has yet to become central to many organizations’ strategies and IT departments’ areas of expertise, these respondents place a high degree of importance on the capacity of its mobile managed service provider to understand the full scope of their mobile initiatives. This fact yields a significant advantage for larger players in the mobile managed services market, as these organizations have already developed strong industry relationships, and may possess greater resources to address companies’ unique mobile requirements.

VDC will expound upon the evolution of the mobile managed services market and vendor ecosystem in the Managed Services & Hosted Applications report – due to publish in May 2012.