VDC Research: Enterprise & Government Mobility Market Blog

The “Rule of Three” Stipulates There's Room for a Third Mobile Ecosystem

“The Rule of Three” postulates that all major markets evolve and shift, and that markets tend to behave in a highly predictable fashion. This seems to be playing out in the mobile platform battle that we are in the midst of. Interestingly, whether by intention or not, vendors such as Apple and Google find themselves achieving vendor lock in. While this is largely due to end-user comfort level and familiarity with these respective platforms, many users have also have invested in apps and music for these respective platforms. However, moving forward, we believe that regardless of monetary investments, familiarity and comfort with a platform that churn is inevitable and even likely — this will give new, emerging and potentially resurgent vendors such as Microsoft and RIM an opening. 2013 will also bring new market entrants such as the Tizen OS (an initiative backed by the Linux Foundation, Samsung and Intel), Mozilla’s Firefox Mobile OS (developer friendly and based on Web technologies [HTML, CSS, and JavaScript]), and the Sailfish OS (a successor to MeeGo). Clearly these vendors face an uphill battle – however, if they are able to establish a developer ecosystem around their platforms, the market opportunity will present itself.  At a minimum, these vendors will force incumbent vendors such as Apple and Google to continue to innovate.

Smartphone OS providers are very aware that generating consumer interest in their respective platforms is critical moving forward, and rightly recognize that the predominant app classes that are succeeding are consumer oriented (e.g., social networking, entertainment, messaging, and games). While the mobile ecosystem remains fragmented, Apple’s iOS and Google’s Android OS continue to attract the most attention from developers — based on churn (largely in the form of contract renewals), breakage, and lost devices, we see an opportunity for both Microsoft and RIM (and potentially others) to remain commercially viable and even gain traction and loyalty from the marketplace. While both RIM and Microsoft have struggled, and stumbled, and continue to play catch-up in what has become a two horse race OS battle, we see ample evidence that both company’s can remain very relevant moving forward, and see room for a third mobile ecosystem. While Windows Phone 8 is off to a good start ... it's clear that RIM has a lot riding on BB10. Stay tuned.

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.

Notable Acquisition Earns Networking Giant a Boost into the Cloud; Cisco Acquires Meraki

On November 18, Cisco announced its intent to acquire Meraki - a startup leading the move to cloud-based networking - for ~$1.2B in cash.  Meraki solutions enable centralized, cloud-based management of on-premise networking solutions.  

Key drivers of this acquisition:

• Grow Penetration into the SMB Market - While Cisco's wireless infrastructure solutions are clearly market-leading, offering a high level of quality and service, Cisco is known as a top-of-the-line vendor with a high price tag associated with its products/ services.  Cisco is betting on the flexibility and scalability offered through Meraki solutions to expand its overall target market with greater support of SMB requirements.
• Rising Competitor, Promising Growth - 2011 saw Meraki achieve approximately $100M in bookings, and nearly tripling its employee base from 120 to 330 employees.  Established in 2006, this performance is especially notable, indicating the strong future growth potential for Meraki.  While not necessarily competing head-on with Cisco - a vendor strong in serving large enterprise customers - Meraki's technologies are complementary to Cisco's existing portfolio.  Further, Meraki's low pricing model definitely represented a real concern for Cisco.
• Cisco Slow to Address Rapid Market Shifts - Smartphones and - increasingly - tablets are putting pressure on organizations' wireless networks.  While Aruba has developed solutions such as ClearPass and Aruba Instant to tackle these growing enterprise concerns, Cisco had not yet announced such a product.  We will likely see Cisco announce several new products and solutions over the next 12-24 months as Meraki's technologies are integrated into the Cisco infrastructure.

While Meraki has no doubt made a splash - over the past few years - as a very successful startup in the networking space, this acquisition will facilitate more rapid global expansion of these offerings.  In all, VDC expects this acquisition to expand Cisco's solutions portfolio, and hopefully facilitate further innovation from this networking giant.

 

 

Market Leading Enterprise Mobility Vendors Lawyer Up

On October 12th, AirWatch (the plaintiff) initiated a lawsuit (case number: 1:12-cv-03571) in the United States District Court for the Northern District of Georgia against a primary competitor, MobileIron (the defendant). The filing includes serious allegations which very clearly articulate MobileIron's intent to convert trade secrets belonging to AirWatch to its economic benefit. Central to the lawsuit is the violation of the federal Computer Fraud and Abuse Act (CFAA - 18 U.S.C. §1030) and misappropriation of the Georgia Trade Secrets Act (GTSA), which prohibits "disclosure or use of a trade secret of another without express or implied consent" as well as "improper means to acquire knowledge of a trade secret".

The lawsuit is centered on the activities of at least two MobileIron employees who fraudulently (under the guise of working for a fictitious company and using aliases) obtained a free trial and access to AirWatch’s software. These employees proceeded to discuss technical details and the competitive landscape with an AirWatch representative during the course of its trial period. Additionally, the MobileIron employees gained access to AirWatch’s Resource Portal and were able to obtain sensitive and proprietary information which is central to AirWatch’s marketing and pricing strategies.

Specifically, AirWatch is seeking compensatory damages for MobileIron's:

• Accessing AirWatch's computers and confidential information in violation of the CFAA
• The misappropriation of AirWatch's technical trade secrets and other confidential information
• Unfair and deceptive business practices
• Fraudulent misrepresentations
• Willful and malicious conduct
• Breach of AirWatch's end-user license agreement (EULA)

AirWatch is also seeking attorneys' fees and costs related to initiating its lawsuit.

It seems as though MobileIron has conducted an internal investigation into the matter, and has taken undisclosed actions (the lawsuits sole exhibit, an email from MobileIron's CEO to AirWatch's Chairman and CEO contained this tidbit). However, it seems as though AirWatch was not satisfied with MobileIron’s actions and has decided to take legal action.

Trade secret litigation has been on the rise, and is not surprising given the fierce competition that is prevalent in the mobile ecosystem (data from the Gonzaga Law Review shows that trade secret cases doubled in the seven years from 1988 to 1995, and doubled again in the nine years from 1995 to 2004 – their study indicates that at the projected rate, trade secret cases will double again by 2017¹). The allegations as stipulated in the filing appear to be very damning for MobileIron. Indeed, this lawsuit is an unfortunate development, and is not only embarrassing, but will likely have monetary and potential personnel-oriented consequences for MobileIron. 

MobileIron has been enjoying significant success with its 100% channel strategy – the company’s trajectory has been impressive, particularly when considering they have only been in operation since 2007. While this lawsuit is likely to be the result of a “few bad apples”, it has the potential to create bad publicity and will not perceived as favorable by customers and partners. However, organizations that engage in deceitful business practices not only run the risk of alienating perspective customers, but also in enhancing competitive threats.

A spokesperson from MobileIron offered the following statement: 

“The complaint filed by AirWatch alleges conduct by a few individuals that is not the type of conduct that is authorized by MobileIron, nor does it reflect our high ethical standards.”

We believe that it is very likely that this matter will be resolved expeditiously out of court.

¹http://gonzagalawreview.org/2010/01/01/a-statistical-analysis-of-trade-secret-litigation-in-federal-courts/

 

MobileCON 2012 Recap

The city of San Diego hosted the autumn edition of the CTIA conference earlier earlier this week — rebranded as MobileCON, the event featured keynotes from prominent mobile-minded industry leaders such as Sanjay Poonen (president of Global Solutions for SAP), Robin Bienfait (RIM's CIO), Briget van Kraligen (an SVP at IBM's Global Business Services) and Stephen Trilling (Symantec's CTO). I wasn't able to catch all of the keynotes, and hope to watch them online this weekend. From what I did see, the speakers were enthusiastic, and definitely see mobilty as a change agent in the enterprise.  Symantec’s Trilling expounded on how the line between business and personal use has been blurred and instead of shunning the mix of business and pleasure, companies must figure out a way for the two to coexist — spot on. SAP's Poonen discussed the importance of device and content management in securing the transitions between machine to machine and machine to man — an insightful keynote indeed.

While the event continues to attract a broad range of exhibitors focused on all things mobile, it was nice to see that invitations weren't extended to the dozens of accessory exhibitors (cases, headsets, etc.) who typically take up a good 20% of the show floor. The event was certainly smaller than years past (I would estimate fewer than 150 exhibitors — attendance was rumored to be just ~5,000). The M2M Zone was prominently demarcated with all of the key players in attendance, and most of the traditional attendees (Airwatch, AT&T, Dell, IBM, Nokia, RIM, SAP, Symantec, and Verizon) were on site.

CTIA reported that 59% of registrants were C-level or senior executives — while many of the exhibitors I spoke with indicated that floor traffic was "light", many were pleased with the quality of the attenedees. Key themes we heard from the vendors we engaged with centered on core mobility challenges that CIOs are grappling with as they expand their mobile workforce. Both RIM and Dell announced their expanded device, content and app management solutions — IBM held series of well attended sessions on the "leadership stage" that focus on key enterprise mobility areas it has increasingly focused on, as IBM puts it mobile solutions to "build, connect, manage, secure, extend and transform your business". 

There is growing speculation that CTIA may consolidate its spring and autumn shows in 2013 — definitely a possibility based on the attendee and exhibitor shrinkage ...

As an aside, next time you are in San Diego and want a hearty breakfast, I recommend Brian's 24 in the Gaslamp district.

BYOD in the Government Sector - the USDA's Large MDM-Oriented RFP

The United States Department of Agriculture (USDA) has recently issued a multi-million dollar RFP for a variety of integrated MDM-oriented mobile solutions. As stated in their RFP and PWS, the Agency plans to award its next-generation and enterprise-grade mobility contract to a single vendor via a blanket purchase agreement (vendors may propose a proprietary solution or one built through partnerships with other providers). The document makes it clear that the agency recognizes that its workforce is being impacted by BYOD:

"new boundaries are being established within USDA that support the mobilization of our workforce and that blur the lines between personal computing and corporate resources."

Several key and core mobility management components are desired — specifically a solution that tightly integrates:

• MDM (the agency expects to grow its current footprint of mobile devices from 3,000 to 100,000 in "the next few years")

• MAM (the agency has specified that it requires a solution that can accommodate the deployment of both in-house and commercially developed applications).

• Secure Container (the agency seeks a solution that allows Government data to be securely isolated from personal data while being managed from the MDM solution it decides on).

While the Agency expects its workforce to be relatively stable in the coming years, it expects mobile devices to play an increasingly important role in the future. It expects BYOD to account for the lion share of the device growth within its workforce in the coming years — however, government furnished equipment (GFE) will also increase. The Agency's RFP reveals the device diversity (3,600 mobile devices are currently being managed, consisting of: iOS, Android 2.2+ and Windows Phone 7) that it must contend with, and also makes it clear that it recognizes the importance of preserving the user experience:

"everything must appear “seamless” to end-users while delivering significant business value in a secure manner."

According to the solicitation documents, organizational experience with the USDA and its primary service provider (International Technology Service or ITS) is preferable — the RFP appears to be open to all federal business opportunity vendors. While the experience requirement could potentially eliminate many smaller vendors, the reality is that there are a limited number of vendors whose solution range spans MDM/MAM/Secure Container that can claim the "tight integration" capabilities that the Agency demands. The fact that the USDA recognizes that participating vendors can propose a proprietary solution or one built through partnerships is notable, and speaks to the Agency's recognition of the state of our mobile ecosystem.

The RFP also reveals that McAfee is the incumbent MDM vendor putting them in an advantageous position for the contract (the company also has recently enhanced its MAM capabilities). However, there are other MDM vendors of note who possess the key criteria that the USDA is looking for (AirWatch, SAP, and MobileIron) as well as others (e.g., Boxtone and Zenprise) who are well positioned to partner due to their ability to tightly integrate with best-in-class MAM vendors such as Apperian and AppCentral, and secure container vendors such Good Technology and Bitzer Mobile.

There is certain to be aggressive per device pricing proposed from the vendors vying for this business — we'll be keeping an eye on this large contract, and will continue to blog about it as details emerge. VDC will also will be publishing a comprehensive MDM Report later this month.

Multiple Paths Have Emerged to Secure Mobile Apps

We all love our mobile devices. They (many of us now have two — usually a smartphone and tablet — some of us [like my wife] have a COPE [corporate owned personally enabled] smartphone, and a personal smartphone and tablet) are inevitably never more than a few inches aways from us — this of course means that they are with us both at home and at work.

The Way in Which we Work is Changing

While today's workforce is changing, and our employers are increasingly providing us with powerful tools that bring reliable access to corporate data and the ability to collaborate with co-workers remotely — a large portion of our workforce (the clear majority) still commutes on trains and drives to their offices. For many of us (I know that many of my firends who work in large corporations don't see this changing any time soon), this may be the case for the foreseeable future.

Sure there are forward-thinking companies like IBM, SAP, and Cisco that "eat their own dogfood", and have embraced technology, offering their employees tools to enable them to work remotely. However, it is important to point out that the aforementioned tools are largely aimed at remote application access via laptops. What has and will continue to change is the way in which we work ...

Yes, I'm Going to Talk About BYOD ...

Modern mobile platforms are the change agent — our personal devices that we bring into the workplace and carry with us everywhere we go have opened the door to productivity-enhancing scenarios that are often "customer-facing". Forward-looking companies recognize this opportunity, and will continue to increase their investments in enterprise-grade mobile applications (VDC estimates this to be a $6B market in 2012). While many businesses have started to offer COPE options and are likely to continue down the COPE path (i.e., offering employees a choice of mobile platforms)— others will put mobile policies in place that accomodate BYOD. These trends, along with a burgeoning apps ecosytem are driving both opportunities and challenges to CIOs and IT organizations that administer and manage these deployments.

Multiple Paths Have Emerged

Clearly enterprise mobility is an increasingly hot topic in the enterprise — moving forward, the single most important priority that will give companies the peace of mind to invest in the mobile enablement of their workforce, will be securing their mobile deployments. The real challenge that I see for companies moving down the mobility path is the competing approaches that have emerged — this has put a significant burden on companies who want to deploy mobile solutions, as it is causing them to have to evaluate multiple approaches and vendors. These emerging paths will increasingly be covered as part of our mobile software research here at VDC.

One method to securing mobile applications that has quickly gained traction is the "secure container" approach, where corporate data is protected (i.e., encryted and isolated). This can be evidenced not only by the funding that several startups in this space have obtained, but by the large cutomers that they are beginning to attract. While several vendors that have emerged with secure container solutions, the most visible today are: Bitzer Mobile, Good Technology, and Excitor — as would be expected, each has a different approach and value play.

Be sure to Register for an Important Webinar Discussing the Impact of BYOD on July 19th at 2PM EST

If you'd like to learn more about BYOD, and the competing paths to securing mobile applications, I welcome your participation in an important webinar I will be co-hosting with Bitzer Mobile (@bitzermobile) later this week — you can register for it by clicking here.

 

 

Some Enterprise Mobility Acronyms are More Important than Others ...

Why BYOD is en Vogue

Chances are if you work (or have worked) in a marketing, product management, or IT role, you've come across your share of acronyms — the mobile boom we are in the midst of has the enterprise mobility ecosytem in full acronym bloom. While this isn't a surprise given the astronomic growth in adoption of smartphones and tablets that we are seeing, if you've been in the workforce for say a decade or more, you've seen your share of acronyms come and go. However, as a long-time industry watcher I can say that there is one salient acronym that will also eventually "go" but whose impact will be felt in the modern workplace for years to come — no surprise, I'm referring to BYOD.

"The Genie is out of the Bottle" is a tried and true expression that folks like me like to use, and it couldn't be more applicable to what is happening in enterprise mobility today. BYOD (many prefer the term "Consumerization of IT", yes another acronym — CoIT) is prolific in the messaging from mobile-focused vendors for good reason, it refers to the increasing influence that consumers are having on the technology which we expect to use at work. This concept, along with the mobile device proliferation that is common in business environments today is bringing both challenges and opportunities for IT organizations. While IT is accustomed to “pushing back,” increasingly it is the employees who are doing the pushing, and they are regularly getting their own personal mobile devices supported on corporate networks. This trend has brought the need for investment in solutions to control and manage their increasingly mobile workforce. Clearly there is a significant opportunity in front of the growing number of vendors that are sharpening their focus on enterprise mobility — while many startups are "mobile first", traditional ISVs are positioning their product roadmaps (often via acquisition) to attack the enterprise mobility segment.

Acronyms all have their day (DOS, DSL, Y2K etc.), and BYOD will fade to obscurity as well, but as of Q3 2012 it is having a profound impact in the enterprise — see our "SWOT" analysis of it's impact below:

Be sure to Register for an Important Webinar Discussing the Impact of BYOD on July 19th

If you'd like to learn more about this topic, I welcome your participation in an important webinar I will be co-hosting with Bitzer Mobile (@bitzermobile) next week — you can register for it by clicking here

ITSMs Going Mobile - LANDesk Acquires Wavelink

LANDesk has made its second acquistion since becoming a stand-alone business in September of 2010 (the company acquired analytics specialist Managed Planet in April of 2012) with the acquisition of Wavelink on June 20th. The company has changed hands several times in the last decade — LANDesk had been spun-out of Intel in 2002, was then aquired by Avocent in 2006 — Avocent was then acquired by Emerson Electric in 2009, who sold the firm to Thoma Bravo LLC in 2010. Thoma Bravo LLC is a private equity investment firm that appears to be increasingly focused on mobile-oriented companies to bolster its software and technology portfolio.

LANDesk who is best known for pioneering the management of PCs and servers has long been focused on expanding its systems management product portfolio. Since being spun-out of Intel, the company added a security suite with a best-in-class patch management functionality, as well as application virtualization to streamline application deployments, testing, and rollbacks while minimizing application conflicts.

With Wavelink, the company has added a tenured mobile-oriented ISV to its systems lifecycle management, endpoint security management and IT asset management services. While Wavelink is best known for its strength in device management and terminal emulation software, the company's rugged roots give it strength in managing mission-critical rugged mobile platforms — additionally, Wavelink's Speakeasy solution is a best-in-class solution for voice-driven data collcection.

Thoma Bravo (and LANDesk) reportedly evaluated 17 mobile-oriented ISVs prior to acquiring Wavelink — clearly this was strategic acquisition that will provide momentum as enterprise mobility continues to gain emphasis for LANDesk.

As depicted below, it is clear that there is significant overlap between the management of traditional technology platforms of desktops and notebook PCs and client/server computing environments and modern mobile platforms — moving forward, we expect other traditional ITSM vendors to move in the direction that LANDesk has as well. A firm such as BoxTone is a great example of a mobile ISV with this mindset.