VDC Research: Enterprise & Government Mobility Market Blog

Global mHealth Market to Reach Over $8 Billion in 2016

Comprising a wide range of mobile hardware, software, and professional services offerings, the global mHealth market will grow at a CAGR of over 15% to surpass $8B in revenues in 2016.  

Drivers of mHealth Market Growth Include:

    Regional Adoption

• While unlikely to threaten the Americas' hold on overall revenues in the mHealth market, the
  APAC region is leading the market with a CAGR of 17.6% through 2016.  And yet, the APAC market will not be attractive for traditional mHealth vendors, with rugged device platforms and Windows Embedded systems.  

• Rather, much of the growth in the mHealth market in APAC (as in other emerging economies e.g. Africa) will be driven by consumer use of smartphone and tablet computers to expand regional health care access to remote regions.  Increasingly ubiquitous wireless networks and low-priced consumer grade technologies are facilitating medical access for poor and rural populations.

    mHealth Market Not Immune to BYOD's Spread

• Despite strict regulatory oversight and data security requirements native to health care environments, this market has proven markedly ripe for BYOD's spread – according to a recent VDC survey, 75% of healthcare organizations currently have or are considering BYOD policies. Tightening health care budgets are seeing IT departments accommodate increased flexibility in network access and app support for employees.  
• Yet while a favorite buzzword amongst mHealth analysts, BYOD’s direct market impact will be tempered as regulatory compliance considerations, data security risks, and device management challenges necessitate more restrictive BYOD policies.

    Market Shifts Drive Innovation in the Legacy Rugged Market 

• While rugged will see slower uptake across emerging economies, the market for these technologies will continue to grow across North America and Europe. In a market with mission-critical processes and chaotic workflows, device performance and reliability is key. Traditional rugged devices - already present in many health care settings (e.g. handhelds/ PDAs, slate tablets, rugged smartphones) - offer a level of enterprise-friendliness not commonly found in the consumer grade solutions market (e.g. maintenance options, OS upgrade cycle).  
• Moving forward, however, traditional rugged vendors will increasingly look at the end user experience to facilitate competitive differentiation. Rugged devices will increasingly incorporate some of the UI/UX enhancements and appealing graphics inherent to today's modern mobile platforms (e.g. iOS, Android).

For more information about VDC's Research on the mHealth market, check out our 2012 Report on mobile & wireless technologies in the Health Care Services market.

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.

Growth in Rugged Tablet Market Trying to Make Up for the Loss in Others

VDC Research recently published its Q2 2012 Rugged Mobile Quarterly Shipments Report, supplementing its Enterprise & Government Mobility Hardware Research Service. Some key findings from this report include:

• The market for rugged large form factors had double-digit growth in Q2 2012 (over Q2 2011). The growth in the rugged tablet market was the primary contributor as the market for rugged notebooks and forklift mounted computers both contracted.
• Rugged notebook market experienced the greatest drop among large form factors. Vendors are positioning themselves to better serve the commercial segments as a result of the cuts in government spending. Shifting focus to commercial markets is not as easy as it may seem, given the historic ties the majority of the rugged notebook vendors have with the public sector.
• Rugged tablet market is taking a boost from the overall demand for the media tablets. The market grew by 30.1% over the year-ago-quarter, experiencing double-digit growth across all regions. Rugged forklift mounted computer market contracted by 9.1% (over Q2 2011) as the only growth came from the Asia-Pacific region while the Americas region shrank by 14.1%.
• Rugged handheld market was flat in Q2 2012, achieving a YoY growth of 1.8%. The economic uncertainty in the EMEA region was a key contributor to this outcome, as well as the fierce competition that this market is facing from lower cost solutions such as the smartphones.

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."

 

Army Might No Match for BYOD Forces

Battling tough barriers to adoption - including concerns over security, connectivity, and robustness of the app ecosystem – consumer-grade devices and mobile applications are seeing increased toleration and adoption in military.  As a major part of the army’s new Connecting Soldiers to Digital Apps (CSDA) initiative, the army has launched a prototype-phase mobile app marketplace. While the market is not yet fully developed, currently includes only 12 apps, and is limited (for a short time) to the iOS platform, “this prototype is a first step in establishing and exercising new submission and approval processes that will eventually enable Army members, organizations, and third-party developers to release applications for Army-wide distribution.” 



As shown above, commercial-grade devices will see strong growth, even against rugged counterparts, in the military market.  This will open up a new and considerable market for app developers…we look forward to the flood of new and innovative apps we will see developers create to target this space.  Although these new and innovative consumer technologies will no doubt propel the army into an even more tech-filled, advanced future, we will have to see how the industry copes with the rapid rate of change and innovation inherent to consumer technologies.

Enterprise Mobile Workers: Tracking Tomorrow's Mobility Opportunities

Today's workforce is undergoing some significant changes, and mobile workers are at the epicenter of many of them. In VDC's most recent report, we project that the mobile workforce will grow to 1.2 billion workers by 2014 - or roughly one third of today's workforce. No other workforce segment is as large or growing at the same rate. The segment spans virtually every industry and organization size.

In addition to this major workforce shift, the GEN Y/ Millenial generation, who has a very different relationship with mobile technology, is now entering the workforce. What makes this significant is that this generation is driving expectations regarding what types of mobile solutions are available from prospective employers and how they want to communicate and interact with co-workers.

To learn more, you can read our most recent research note here or tune in to The Global Mobile Workforce Quickcast.

BIG Again! NRF's 2012 BIG Show Brims With Traffic

National Retail Federation Expo 2012 took place in NYC this week and highlighted the future of retail. The attendance from solution providers including hardware, software and services providers was highly significant as well as visitors. Following a strong 2011 performance complemented by the holiday sales, the general outlook for retail remains strong, while the pace is expected to be slower than 2011. Nevertheless, NRF is projecting retail industry growth of 3.4% in 2012 to $2.5 trillion.

Members from VDC's Mobile and Wireless Practice spent Monday at the show meeting with a variety of established and emerging vendors. Some of our early impressions include:

Apple exhibits at NRF!

While Apple does not do tradeshows, based on the bevy of iOS devices on display at the show it clearly does not have to. A perhaps not so outrageous prediction of ours for 2012 was Apple's (and specifically iOS's) continued expansion into the retail market. Much of what we saw at NRF certainly confirmed this expectation. From customized sleds that convert the iTouch or iPhone into a secure mobile payment platform to sophisticated business intelligence applications designed for iPads, Apple's presence was widely felt. Secure payment solution providers such as Ingenico and VeriFone introduced their solutions targeting the iOS platform which are capable of processing both credit and debit cards, making them usable globally. While the mobile vendors typically selling into the retail segment continue to debate the Windows vs. Android scenario, Apple/ iOS - with no major push of their own - is establishing itself as a strong retail mobile platform. This only confirms another trend we are tracking in that Chief Marketing Officers are usurping power from traditional IT decision makers when it comes to which mobile solutions to deploy for highly visible and customer facing retail applications.

Are tablets right for retail?

The uptake in tablets appears to be noteworthy given that small form factor devices have traditionally dominated retail. In addition to small form factor vendors like Motorola which has been among the leading vendors in retail with their rugged handheld solutions debuting their ET1 tablet, rugged large form factor vendors such as Panasonic and Motion Computing are also going after the highly promising retail market with their recently introduced rugged tablet solutions. While tablets clearly have a role to play in retail operations - especially for customer facing applications and for solutions such as interactive displays - retailers are still evaluating the true potential of these devices. A recent survey did not perceive store associates equipped with tablets as providing superior service in comparison to those equipped with other mobile computing and communications solutions. While we expect tablets to represent a strong platform for certain retail workers and workflows, 2012 may bring more pilots and evaluations rather than large scale rollouts.

Consumer WiFi, mobile payments and mobile scanning providing more immersive retail experience

Similar to themes we have been discussing throughout 2011, customer engagement is expected to play a huge role in this move. More and more store associates are being equipped with mobile devices in order to lookup customer and product information during their interaction with customers. Most retailers we spoke with also talked about public WiFi for their shoppers to drive a more interactive experience while evaluating next generation presence applications.

Likewise, mobile payments and mobile POS solutions were in high demand during the show as many solution providers introduced their newest products. Not only answering the customer's product-related questions but also completing the transaction at that point of contact is becoming highly valuable for retailers as the traditional in-store environments which may have limited number of POS machines can result with long lines and lost revenue for these organizations. Thus, this enables the associates to not only sell the inventory in a particular store but to also order an out-of-stock product through their online/ mobile site and have it ship directly to the customer or the store based on the customers' preference. Hence, the up-sell and cross-sell opportunities that can be achieved through this interaction are very significant. Tracking how traditional retail POS vendors respond to this trend will be especially interesting as many of these have the most at stake. One interesting solution was from Wincor Nixdorf - a leading brand of traditional POS solutions. They are extending their mobile capabilities with their TP Application Suite, which provides two hardware independent modules: TPiSCAN supports all self-service solutions in the checkout area. TPiSHOP offers the possibility to implement mobile self-scanning either on retailer-owned devices or on individual smartphone of the customer.

Following a dynamic 2011, expectations for retail technology solutions - especially customer facing mobile solutions - remain robust in 2012.

Changing End-User Requirements are Forcing Field Mobility Solution Providers to Invest in Customer Engagement

Mobile computing solutions have long been deployed, and are relied heavily upon by field service and sales organizations to improve productivity, enhance decision making and achieve real-time visibility. However, VDC Research's most recent end-user study (fielded in Q2 2011) highlights an increasing interest in enabling customer engagement in field mobility among organizations of all sizes.

 

While the heavy reliance on mobile computing solutions for minimizing manual and labor-intensive processes in inefficient workflows continues, organizations are closely studying ways to engage with customers throughout the process. VDC expects the demand for improved customer service to continue to increase given the effect of customer satisfaction, loyalty and referral on the increase in sales through repeat business and potential cross-selling abilities. Understanding customer pain points and delivering personalized services that build customer relationships and increase customer commitment to their company or brand is among the key requirements that should be built into the service and sales strategies of solution providers.

Please click here if you would like to read our latest research note on Field Mobility.

Field Mobility - Empowering the Mobile Workforce

Field mobility solutions provide enterprises with real-time visibility, enabling field mobility workers to engage with customers at the point of interaction. With the continued need to improve real-time decision making and increase productivity, the market for field mobility solutions is expected to increase from $14 billion to $23 billion by 2015. Employing an efficient and effective field service operation is already becoming a competitive differentiator for a lot of forward thinking organizations, and capitalizing on technological advancements will be a key opportunity for suppliers. Please click here if you'd like to listen to our latest QuickCast on Field Mobility.

Based on our enterprise mobility end-user survey that was fielded in Q2 2011, the demand for real-time product and customer information ranked the highest among the field mobility pain points. Whether we are talking about a field service technician or a field sales representative, the advancements in technology, along with the improvements made in wireless coverage, enable organizations to equip these field workers with the necessary solutions to be fully capable of resolving issues/ closing transactions at the point of interaction. More information about the recently published Field Mobility Solutions Vertical & Applications Market Report can be found here.

Outlook for Mobile Devices is Bright - Continued Uplift Expected Through 2015

VDC's Mobile and Wireless Practice recently published our annual report on Mobile Devices for enterprise and government mobility applications. We have been publishing this annual report for almost 10 years running and it represents the keystone of our annual Enterprise and Government Mobility Research Service. The past 18-24 months have exposed some of the most volatile and difficult to predict market conditions and we do not expect the next 18-24 months to be any different. From rugged solutions supporting line of business applications, to enterprises enabling access to a variety of corporate assets and platforms (ERP, CRM, etc.) on smarpthones and next generation tablets being trialed for customer-facing applications, we see the level of investment and sophistication of solutions within enterprise and government organizations continuing to scale.

Some of the key findings from the 2011 report include:

• Rugged mobile market rebounds. Although this is perhaps not news anymore, the fact that most segments of the rugged mobile market will reach the prior highs established in 2008 by late 2011/ early 2012 is an astounding feat, considering the severe contraction experienced in 2009. In 2010, the global rugged mobile computing market exceeded $4.6 billion and we expect it to grow by just over 10% in 2011 to $5.1 billion. Much of the recent growth was driven by pent-up demand in the retail distribution sector and for field mobility solutions. In 2011 and 2012/13 we expect transportation and logistics to pick up - especially mail and courier - and drive growth. The outlook in the large form factor market - primarily the rugged notebook market - is slightly more uneven due to its large exposure to military and public sector markets.


• However, downside risk increasing. Although demand in the first half of 2011 has been strong and the outlook is positive, the downside risk in these markets is increasing due to the uncertain economic outlook in several country markets. We are beginning to hear about deals being postponed to later in 2011/ early 2012. Too few to call a trend at this point but certainly something we will be following.


• Rugged competitive environment undergoing change. Although still massively fragmented, one recent trend among rugged mobile vendors has been to more actively explore private label/ rebranding opportunities to fill gaps in line cards/ portfolios. Although this presents a low-risk/ moderate reward opportunity for vendors to expand their footrpint there are some potentially dire consequences specially as they relate to brand erosion and IP position/ value-add (real AND perceived) of vendors pursuing these tactics.


• Rugged handheld devices - Microsoft's predicament? It is well known that Microsoft is having a hard time scaling opportunities for its Windows Phone 7 OS. However, in the rugged handheld market, Microsoft remains the clear leader with over 80% market share for its Windows Embedded Handheld/ Embedded CE platforms. Although there is a fair amount of dissonance regarding this platform and its road-map - largely emanating from ISVs determining their future OS support strategies - enterprise end users (and handheld OEM/ ODMs) remain committed to the stability of this platform. Although Android does loom as an alternative, the more relevant discussion may be regarding the migration of HTML5 browser-based solutions.


• Smartphone growth (and tablet adoption) showing no sign of slowing. In contrast ot the rugged market which is discussed in the millions of units, the smartphone scale is in the hundreds of millions. Smartphone unit growth - although slowing - is expected to exceed 25% per year through 2015. In terms of enterprise adoption and support (of both corporate liable and individual liable devices) we expect shipments to near 500 million by 2015. With today's growing mobile workforce, the smartphone increasingly represents a key solution for enterprises to connect and engage with their employees. That means enabling access to a variety of enterprise assets (ERP, CRM, HR, etc.) and workflows (expense reporting, approvals, etc.) on these devices. Overall VDC expects that by 2015 the smartphone access to mobile applications (beyond email and messaging) will exceed 50%. The smartphone market is also increasingly challenging - and potentially eroding - the lower-end/ entry class segment of the rugged handheld market.


• The tablet wrinkle. The tablet computer market - traditionally supporting niche line of business workflows - has undergone a renaissance following the introduction of the iPad in 2010. Enterprises are exhibiting strong interest in these devices - and renewed interest in legacy solutions - to support a variety of applications and workflows. One development has been that application strategies within organizations are changing and often shifting from smartphone-centric solutions to ones that leverage the greater display real estate of the tablet.

The published report expands on these issues and addresses many others. Please click here for more information. We look forward to your feedback!