VDC Research: Enterprise & Government Mobility Market Blog

Webcast Recap: Proliferation of Mobile Devices = Opportunity for Apps & Developers

During yesterday's webcast, we talked about some recent findings from our 2010 Mobile Developer survey, as well as vendor and end-user interviews.

The enterprise mobile device market is primed for significant growth as the capabilities, functions and users of mobile devices broadens. Specifically, we expect to see large growth numbers for Smartphones within the enterprise, and with it, mobile applications. In fact, mobile application developers are hot-ticket items for companies looking to mobilize their workforce.

With a fragmented mobile OS landscape for the foreseeable future and device proliferation, comes additional complexity. Companies deploying mobile applications will have to deal with supporting multiple platforms (which increases costs). But moving forward, mobile device management (MDM) vendors will benefit from this complexity. We see the importance of mobile policies gaining in importance, particularly in regulated industries, such as financial services, manufacturing, life sciences/healthcare and utility market segments.

For more details on our thoughts and to see some preliminary findings about the Software and Mobile Device market, we encourage you to listen to the webcast recording and scroll through the slides below.

Proliferation of Mobile Devices = Opportunity for Apps & Developers

View more presentations from VDC Research Group.

iPad's Enterprise Dreams

Not to overstate the obvious, but with 3 million units shipped in its first three months, Apple's iPad has been an astounding success. With one simple, yet seductive, product Apple has succeeded where all others have failed: bringing relevance to the slate tablet category. Now while that last statement may not exactly be fair - the slate segment has found success in a variety of vertical markets supporting specialized applications - slate tablets have so far not lived up to their initial (think Bill Gates at COMDEX circa 2001) hype as the next mainstream PC form factor. And therein lies the rub. The iPad is NOT a PC. Leveraging the iPhone OS and its iconic multi-touch interface, the iPad obviously resembles a smarphone much more than a traditional PC and in doing so dispels the notion that devices with large displays should behave like PCs. Therefore what makes the device attractive is not in its displacement value (notebooks continue to ship in record numbers) but rather in the new applications and workflows it can introduce. Moreover, it has the potential to usher in a new era of mobile interfaces and social computing.

Although the iPad (and iPhone and iTouch) have been designed and deployed with the consumer in mind their reach into the enterprise is substantial. The iPad should benefit greatly from the ground work achieved by the iPhone (in terms of garnering enterprise support) and the transition should be much more seamless. In a recent survey conducted by VDC Research among in excess of 500 enterprises (survey conducted in June/July, 2010) the level of interest in and evaluation of the iPad for enterprise mobility applications was astounding.

Among the respondents, almost 15% have already decided to deploy iPads while an additional 29% have plans to evaluate the iPad for enterprise applications. For a product that was launched barely three months prior these are some strong numbers. Digging into the numbers a little deeper revealed a high correlation between industries with highly or inherently mobile workforces and interest in the iPad. More specifically, interest was strongest in industries such as healthcare, retail, construction and manufacturing.

However, as with any new form factor/computing experience, there a number of legitimate issues or concerns with the iPad - especially from the perspective of the enterprise consumer. Per VDC's research results, of the organizations that have evaluated the iPad almost 37% decide NOT to deploy the device based on its shortcomings. While most of these have been well documented - lack of multi-tasking, wireless security concerns, processing power, etc. - others have received less attention. One of the most glaring in VDC's perspective - especially for what one might consider mission critical field applications - is the viewability of the display in direct sunlight. In addition, the limited support of many enterprise applications for touch interfaces will be a barrier in many industry segments (although one that should be overcome fairly quickly).

Nevertheless, the outlook for the iPad and other slate tablets in the enterprise is expected to be strong and introduce innovative new workflows and mobile opportunities.

Strong 2010 Rebound for Rugged Handheld Computing Market...But Challenges Remain

Sales of rugged handheld mobile computers - widely used by mobile workers supporting mission critical applications in a variety of industries - cratered in 2009 with the market contracting by 30%+ in certain segments. While VDC Research expected the market to return to growth in 2010, the rate at which the market has performed over the first six months of 2010 was slightly unexpected. Overall, the rugged handheld market grew by almost 8% in Q1 2010 over Q1 2009. Excluding Intermec - which had a difficult comparison because of its strong government sales in 2009 - the growth would have reached almost 12%.

Several factors combined to contribute to this strong performance. Some of the more notable include:

Return of the retail sector. Retail sector spend on rugged mobile solutions has been sluggish for the better part of the past 24 months. Much of the pent-up demand is now beginning to be realized driving a boost to spending for retail shop-floor in addition to back-room warehouse applications.

Tier I account spend. Largely absent over the past 18 months, large Tier I programs - especially in the highly competitive mail/courier segment - have provided a strong boost to the market. What is especially important is that whereas these contracts used to be highly US-centric, large contracts are increasingly available in international markets.

Field mobility opportunity. The strongest long term growth prospects for rugged handheld devices will be in 'beyond the fence' field mobility environments. This represents the least penetrated market segment and is just beginning to realize the benefits of mobilizing certain processes.

While 2009 is a fading memory for many rugged handheld vendors, most continue to face several significant challenges. 

Price competition/erosion. Although performance in the first half has been strong, much can be attributed to unrealized pent up demand. Business development has not been able to keep pace resulting in leaner pipelines. Consequently the level of price based competition continues to be severe and represents perhaps the industry's greatest challenge moving forward (year over year price erosion may reach 10% for rugged handhelds in 2010 - the highest it has been since 2006/07). While end users certainly are not complaining, the intense price wars have resulted in rapidly shrinking margins among both hardware vendors and their channel partners.  

Smartphone challenge. Another critical challenge facing rugged handheld vendors is the increasing level of competition from smartphones and other emerging devices - especially for field mobility applications. While smarphones do not have the same level of integrated I/O capabilities nor the level of ruggedness offered by rugged handheld devices, their proliferation in the enterprise (and lower adoption cost) are making them target devices to support more sophisticated enterprise applications. Plus, in the field mobility market the rugged handheld community is most challenged from an OS perspective. Although there is a strong application and developer community supporting field mobility applications on Windows Mobile devices, customer expectations in terms of user interface and experience - especially for field mobility applications - is increasingly influenced by consumer oriented smartphones.

Amidst these challenges, VDC remains optimistic about the future outlook for rugged handheld devices and is projecting a compound annual growth of 8% through 2014. However, participating in these markets is only becoming more challenging and vendors need to be prepared to be more agile to adapt to these conditions.