VDC Research: Enterprise & Government Mobility Market Blog

MobileIron's Miss

"Standing Alone" increasingly challenging for mobile-first EMM ISVs

Larry Dignan's article over at ZDNet this past week was a shot across the bow for the EMM market. In case you missed it, MobileIron announced that their CFO was departing, and issued a profit warning in their pre-announcement of their Q1 earnings (the company's Q1 earning call is scheduled for this Thursday). In their pre-announcement, MobileIron said that its Q1 non-GAAP revenue will be between $32M-$33M (down from its previous outlook of $34M-$37M). Gross billings (between $35.5M-$37M) were also lower than the $40M-$42M that they had expected. MobileIron's CEO Bob Tinker attributed the miss to several large deals not closing in Q1. Tinker also argued that the company's customers were moving toward monthly subscriptions and that the trend was cutting into revenue (reasonable).

What MOBL's Miss Means for the Broader Market

The EMM space is the most visible of the "segments" of the enterprise mobility ecosystem: not only have there been notable acquisitions (AirWatch, BoxTone, Fiberlink, and Zenprise), but participating vendors have demonstrated that they can win large deals, and attract key partners in the channel. However, being one of the two (Tangoe is the other) public "pure-play" mobile-first EMM ISVs is a challenge, as every move is "under the microscope". While EMM vendors are enjoying success in the market, the market is shifting beneath their feet. "Standing alone" as several prominent vendors currently are (e.g., Globo, Good Technology, MobileIron and SOTI) will be increasingly challenging moving forward as global channel expansion and substantial R&D investments that ensure continual product enhancements will be required — not to mention the growing footprint of large and established vendors who have recently entered / plan to enter this market (e.g., Accelerite, CA, Dell, Microsoft, and Oracle).

Pivot!

I wrote about the "EMM Pivot" I was expecting this past March — and recent discussions I’ve had with several prominent EMM vendors has revealed an interesting approach on how they intend to evolve and differentiate their platforms moving forward. Key initiatives that are in development and on most road maps include:

• Split billing
• Unified Endpoint Management
• Enhanced email clients
• Secure Messaging
• IoT and Wearable Strategies      
• Architecture enhancements (moving away from "rack and stack")
• UX / Console optimization

If you participate in this market, I'm still taking briefings to discuss the evolution of EMM and the pivot that I anticipate.

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Xplore Technologies and Motion Computing: Austin Neighbors Get Cozy

The news that Motion Computing was acquired did not come as much of a surprise, nor the fact that it was acquired by the ever-opportunistic Xplore Technologies. What was striking, however, were the terms of the deal - $9 million cash and assumption of $7 million of Motion Computing’s liabilities. Motion’s struggles with profitability have been widely rumored within the industry, with uneven performance resulting in substantial market share erosion. Motion's share of the growing rugged tablet market shrank by nearly one half over the past 4 years to the low teens in 2014. However, the extent to which it was leveraged and its narrowing margin for error – resulting in such an abrupt deal – came as a shock. Thus, the impact of the Hydis plant closure (Hydis was Motion’s single source supplier for daylight viewable displays) was a critical blow that stopped the company in its tracks as it was unable to fulfill orders for a large share of demand, especially its released - and increasingly popular - R12. With no inventory on hand or opportunity to place a “final order” (as plant workers immediately went on strike following the announcement that the plant was being shuttered), this was ultimately crushing to Motion.

VDC analysts explore the ramifications of this deal and the impact of the consolidating rugged mobile vendor landscape in a recently published VDC View. VDC clients can access the document here. 

 

Mobility is Driving Enterprise Collaboration Innovation

Long a bandied-about buzzword, collaboration has gotten an enterprise makeover in recent years in integrating chat and content sharing. The market has emerged from its roots in consumer-grade social networks like Facebook and Twitter to incorporate established enterprise players like IBM, Oracle and SAP, especially after Microsoft’s acquisition of Yammer in 2012. Since then, enterprise-specific social networking products have transformed from more consumer styled chat tools to fully fledged business collaboration platforms that have the potential to replace not only intranets, but knowledge management systems and corporate portals as their features and functionalities continue to expand. The main driving force behind this explosion in innovation has been mobility, both on the consumer and the enterprise front, as the impact of mobile-native millennials entering the workforce grows.

Differentiation in a crowded market

Companies are increasingly coming to understand the value of employee collaboration and of enterprise social networks (ESN), particularly as social media becomes a more integrated part of professional and personal daily life. However, the low barrier to entry has meant that there is an abundance of options available, ranging from consumer-grade chat options to Tier-1 solutions and everything in between. The result is a crowded market with considerable overlap, making it difficult for vendors to differentiate themselves. Although many companies faced with a plethora of options turn to existing solutions providers like IBM, Oracle and Salesforce, there has been room for innovators to disrupt the marketplace. These include companies like Atlassian, Slack and Zimbra, who offer a streamlined, mobile-first approach to collaboration. The sheer number of market players and the stratospheric levels of funding mean that the playing field is wide open with no apparent winners, which in turn is putting pressure on big name vendors to bring powerful collaboration tools to the table.

Appealing to a workforce that spans multiple generations

While the millennial generation has proved to be a significant driving force behind the adoption of more consumer-like collaboration tools in the enterprise, there is a challenge in getting older employees to adapt their work habits to embrace a more fluid approach to work and collaboration. For companies like Tangoe, considering the requirements of an inter-generational workforce has been central to the design and development of their product. In order to overcome resistance to new work processes and collaboration tools, vendors have the ability to introduce adaptive elements that can learn from end-users’ habits, although this presents privacy and security issues that would need to be addressed by the vendor.

Seamless integration is key

There is definite value in areas like user-defined contact preference, one-on-one and group chats, and content sharing, particularly when combined with a mobile-first, device-agnostic approach. This is increasingly becoming the norm across enterprise productivity applications and products. However, to be truly powerful, these solutions must be able to provide a user experience that meets the high expectations of a user base accustomed to consumer products and seamless integration. In an era where many longstanding productivity applications like email are undergoing significant revamps, a lack of integration could lead to a glut of programs and unnecessary app-switching, which is inefficient and cumbersome. Any shortcomings in either category can result in a lack of employee buy-in, or worse, employees resorting to workarounds using consumer-grade programs that lack the necessary security features and risk data leakage. Major players like Microsoft, Salesforce and SAP have done well in integrating their collaboration tools into their portfolio, but the bar has been set high to meet expectations. Given the growing market for enterprise collaboration, however, it is a challenge that a growing number of vendors are willing to accept.

with Kathryn Nassberg, Analyst

Could the Apple Watch be a tipping point for enterprise wearables?

In the days before the official launch of the Apple watch on the 24^th and Apple counting nearly a million pre-orders since last Friday, much of the tech world is abuzz with talk about the newest smartwatch to hit the market and the impact it could have on wearables as a genre. Although wearable devices have been on the market for some time, they have failed to garner any notable traction in the consumer market. The question remains as to whether the pricier, designer Apple Watch can be the catalyst for widespread adoption the way its predecessors were for smartphones and tablets and pave the way for greater integration of wearables in the enterprise.

The slow climb towards enterprise acceptance

Despite the current focus on smartwatches, the wearable form factor represents a broad spectrum of devices, particularly in the enterprise, where less consumer-oriented devices like wrist- and hip-mounted computers and ring-mounted scanners are more the norm, as well as head-mounted displays like that of Vuzix and the much-maligned Google Glass. However, the majority of the deployments for these wearables have primarily been for relatively niche applications that have traditionally revolved around data collection-intensive environments like the warehouse, where the benefits of hands-free devices are more immediately tangible. However, with enterprise mobility reaching even the most conservative of companies, interest in wearables is spreading across industry verticals. Notable examples include the healthcare industry, as well as logistics and field services where the benefits of being hands-free are becoming increasingly apparent. While many of these developing use cases have been for head-mounted displays like Google Glass (particularly in logistics and warehousing for vision-based picking applications), it has made enterprises take a more creative approach to equipping their mobile workforce and the benefits to be gained. Data from VDC Research shows that a growing number of industries are evaluating wearables, although the lack of a clear ROI remains one of the primary barriers to adoption.

Finding the killer app

The primary challenge in bringing wearables like the smartwatch into the enterprise is that, unlike other mobile devices, the wearable is not typically a standalone product, but is tethered to another device – usually a smartphone. By acting as a complementary device, it brings up the question as to whether it is truly needed in line of business applications. However, the ISV and development community is bullish on the notion, as evidenced by the growing number of solutions that incorporate smartwatches: last month Good Technology became the first enterprise mobility management (EMM) vendor to support wearables with Good Work, while Salesforce launched Salesforce Wear in the summer of last year as a platform to encourage app development for the form factor. Many of the emerging use cases revolve around hands free notification and ID functionality through NFC and BLE, although EMM vendors like Good Technology see potential for data security through the use of the device in dual-factor authentication and access control. Nevertheless, many of the gains are viewed as incremental and complementary rather than revolutionary, as the introduction of the smartphone and tablet into the workplace has set the bar high.

 Awaiting the tipping point

With thought leaders across the board predicting the explosion of wearables and IoT both in consumer and enterprise markets, it is only a matter of time before wearables as a whole gain more widespread acceptance and, once again, all eyes are on Apple. If the company succeeds as it has in the past in capturing the imagination of the public and the developer community alike, this month’s launch will likely prove the much-anticipated and talked about tipping point for wearables. This, in turn, will bring forth new layers of complexity regarding BYOD and security policies to an already complex environment, especially as the vast majority of devices will be personally-owned for the foreseeable future. In the meantime, April’s launch will determine whether wearables can finally make the transition from consumer trend to enterprise-ready. 

(Research and contributions from Judy Zhang)

Why Content is King on Mobile Platforms

VDC's recent conversations with CIOs indicate that a shift in thinking is underway; organizations recognize that they need to expand their security focus beyond their users and their device(s) to the data both the users and devices have access to. This data-centric security model is helping CIOs and IT leaders to exert greater control and increase their level of comfort with their mobile policies. While protecting data on a server has become par for the course in the enterprise, protecting data in motion is a whole other kettle of fish. The increasing use of mobile devices in the enterprise has employees carrying around (and potentially exposing) more information than ever. A typical mobile device is likely to contain both personal and work-related data – including emails, email attachments, voice mails, text messages, and potentially private corporate data.

 

Providing access to corporate content is game-changing

 

The ability to provision and control access of corporate content to mobile platforms represents a significant area of growth, as evidenced by how vendors such as DropBox and Box have seen their subscriber numbers skyrocket as they have made it easy for consumers to access their personal photos, files, and videos on all platforms, regardless of device. However, there are many scenarios for these types of services to be extended into the corporate world so that users have perpetual access to their data and content. What continues to change is the type and volume of content, as well as the places in which content needs to travel to enable business processes. Most large organizations have invested in Enterprise Content Management (ECM) infrastructure, and have terabytes of content siloed in those systems. Mobile access to these repositories has been possible for some time; however, only recently have we seen CIOs feeling more confident in allowing mobile access to this content. This is primarily due to the enhanced security features that mobile-first vendors have implemented in the past 12 months. These vendors have integrated elegant containerization solutions that feature sophisticated authentication mechanisms that can easily interface with existing identity management solutions. Furthermore, the native mobile VPN capabilities on both the iOS and Android platforms continues to improve and evolve, enabling vendors to further enhance the security posture of their solutions and giving the C-suite the peace of mind they require for more advanced mobile enablement.

 

 

Smaller vendors are leading the way

 

While EMM vendors have made great progress in integrating robust MCM capabilities into their EMM suites (successful examples include AirWatch (Content Locker), MobileIron (Docs@Work), and Good Technology (Good Share) and innovative startups such as Big Tin Can, Egnyte, and OwnCloud have proven their mettle in the market, it is only a matter of time before large vendors like IBM and Microsoft enter the arena in a meaningful way. Both of these firms have not only made clear intimations on enterprise mobility, but are ready invest significantly to ensure their position; despite progress with Lync and Delve, Microsoft may need to acquire in this space in order to bolster their offerings. Meanwhile, IBM has made strides in MCM with MaaS 360 to provide scalable enterprise mobility solutions. The question remains, however, as to what the impact large vendors will have on smaller, more agile EMM vendors looking to innovate in this space.

 

 Providing the tools towards a Post-PC era

 

A variety of tools and solutions have emerged to help address the new mobile workforce challenge ― vendors know a problem exists, as they hear their customers asking for help to deal with the onslaught of data and new forms of mobile content (such as work products from new mobile applications that include forms or images, audio, and video content) that are increasingly common in their organizations. While the ability to discover, search for, view, edit, and annotate an increasingly broad range of content from a mobile platform moves us closer to what many refer to as the post-PC era, it is the incorporation of enterprise features like granular policy control, auditing, and traceability of documents and business content that will give CIOs the peace of mind they need to open up databases and content management systems to their mobile workforce.

 

 with Eric Klein, Managing Director

 

 

Rugged Mobile Market Entering 2015 With a Head of Steam...Sort of

It has been undeniable that the rugged mobile computer market has lost its way over the past several years. Be it the competition from lower-cost consumer devices eroding opportunities or the overall economic malaise, the headwinds facing this sector have been palpable. In 2011, VDC Research published a report suggesting that one-fourth of the rugged market (especially the handheld segment) was at risk from the onslaught of consumer smartphones and tablets. Although the market outcome followed the narrative, the analysis did not fully take into account the market dynamics and the degree to which the market has transformed over the past three years. From sweeping consolidation to massive changes to device design and mobile OS bets, the market has fundamentally changed. 

VDC just published its Q4 2014 and fully year 2014 shipment figures for rugged mobile computing solutions. The highlights from the research include:

• The overall rugged handheld market was flat in 2014 in comparison to 2013. However, revenue shipments were up 4% in the second half of 2014 and Q4 2014 were up an even more impressive 8.9% over Q4 2013. Although the rebound has been fueled almost entirely by the US market with several large-scale rollouts in the retail and transportation/logistics sectors, we are beginning to see positive momentum in other regional markets. Rugged Android has been a key storyline with major enterprise customers overcoming their tension by placing big bets on these solutions. We anticipate more OS see-sawing in the rugged handheld space, However, with the absence of a viable Microsoft alternative (until Windows 10?), we do expect Android-powered handheld devices to account for more share moving forward.
• Rugged smartphone shipments grew by 9.8% in 2014 with growing demand in various field mobile segments including construction, utilities, manufacturing and others. Opportunities in public safety are expected to become especially interesting with increasing demand for broadband applications. Specialized solutions with Band 14 support and PTT functionality are starting to show real traction.  
• The rugged tablet market grew by 17.5% in 2014, recording especially strong growth in Q4 2014. The opportunities were very diverse with strong investments in embedded manufacturing applications and also as a notebook alternative for first responder solutions. A challenge for some of the vendors in the first half of 2015 will come from the closure of a Hydis display factory, which had been providing daylight viewable displays. Navigating this supply chain issue will likely cause some disruption in the first half of the year. 
• Q4 brought 2014 to a solid close for notebooks with the third consecutive quarter of growth after heavy contractions in 2013. However, with much of the 2014 momentum powered by XP migration initiatives, it will be interesting to see how the market tracks in 2015. So far, we are seeing generally positive indicators for this segment.

Our outlook for rugged mobile solutions through 2015 is generally positive and certainly an improvement over previous years. The market has clearly changed and what will be especially critical for vendors and solution providers that amid the growing noise surrounding enterprise mobility is maintaining focus on the markets and applications where the value proposition of rugged technology can be clearly articulated and supported.