VDC Research: Enterprise & Government Mobility Market Blog

VDC Research Releases Results of its Quarterly Rugged Device Tracker

This week, VDC published the results of its quarterly device tracker, which follows both quarter-on-quarter and year-on-year numbers for major OEMs both globally and by region. 

Notebooks lag behind other form factors

The rugged market – including notebooks, tablets, handheld computers and forklift terminals – reached $4.1bn in 2013, a 6.1% year-on-year decline from a total of $4.3bn in revenues from 2012. Excluding notebooks the market increased by 1% over 2012. The strongest performing category was rugged tablets which grew by 22% year over year. The impact of consumer-grade smartphones and tablets being used in an enterprise setting continues to make itself felt on a global level, particularly among field mobile workers and for customer-facing applications.

Q4 continues the upward trend

Performance in Q4 2013 built on the improvements in market conditions we began to witness during the second half of 2013. During Q4 2014, year over year rugged mobile vendor revenues declined by 1%. Excluding rugged notebooks, the market grew by 4.2%. Performance during Q4 2013 was lead by the rugged tablet and forklift segments which grew by 31.6% and 13.1% respectively.

Android and Windows Embedded Handheld 8.1 present 2014 growth opportunities 

“The rugged mobile market is expected to continue to stabilize in 2014 and provide moderate to strong growth opportunities. We expect a stronger retail segment and improvements to investments in North America, which has recently lagged EMEA in performance,” states Kathryn Nassberg, an analyst for VDC. Continued strength in the rugged tablet segment, improved support and availability of rugged Android handheld and tablet offerings along with first generation rugged handheld Windows Embedded Handheld 8.1 will fuel much of the 2014 opportunities However, headwinds and downside risk clearly still exist, especially in the form of adoption of lower cost consumer mobile devices and overall access to capital. 

For more information, click here

For a copy of the report, please email [email protected]

 

 

BlackBerry’s Uphill Battle to Regain Enterprise Confidence

It’s no secret that BlackBerry is working to maintain its relevance in enterprise mobility. CEO John Chen emphasized just last month at Mobile World Congress that the firm had engineered a new strategy to restore customer’s confidence in BlackBerry. Both in Barcelona and at a meeting with analysts in January, Chen has stressed the relationship with enterprise as central to the company’s strategy and success. Potential revenue enhancing opportunities have emerged, such as the news that the company intends to support the Windows Phone platform with its upcoming BES 12 release (BBM support for the Windows Phone platform was also disclosed), and the announcement that Ford will be using the company’s QNX platform for its next-generation Sync system—however, while these initiatives have potential, we see the company’s reluctance to abandon its hardware orientation as hurting its long term prospects. While there remains a window of opportunity to maintain relevance with a device centric strategy (The firm made a wise choice by partnering with Foxconn to defray the downside of its unsustainable (and unprofitable) manufacturing operations), we believe the upcoming Z3 (low end consumer device) and Q20 (a QWERTY keyboard sporting enterprise-grade smartphone) are the company’s last chance. This is primarily due to the fact that there is a marked loss in mindshare with enterprise customers—according a recent VDC survey, the lack of confidence is quite stark.

Forecast is Gloomy

Our survey showed that BlackBerry’s support among larger enterprises (organizations with greater than $500M in annual revenues) has continued to has lose ground to both the Apple and Android platforms. BlackBerry also lagged significantly and was the least-supported OS, both among BYOD and enterprise-issued devices according to our study. When asked point-blank about their likelihood in investing in BlackBerry, the same companies showed a marked level of ambivalence:

While Apple and Android are the dominant mobile platforms in the enterprise, we believe that there is room for a third ecosystem—particularly one with enterprise-grade capabilities.

Need for Speed

While the new Z3 and Q20 devices are slated for later this year, BlackBerry needs to move quickly as new devices such as Samsung’s S5 (April) and Apple’s iPhone 6 (September?) are fast approaching. Both are high-end devices and feature notable enterprise-grade enhancements that will be difficult to match.  In the meantime, the company should continue to enhance its focus on its BYOD management solutions—else, the road ahead will continue to be long and increasingy uphill.

(Research and written contribution by Kathryn Nassberg)

Event Recap: AirWatch Connect

AirWatch held it's 4th 'Connect' end-user and partner event earlier this week in Atlanta. The long roster of mobile-first vendors in attendence was impressive and made this conference feel more like a mini CTIA event. The company attracted important executives from vendors such as IBM, Salesforce, and Samsung; and offered its customers access to three days of roundtables, keynotes and panel discussions on the hottest topics in enterprise mobility. AirWatch also offered customers a certification workshop and provided partners with training sessions.

As expected, AirWatch revealed several new enhancements to its EMM solution portfolio. Most notable was Workspace, the company's containerization solution. AirWatch  (and its competitors) have seen upstarts offer powerful solutions for containerization and application management and recognized that it needed to complement its EMM suite with a hybrid approach in order to maximize the market opportunity with customers and prospects. The new Workspace app will serve as an app catalog; other apps include a secure browser, file synch/share, and email clients (these are AirWatch and not partner/white label apps). Other apps can be integrated via the company's MAM SDK, its app wrapping tool, or through partner ISVs.

The company also announced a marketplace offering customers and partners easy access to complementary technologies. The solution range of the participating technology partners is broad, including handset OEMs, and a diverse range of vendors that offer application development, certificate authorities, enterprise-grade applications, retail solutions, network and NAC solutions, telecom expense management, VPN and web security. Most of the marketplace partners had booths at the conference.

Customer Implications: AirWatch's solution range is evolving with the market, and the company has demonstrated that it can service large fortune 1,000 deployment environments. I had the opportunity to speak to several of the company's largest customers who were pleased with the support they received, and (more importantly) specifically mentioned that their feedback has been regularly acted on as they've expanded their deployments. AirWatch is very focused on sales execution and executive leadership seems intent on aggressive growth. VDC projects AirWatch's success will come as a result of the company’s ability to balance pressure to succeed with customers’ self-paced buying needs.

Channel Implications: AirWatch's attention to its channel programs support its growth ambitions. Currently, the company realizes ~40% of its software revenues via its partner ecosystem ― I see partners and managed service trends moving this number higher going forward. AirWatch definitely has attracted the most visible vendors in the mobile ecosystem as partners, and is demonstrating it knows how to build a successful channel program. The company will continue to expand outside of North America for growth, and sees an opportunity to work more closely with carriers for a "prosumer" version of its software ― this has the potential to bring significant revenue in my view. This is a tactic I've expected to see from other competing EMM vendors, and one that will likely be emulated (BoxTone's nascent partnership with NTT is the best example thus far).

Competitor Implications: Based on my conversations with leadership at the Connect event, it is apparent to me that a big advantage AirWatch has over its competitors is its ability to invest in R&D, attract top talent and invest in marketing ― AirWatch makes it clear that it has the means (it scored the largest funding round of any mobile-first ISVs this past February when Insight Venture Partners led a $200 funding round) and events such as this week's Connect event prove it. Like it or not, in a fast-growing and crowded market, visibility is important ― the company is already planning its next Connect event (scheduled for October in London). AirWatch's chairman (Alan Dabbiere) is keynoting CTIA's upcoming MobileCON event in October and the company's events team is already busy planning for RSA and MWC (Q1 '14). AirWatch's past experience managing a rapidly growing headcount is also proving to be an important differentiator. Many of the company's senior leaders are from Manhattan Associates (Dabbiere cofounded Manhattan and self-funded AirWatch in its early days).

With parity increasing in the EMM market, longevity will be predicated on the ability to innovate and maintain visibility in the market as large and established vendors such as Citrix, IBM and SAP continue to sharpen their focus on enterprise mobility. Our soon to be released global EMM market forecast shows a 24.6% CAGR from 2012 to 2017 for the ever-broadening solution range that is EMM. Almost every large deal is a dog fight, and pricing pressure will ultimately force market consolidation.

Executive Bling and EMM

I'm not sure who coined it, but the term "executive bling" is not only funny, but has been a very accurate descriptor of mobile enablement in many of today's organizations. While nearly everyone now carries their own personal device with them at all times, in many organizations, executives continue to be an elite group that are offered a device (or choice of devices) once they attain a certain 'rank' at their place of employment. However, BYOD policy adoption continues to impact mobile enablement in large organizations (59% of the respondents to our latest survey claimed to have a formal BYOD support program in place) and has created a significant market opportunity for mobile-first ISVs. CSO's know that unprotected and unmanaged devices are likely to expose their organization to risks such as unauthorized access and data leakage – for this reason, VDC expects the number of devices "under management" to continue to grow rapidly and is the reason why our forecast for enterprise-oriented mobile solutions is so bullish. Our soon to be released global EMM market forecast shows a 24.6% CAGR from 2012 to 2017 for the ever-broadening solution range that is EMM.

MDM is Dead?

Some have boldly proclaimed that the MDM market is dead; that is pure bunk. The need for centralized oversight of configuration control, application usage and device protection couldn't be more important moving forward – the market is far from dead, it has just evolved. Not to mention that the usage of 3rd party software from EMM providers will increasingly be required for deployment environments where compliance reporting mandates the ability to conduct auditable events – in these scenarios, EMM solutions are needed to compensate for the technical limitations of even the latest mobile operating systems.  Bottom line, MDM solutions are foundational to EMM vendors’ platforms. What has changed, is the emphasis on data at rest and in motion – and of course the applications. Moving forward, I see this shift straining the partnerships that EMM vendors have engaged in and creating pressure on the strategic interactions among competing firms. This is a topic that will be expanded on in our upcoming (September) EMM Report .

Turning the Page on e-Textbooks

The fact that today’s book stores are more a relic than a real destination for those in search of textbooks reflects the digitalization of an entire industry. Both Borders and Cengage have declared bankruptcy over the last two years and companies like Barnes and Noble have tirelessly transitioned their strategy towards an online presence as opposed to their brick and mortar beginnings. It is therefore easy to cite the e-textbook as the next cutting edge in disruptive technology, especially due to price advantages posed by resellers like Amazon and their aggressive strategy towards digital content.  Take for example the survey released by the U.S. Public Interest Research Group that revealed seven in ten college students claimed not to have purchased a textbook at least once due to prices that were too high.

The pricing advantage of digital content however is not the only disruption the e-textbook poses for its traditional counterpart. In fact, the e-textbook market is only in its infancy as the following capabilities pose a threat to not only replace the textbook but re-imagine the quintessential learning experience:

• Capacity to embed interactive tools  and multimedia
• Ease of access to real time, updated content and Open Educational Resources (free, open licensed resources for the public)
• New distribution channels that offer instant, ubiquitous access to content, cannibalizing traditional models of distribution
• Ability to leverage big data and analytics

Simply transferring textbook content onto a digital platform is only the first step for the e-textbook market. In the horizon we see a complete transformation of once static content that promises to change how content is purchased, relationships with authors and the classroom as a whole. As such, the future of the e-textbook market boasts the following opportunities:

• Embedded assessments and interactive tools that align with core curriculum standards
• Social and collaborative platforms for discussion between students
• Leveraging data based predictive analytics and personalized learning
• OER based on established and proven pedagogy
• Ubiquitous support and resources for OER

As these opportunities become realized, established dominance by major textbook and publishing companies will be questioned, encouraging consolidation of the market. Smaller vendors specializing in these capabilities like Inkling and CaféScribe may be acquired while major vendors will be forced to continue to adapt to a changing textbook ecosystem as Pearson has already shown through its OER project Blue Sky. The rise of OER will severely disrupt existing textbook market control and bring legal battles over copywrited material to the forefront. Those looking to succeed will need to look beyond simple, digitalized content and embrace the change of the learning environment. 

What Does an 'Enterprise' Smartphone/Tablet Look Like?

Due to the valuable and often sensitive nature of the content residing on mobile devices, and the inherent insecurity of modern mobile computing platforms, CIOs and IT personnel know that they must make protecting their mobile end points from the vulnerabilities and threats that they are regularly exposed to a top priority. Handset OEMs and mobile ISVs are in tune with these trends and are beginning to augment and enhance the security mechanisms to protect both corporate liable and BYOD devices. The goal is in hiding the complexity associated with the enterprise-grade security they are adding from consumers who are the ultimate buyers of the devices.

Hardening the OS w/o Affecting the UX

In just the past 8 weeks, all four of the major mobile computing platform vendors held their own developer / ecosystem oriented events (BlackBerry Live and Google IO (May), and Apple's WWDC and Microsoft's Build (June). While each respective company's mobile initiatives (save BlackBerry) weren't necessarily front and center, the enterprise mobility strategies of each were thoughtfully "rolled out" and messaged. The mobile elements of these events received plenty of attention from the media and analyst community.

Handset OEMs are very well aware of the enterprise opportunity ahead of them – while Apple's Senior Manager of device management Todd Fernandez poked fun at his company for furthering its enterprise strategy "lookout I just used the 'e' word", Apple did announce several notable security enhancements to its latest version of iOS, and did proceed to updated its 'Apple for Business' web site.

The Platform Battle is on

While BlackBerry’s mobile solutions have historically been synonymous with large mobile deployments in enterprise settings, the iconic handset manufacturer’s slow move to touchscreens has significantly impacted its market share and given competing platforms such as Apple’s iOS and Google’s Android an opportunity to take over in the enterprise. As depicted above, this has BlackBerry (and Microsoft) on the outside looking in on the enterprise market.

The security enhancements that Apple teased at WWDC were indeed notable, IT-friendly improvements included: auto-updates for apps, better app multitasking, per-application VPN, enterprise SSO capabilities, streamlined device-management enrollment, better app license management. However, competitors focused on Google's Android platform (e.g., Samsung, HTC, Huawei et al – along with mobile ISVs) are taking advantage of the platforms' openness and innovating on a broad range of enhanced security features on Android devices. Not to mention that these vendors are able to innovate, harden, and develop their own security enhanced (SE) features by leveraging the good work that originated in NSA to better protect the integrity of apps and data on the Android platform.

Ballmer?

Microsoft seems to have blown an opportunity at the recently concluded Build conference – Mr. Ballmer spent all of 3 minutes on Windows Phone 8. While Microsoft did disclose that Sprint would be carrying a new device, many of us expected to hear more. It seems clear that the vendor has been slow on delivering its 'General Distribution Release 2' (GDR2) update for Windows Phone 8 – although it is rumored that at least 2 GDR updates are forthcoming and will be delivered prior to the upcoming 'Blue' release. Regardless of any potential enhancements that are planned, what I see mattering is where mobile ISVs are focused.

So what does an enterprise Smartphone/Tablet look like? For now, iDevices, and Android devices (with mobile ISVs focused on both, and the Android inclined handset OEMs who have formailzed enterprise strategies focusing on the latter).

AirWatch Scoops up Motorola Solutions' Mobility Service Platform

Motorola Solutions (MSI) announced today the sale of its Mobility Services Platform to enterprise mobility management (EMM) vendor AirWatch.  Previously partnered with AirWatch to facilitate stronger management of consumer grade device deployments, this sale indicates a strategic shift by MSI, including:

1) A shift in focus from software to services - While selling off its MSP platform, MSI will continue to build out and expand its mobile services business and expand its play in the mobile managed service market. Software solutions such as MDM and MAM are increasingly commoditizing.  As this occurs, the real money and value proposition is shifting to the service delivery, rather than the software itself.

2) Doubling down on core strengths - Recent years have seen MSI invest to enhance and build out its MSP solution.  Yet with vendors such as AirWatch, MobileIron, Good Technologies, SAP and Fiberlink innovating with sophisticated, robust mobility management products, MSI is shifting away from competing in this space.

3)  Pivoting to address shifting enterprise demands - Just as carriers have been challenged to offer carrier-agnostic managed service solutions, MSI, Intermec and other rugged vendors are increasingly challenged to support consumer grade deployments alongside the rugged.  Prior to this acquisition of MSP by AirWatch, MSI would support only consumer grade devices used in business critical environments.  Yet enterprises are increasingly look for a single, robust platform to support all mobile deployments.  If AirWatch is truly able to embrace MSI's rugged, enterprise-grade technologies (and leverage MSI's associates that will now join the AirWatch team), we may see a strong EMM platform emerge that serves needs of both rugged and consumer-grade device deployments.

Android is Enterprise Viable

Android’s perception problem is largely due to well-documented flaws in OS releases prior to v4.0, which have been plagued with malware. The good news is that many of the exploits are limited to older versions of the operating system. The bad news is that more than 50% of the Android devices in use are on versions prior to v4.0 and, according to Google, 44% of Android users are still on Gingerbread (v2.3.3 - 2.3.7; many of these devices were released two years ago). This platform fragmentation will persist as a problem, as handset OEMs continue to sell pre-v4.0 devices. Additionally, many users can’t upgrade to the latest OS release because the process is tightly controlled by their carriers, which have been slow and inconsistent (at best) in updating devices on their networks.

Improved Security Mechanisms

While the BYOD trend has opened new opportunities for businesses, it has also introduced new risks. The continued uplift in Android market share not only has more consumers bringing these devices into the workplace, but has IT organizations increasingly open to supporting the devices due to the important incremental security enhancements Google has made since the initial release of Android in 2008. The most recent Jellybean Android firmware incorporated several critical security enhancements such as Address Space Layout Randomization (ASLR) and Data Execution Prevention (DEP). ASLR is a defensive technique that has long been a security mechanism for desktop and server operating systems; DEP imprints important structures that reside in memory as non-executable. These exploit-mitigation elements are common features in desktop Linux distributions, and are critical to the Android platform. They harden and protect it from exploits such leakage of kernel addresses that lead to privilege escalations and expose devices to privacy and security risks. Similar to malware problems that plagued earlier versions of Windows, pre-v4.0 Android releases are vulnerable due to the platforms’ openness. Not to mention, that the "bouncer" feature that Google added to their Google Play app store security mechanisms seems to have also helped with "bad apps".

While improvements have been made, Google has much further to go. The commitment from handset OEMs like Samsung and HTC has helped raise the bar for Android, as these vendors are partnering effectively and integrating IT-friendly security mechanisms into their devices. However, additional precautions and considerations should be taken into account for mission-critical deployments in corporate environments - vendors such as Motorola Solutions recognize this and have raised the bar with their Assured Mobile Environment (AME) solution. The platform battle looks like it will be continuing for the forseeble future (be sure to check out my next post on tnis topic).

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.