VDC Research: Enterprise & Government Mobility Market Blog

Google’s Android Evolution – Knox and Divide? The End of Fragmentation?

With “Android for Work” Initiative, Google’s Next OS Will Feature Samsung Knox Integration

Google made several important enterprise mobility-oriented announcements at its annual developer conference (Google I/O) earlier this week. The company provided details of its “Android for Work” initiative, which aims to help business users separate personal and corporate data. The effort is being supported by prominent handset OEMs (Samsung, Sony, Lenovo, Huawei and HTC), as well as PC OEMs, including Dell and HP. While these OEMs are eager to work with Google, it is likely that the company had to offer assurances (such as guaranteed timely access software updates and key security enhancements) to ensure a solid roster of vendors for the fall release of its next OS “Android L”. Google’s SVP of Android, Chrome and Apps Sundar Pichai shared key details of the next OS (and announced its beta release to developers), and demonstrated several new enterprise features for enhanced security and privacy. The OS will offer a “kill-switch” function (remote factory reset protection), new lockscreen enhancements, and alternative security features such as context and proximity that open up new opportunities for two-factor authentication scenarios (via a companion device such as a smartwatch etc.). The company also announced a new version of its popular consumer file storage, sync and share solution (Google Drive). Dubbed Drive for Work, the service combines the familiar experience of Google Drive with new admin controls, advanced file audit reporting, and eDiscovery services; key features that will allow the service to compete with established vendors such as Box and Dropbox. Google also announced several notable updates to its productivity software ― the company’s popular presentation software, Slides, is now available on mobile platforms. Google has also integrated QuickOffice with its app suite, and has brought the ability to work with Microsoft Office applications natively (no conversion required). However, the big announcement at I/O was the planned integration of Samsung’s Knox security service into the Android OS. While it is not definitive that Knox will serve as the foundational security element for the Android for Work initiative, VDC sees it as likely (Google has provided scant details relating to the integration in Android L’s documentation). Just last month, Google acquired Divide, a firm that developed a rich platform utilizing a similar containerization approach to separate personal and corporate data. While Divide created a superb UX and delivered core productivity apps (a PIM suite of email, contacts and calendar apps), the company’s security features pale in comparison to Samsung’s Knox. Here’s why:

Knox builds on the Security-Enhanced Linux (SE Linux) changes to the Linux kernel developed by the US National Security Agency (NSA) and debuted on the Galaxy S4 in 2013. Knox 2.0 was released earlier this year at Mobile World Congress and builds on the original Knox security feature set through upgraded certificate management, IPSec VPN capabilities and enhanced container security powers. Samsung’s latest Smartphone (the Galaxy S5) ships with Knox 2.0. Key Knox features include:

• TrustZone-protected certificate management and On Device Encryption (ODE) (via a Trusted Execution Environment (TEE) through a partnership with Trustronic
• A key store for managing encryption keys
• Real-time protection for system integrity
• Two-factor biometric authentication
• Per-app VPN functions for SSL VPN solutions (with tighter integration with Juniper planned)

The integration of these features has enabled the Knox solution to achieve “Common Criteria Certification”. Knox was evaluated under the internationally recognized Common Criteria Evaluation and Certification Scheme (CCEVS) with an Evaluation Assurance Level (EAL) and Protection Profile (PP) that qualify it as a "trusted" operating system. While this validates the cryptographic foundation of the solutions security features and deems it viable for accessing enterprise networks and high-value information assets, Samsung has only achieved EAL level 1 (there are seven levels in EAL classifications and competitors such as Good Technology have been certified at level 4). While uptake in enterprise settings for Android have been slow, VDC sees the enterprise features that continue to be implemented by Google, along with the upcoming integration of Knox giving CIOs and IT leaders fewer reason to not support the OS.

Where Does Divide Fit?

Divides solution offers FIPS 140-2 validated 256 bit encryption, the ability to encrypt email messages (using S/MIME), as well as basic MDM features. Google announced that it planned to release an application (no carrier involvement required) for Android 4.0 releases (Ice Cream Sandwich) through 4.3 (Jelly Bean) claiming that it will bring backwards compatibility to the aforementioned security enhancements that will be embedded in Android “L”. While this will help significantly with fragmentation, it still leaves the ~20% of Android devices that run OSes < v. 4.0 in the cold. This is very likely where and how Divide will fit into the company’s plans to quash fragmentation. We will be watching for updates relating to this initiative closely.

So What Really Happened?!

"We want to thank Samsung for its amazing work with Knox. It's so good we're going to integrate it directly into our platform,"

Google’s SVP of Android, Chrome and Apps Sundar Pichai, 6/25/14

The announcement that Knox would be “contributed” to Android (see above) was not only unexpected, but had many industry watchers (and Google competitors) guessing and prognosticating. The reality is that we won’t know for certain how the two companies arrived at this arrangement. There has been speculation of a rift between Google and Samsung. Samsung continues to experiment with a competing OS (Tizen) and has clearly been moving forward with its own interpretation/implementation of Android. One thing is certain, though: Samsung is definitely not abandoning its Knox development (the company has > 2,000 engineers working on Knox) and will continue to evolve the platform and target the enterprise with its solutions. VDC views Google’s partnership with Samsung as significant due to its potential impact on the broader Android ecosystem. With businesses embracing BYOD policies, and turning to enterprise-grade solutions that cater to these deployment environments the rapid upgrade cycles for modern mobile platforms has OEMs eager to crack the business market. That is what is most fascinating about the partnership – it will give handset OEMs who have been unsuccessful in targeting the enterprise thus far (such as HTC and Lenovo) a means to compete with Samsung using its own technology. Apple, BlackBerry, and Microsoft have all sharpened their security messaging and are vying for enterprise mindshare.

VDC will be releasing an in-depth mobile security Report in early July.

Cloud First - Mobile Second at SapphireNOW

Cloud First

SAP's CEO Bill McDermott and his broader executive team were consistent in their core message at this year's SAPPHIRE event; the main message: "Simplify everything. Do Anything." SAP's strategy is increasingly centered around cloud delivery, an integrated suite, and sreamlining customer support for large multi-national customers. There is no questioning the strategic importance of the in-memory database technology that SAP has been developing for the last decade. HANA has been front and center at SAPPHIRE since its release in 2010; and continuing to demonstrate the platforms' traction with customers will be key for SAP to prove their viabilty in the cloud computing market. Having long time (and marquee) customers such as John Deere, ConAgra Foods and eBay elegantly articulate their success with HANA certainly helps.

Suites Win — Simple beats Complex

There were several notable quotes I keyed in on during McDermott's keynote that kicked off the event. The first was regarding software suites, "In the end, the suite always wins. Always has. Always will." McDermott went on the diss the current crop of best-of-breed vendors insinuating they were commodity plays. However, a key reason that precludes best-of-breed vendors from "breeding" is they are typically acquired by vendors like SAP. While suites typicall do win in large organizations, IT modernization is long overdue amongst many of SAP's core customers. McDermott sees HANA are the simplifier, and the way to deal with the "intractable CEO issue of our era" (complexity). SAP Fiori (revealed just last year at SAPPHIRE) will be a core element to reducing complexity; SAP will lead with Fiori, and announced that it will make the UX and SAP Screen Personas software free with underlying licenses of SAP software. The announcement was not a surprise, however, it is a positive move and will also help with mobile adoption within SAP's customer base.

In additon to "run simple" messaging, there were key product related announcements. SAP announced Simple Finance — a comprehensive and enterprise-grade finance solution based on SAP HANA. The offering covers the complete capabilities of the SAP Finance Value Map and will help to modernize aging financial applications through its more simplified, easily consumable, cloud based solution offering. SAP also made sure to showcase the newest member to its executive board, Bernd Leukert who with Vihsal Sikka's departure has global responsibility for the development and delivery of all products across SAP’s product portfolio including applications, analytics, cloud, database and technology, and mobile.

Mobile Second

I came across an excellent summary of SAPPHIRE at SAP's community network. If you are interested in a very detailed summary of announcements, I would suggest taking a look. What jumped out at me from the summary was the absence of mobile solutions. The empahsis at SAPPHIRE was definitely around the HANA platform and SAP's intentions with the cloud. However, Rick Costanzo, SAP's EVP and GM of mobile solutions is likely to change this. The BlackBerry veteran is well aware of SAP's mobile opporunity and is bullish on his company's outlook. SAP's 3.0 version of its mobile app development platform (SMP 3.0) looks as though it will become a core component to SAP's EMM solution (Mobile Secure) and can now be cosumed more easily than prior disparate SAP mobile development solutions components (SUP, Mobilzer, Agentry, etc.). SAP's mobile executives also provided me with a preview of Mobile Place, the company's portal to manage, secure and publish mobile apps. While on its surface, the solution appeared to be just an app store, I see it becoming more integrated with the company's mobile content management solution (mobile documents).

While mobile is too niche to be front and center a SAP's SAPPHIRE event, it will become more prominent moving forward. There is no question that many of SAP's large customer are investing in mobile solutions and I personally expect to see mobility being increasingly taken into consideration for a growing number of SAP's core ERP applcations — Fiori is just one of the first steps.

Poll

Click here to vote — when do you think that mobile will be the lead story at SAPPHIRE? 

Thinking Outside the Box (or Container)

The IT Security landscape must continue to evolve in response to sea change of user and enterprise behavior that has come with the increased usage of mobile applications. This comes in addition to the continued trend toward cloud computing, an increased reliance on the web for transacting with customers, and the increased sophistication of those looking to exploit IT infrastructures. Bottom line, in corporate settings, mobile users and their devices have become a big security pain point and one that must be addressed.

While BYOD trends are delivering new opportunities in enterprise settings, there is no question that they also introduce new risks. In order to support device choice, IT organizations need to invest in software and infrastructure to protect mobile deployments and manage device and carrier diversity. EMM vendors have taken a very deliberate and measured approach to helping organizations deal with BYOD that has coalesced around containerization; collectively, this approach seems to be gaining traction in the enterprise. However, without the appropriate policies, training and governance mechanisms in place, our personal and corporate data will increasingly be comingled which can result in data leakage and can potentially put organizations at risk. While recent public filings indicate that several high profile EMM vendors have yet to reach profitability, their commercial viability has been proven by their robust customer uptake. Additionally, the consolidation activity and sharpened focus from large and established vendors shows that this market has matured.

Catching up Will be Difficult

In this vein, VDC is closely tracking several innovative startups that we see as tackling the mobile data challenge with a different approach. Vendors on our radar include: BlueBox Security, Cellrox, MobileSpaces, and MobileO2. We see these new entrants to the market as having disruptive potential due to their focus on delivering a superior user experience, balance user privacy concerns, while giving IT leaders and CIOs the visibility they require into how users are using their devices and where their corporate data is moving.

These vendors have been able to articulate their differentiation, but will need to get their solutions deployed for validation and to prove their commercial viability. Conversations with these vendors revealted that each shares a different view on what they consider containerization. To these vendors, moving into a work persona is a form of containerization, or any app that is “badged” may also be considered as being containerized. We anticipate that discussions with reference customers will provide more detail of the scope and success of these early deployments.

In order to meaningfully participate in the market for enterprise mobility management solutions, these vendors must quickly establish partnerships in the channel which at this stage of the game will be required for longevity and relevance in the market.

VDC clients will gain access to broader coverage of this topic in the next VDC View that we will be publishing next week.

Google Acquires Divide to Enhance Android’s Enterprise Cred

Google made headlines earlier this week by finalizing an acquisition of Divide (formerly Enterproid); a company specializing in the internalization of a work container within an employee’s personal smartphone.Google has planned to incorporate the Divide feature to future Android releases, thereby strengthening the platforms’ enterprise capabilities as a whole. The acquisition will impact the ecosystem of vendors focusing on mobility management for the enterprise, and will give HW OEMs that compete with Samsung an opportunity to offer a well-integrated containerization solution along with their hardware. The move by Google also portends to a more strategic focus (albeit late) on the enterprise market.

Similar to other popular containerization solutions, Divide’s secure workspace separates employees’ personal and business use on an individual smartphone while simultaneously preserving the experience that users expect. Container solutions such as Divide offer an elegant way to give users the ability to use their device the way they are accustomed to without the threat of privacy issues, and more importantly, give IT administrators flexible and powerful tools for administrative oversight as well as granular policy control for their corporate data and applications.

Is Android Finally Ready for the Enterprise?

Does this mean that Android is now completely enterprise-friendly? The move certainly strengthens the platform’s viability, particularly when considering the enterprise capabilities that have been integrated into the most recent Android releases (Jellybean and KitKat). Additionally, depending on how Google decides to integrate Divide and how easy OEMs can customize it, Divide will potentially give HW OEMs new ways to approach business customers. With Apple’s recent production of iOS7, Apple could fill the enterprise mobility void left by BlackBerry. With no major fragmentation concerns (~80% of iOS users are on iOS7), Apple’s walled-garden approach and its reputation for proactive responses to malware threats has served it well. While Apple was dragged into the enterprise, it has clearly been embraced by large organizations and accepted as a secure mobile platform. EMM and mobile security vendors have created very powerful solutions that have made Android a very secure platform – however, without these third-party solutions, the platform would not be gaining the traction in enterprise settings that we have seen since the 4.2 release.

The Debate will Persist – To Secure the Device and/or the Data

Containerization, unfortunately, is not a black-and-white solution. Although it can potentially allow for more employee privacy through less IT supervision, containerization can easily be described as an incomplete solution (depending on the use case). While containerization solutions separate applications and data between personal and corporate use, they do not provide the enhanced security, granular policy controls, asset management functions, or provisioning capabilities that an integrated solution from an EMM vendor can provide. However, containerization and app virtualization (a topic for a future blog) are changing the dynamics of the competitive landscape. We expect the “securing the data vs. the device” debate to persist – but we see containerization as only one element of the holistic enterprise solution (one that will not replace MDM, but add to it).

Everyone Has a Container – Can Divide be the De Facto Android Container?

Containerization has become a central solution component to almost every vendor participating in the enterprise mobility market. AT&T’s Toggle, BlackBerry’s Balance (both powered by OpenPeak), Excitor, Fixmo, Good, and Samsung (KNOX), along with almost every EMM vendor, have all incorporated containerization into their solution portfolios. While these vendors can all “play” in the iOS ecosystem, Android has been the platform of choice on which to differentiate. With its acquisition of Divide, Google may have an opportunity to make Divide the de facto containerization solution for Android (if HW OEMs play ball). We anticipate that Divide will be integrated into future Android releases, and we will be carefully watching if and how Google “opens up” the Divide platform. Samsung has been masterful in attracting enterprise-oriented vendors to work with its KNOX platform – while KNOX has been slow to take off; aggressive marketing and extensive media coverage have made Samsung the most visible enterprise-grade handset OEM. To its credit, Samsung has integrated and co-opted Android and effectively has made it an extension of its hardware by incorporating significant device-side capabilities at the chipset level. HW OEMs that compete with Samsung will need to do the same, and Google has an opportunity to enable them to do so. Google’s acquisition of Divide is an important and necessary step forward if the company wants to further its enterprise strategy – however, it is just one step.

(Research and contributions by Natalie Buckner)

Event Recap ― IBM Impact

VDC had the opportunity to attend IBM’s Impact event in Las Vegas last week ― the event was well attended (~9,000 attendees) and featured hundreds of breakout sessions that spanned a broad range of technologies. A key theme at the event was what the company described as its ability to help companies become “composable businesses”.

The company's keynote speakers were very much in sync with this message and articulated how IBM was positioned to provide its customers with a path to transform their business and help them embrace the “ecosystem of everything.” Throughout Impact, IBM showcased how it had expanded its portfolio of cloud-oriented solutions with analytics, big data and mobile solutions and how customers could benefit from the ecosystem of innovation it has assembled. The company's message: it can provide the flexibility and speed that are required to overcome the challenges which every business will ultimately face as the shift to digital services impacts their IT infrastructure. This building block approach will enable customers to piece together what’s needed quickly and effectively to solve rapidly changing business problems. IBM identifies four service types in this environment:

• Infrastructure services such as those from Softlayer
• Business services in the more general SaaS portfolio
• Defined pattern services such as its PureApplication services
• Composable services (PaaS) such as BlueMix

MobileFirst and Customers Front and Center

IBM's MobileFirst GM Marie Wieck talked about design thinking, and the need to train development teams to think first about engaging with mobile. She identified several success factors for mobile enablement that were on point:

• Mobile interactions will increasingly transition to mobile transactions
• Must support secure, effective, real-time transactions not just interactions
• Not just mobile analytics, also customer analytics
• Use mobile analytics to improve outcomes whenever possible
• Must be iterative and rapidly evolve applications
• Business rules are required to iterate business logic

There were some great examples of mobile enablement scenarios which featured prominent customers and partners that tied well to Wieck’s success factors. Tangerine Bank discussed how they use technology to redefine and simplify banking for their customers. Tangerine shared details on how it has raised the bar in mobile banking and has transformed into a mobile-first bank (key product enhancements mentioned were voice activation and offline access).  In working with IBM, the company was able to shorten its mobile development cycle using IBM's PureApplication System. Tangerine was able to quickly develop, test and deploy repeatable patterns, access the Worklight programming environment, use Bluemix for testing and QA, and take advantage of the API catalog to manage their internal services.

IBM's SVP of Software and Cloud Solutions Robert LeBlanc cited Tangerine as an example of the shift to a completely digital economy where companies are increasingly using mobile and cloud for computing, unbundling their business offerings and where new “killer apps” have the potential to disrupt any industry.

In this vein, IBM made sure that the most visible announcement out of Impact was its marketplace. The company has curated a site that is designed to pull IBM and third party services into solutions to help customers easily find them. Solutions range from standard business, development and operational services (new SaaS and composable services on BlueMix and Softlayer will be a focus going forward). This capability was required when considering the new style of purchasing that many companies are starting to engage in, and gives IBM a mechanism to help its partners gain influence.

Still a Long Road for Many to True Mobile Enablement

IBM was also intent on demonstrating that its products can work well together, and how it can transition organizations from legacy data centers to a modern IT architecture. The company spoke about how it is beginning to see evidence within its larger customers that mobility is becoming more strategic with more senior sponsors getting involved (something that we’ve all been waiting to see). In response, IBM has taken a managed services approach to best position themselves to help quickly (a wise move given the company's Global Services capabilities). The company has also been focused on training its business process consultants and partners on its MobileFirst solution portfolio to make sure that process solutions are being mobilized if and when the opportunity presents itself. IBM's industry specific Ready Apps were also showcased ― these starter kits will be useful and can definitely help customers accelerate their mobile enablement initiatives.

While many organizations are certainly striving to modernize their infrastructure and are in the process of iterating and re-architecting their business processes the reality is that logistics networks, supplier relationships, product and service design and customer service have and will continue to be in a state of flux. Any path to sustainable competitive advantage will require a high degree of operational adaptability. IBM certainly has assembled a portfolio of products and services that can help, but engraining mobile solutions into their workflows and business processes will take time, and getting key stakeholders within lines of business, IT leaders and developers to collaborate is difficult.

IBM has enhanced its opportunity in the enterprise with its MobileFirst initiative, with key acquisitions (Cloudant, Fiberlink, SoftLayer, and Worklight) figuring prominantly; however, significant integration work remains. IBM must demonstrate to its customers that it can help to simplify and streamline app development by mobilizing existing apps (backend integration) and help to build next generation apps.

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)

VMware Furthers Its Mobile Ambitions with AirWatch Acquisition

The device proliferation we've seen in business settings has definitely fueled a surge in the adoption of MDM licenses and is driving much of the growth in our mobile software forecast (Particularly since Q4 2012). Our recent EMM Report showed the EMM market growing from $526M (in 2012), to $1.6B by 2017. However, what also stuck out like a sore thumb within our forecast period were the diminishing revenues that will be attributed to MDM (No surprise, MCM, MAM and services will account for the majority of EMM revenues going forward).

There is no question that organizations see the opportunity to benefit from consumer-oriented mobile devices from a business context. However, today’s IT organizations are challenged to provide end-to-end support from software distribution and patching to asset management and incident support for a wide variety of mobile platforms—not to mention for dispersed devices which are both on and off corporate networks. This trend has made the solutions being offered by EMM vendors not only attractive, but also a logical choice for organizations as they invest in mobile enablement for their workforce. It also has led to a more visible focus on enterprise mobility amongst large and established ISVs.

For VMware, the moves being made by competitors such as Citrix and Dell—along with the tepid reception to its Horizon mobile solutions—forced its hand and made making a meaningful investment in mobility essential (Former SAP mobility head Sanjay Poonen certainly played a large role in bringing this deal to fruition). With AirWatch, VMware gets a proven well integrated enterprise-grade mobility platform – while other potential acquisition targets may have offered similar capabilities—we have identified some factors that we believe made acquiring AirWatch too attractive of an opportunity to pass on which will allow them to better compete in the mobile space with key rivals such as Citrix.

Why AirWatch?

AirWatch's solution range has evolved with the market, and the company has demonstrated that it can service large Fortune 100 deployment environments—this bodes well for VMware, whose customers tend to be on the larger side. There certainly remain other viable “tier 1” mobile ISVs that were likely evaluated by VMware; however, an acquisition of this size is always carefully and deliberately evaluated (We’ve heard that this deal had been in the works for ~6 months). For this reason, we believe that there were key and clear reasons VMware identified in its decision to choose to acquire AirWatch, which are:

Solution Range, Adaptability and Ability to Scale — The company has consistently added new enhancements to its EMM solution portfolio (Recent and notable additions include Workspace, a containerization solution, as well as mobile email clients for Android and iOS). AirWatch was also early relative to its peers with its content and application management solutions to complement its core MDM functions. More importantly for enterprise customers, the company has demonstrated that its solution can integrate with existing technology platforms (AirWatch offers a cloud-based version of their software, an on-premise virtual appliance, or an on-premise physical appliance) and it scales well with expanding deployments (Several of the company’s customers’ deployment environments are very large, with 25K+ devices under management).

Brand — This is quite remarkable, given the noise in the mobile ecosystem and the relative parity amongst market-leading EMM vendors.  However, the company has consistently demonstrated that it is willing—and capable—to invest in its sales and marketing organization. AirWatch has not only been able to attract key talent, but it has also aggressively expanded into new geographies. While other tier 1 EMM vendors have followed suit, AirWatch is ahead here in our view, based on the early traction it is seeing abroad. The company’s willingness to invest in its marketing and events functions has also led to positive press and—indirectly—to the expanded roster of channel/reseller arrangements that AirWatch now maintains—like it or not, in a fast-growing and crowded market, visibility is important.

Dynamic Policies, Automated Compliance and Robust Security — The company has secured relationships with key partners such as Appthority, Veracode and Cisco and can easily integrate within the reputations and identity management solutions of these companies. AirWatch’s enhanced security features for its MAM and containerization solutions are also robust and support for two-factor authentication, SAML, certificates, and PKI. Data in-transit and at-rest is encrypted with AES 256-bit, FIPS 140-2 compliant encryption. While these capabilities are table stakes and reside with every bona fide EMM vendor, AirWatch has done well at integrating these features and providing an IT friendly console to administer them.

Sales Execution — AirWatch is laser focused on sales execution, and executive leadership has been intent on aggressive growth. The company’s success has come as a result of its ability to balance pressure to succeed with customers’ self-paced buying needs (The company’s tiered pricing model also has helped, as it gives AirWatch the ability to reach mid-market and SMBs). AirWatch’s largest customers are typically pleased with the post sales support they receive, with many specifically mentioning to us that their feedback on feature enhancements have been regularly acted on as they've expanded their deployments. AirWatch definitely has attracted the most visible vendors in the mobile ecosystem as partners, and has demonstrated that it knows how to build a successful channel program.

Who’s Left and What’s Next?

With parity increasing in the EMM market, longevity will be predicated on the ability to innovate and maintain visibility in the market, as almost every large deal seems to be winding up as a dog fight—in this vein, we see pricing pressure continuing to force market consolidation. Clearly, large vendors such as Citrix (Zenprise), Dell (Kace), IBM (Fiberlink), Oracle (Bitzer), and SAP (Sybase) will continue to sharpen their focus on enterprise mobility, so VMware’s announcement of its intent to acquire AirWatch was no surprise.

VDC has been tracking the maturation and evolution of the MDM market for some time now and sees the number of relevant pure-play EMM vendors that remain winnowing. More importantly, the window of opportunity to either pivot or be acquired is beginning to close. While there are certainly several enterprise-oriented vendors with a relatively weak mobile solution range—Microsoft {Intune}, BMC Software, and HP come to mind—that will likely expand their mobile solution range, their willingness to step to the plate is unclear. This is largely due to their ability to develop/enhance their mobile solutions in-house (Or, via a series of small acquisitions, such as Dell’s acquisition of Kace, and other complementary security-oriented ISVs). Other examples of these activities include Cognizant’s recently released TruMobi solution, and CA, who white labels SAP’s Afaria MDM solution, and has developed its own MCM solution.

Good Technology and MobileIron are clearly the largest and most prominent pure-play mobile-first ISVs that seem best positioned for acquisition: while both claim to be positioning for their respective IPOs, no S1’s have been filed, and investors may be beginning to grow impatient. The other problem—particularly for MobileIron—is overcapitalization: While MobileIron has continued to grow its customer roster and expand its solution range, the company closed an F round this past October and seems to be burning through cash. The company has also been relatively quiet as of late and has not disclosed any prominent customer wins/deployment expansions. Good, on the other hand, due to its tenure in the market, its patent portfolio and its success/hold in federal markets may be next (They also will likely be available for less than the $1.5B that VMware paid for AirWatch). The company made smart acquisitions in AppCentral and Copiun—both were relatively inexpensive—to round out its solution range.

Other prominent vendors that are potential acquisition targets include: Absolute Software, Boxtone, and SOTI—each must demonstrate they can continue to innovate and expand their solution range, while retaining and growing their customer rosters in 2014—making progress in the new geographies in which they have been actively investing will also be key to remaining viable. In this vein, AirWatch’s trajectory and its path to its acquisition will not easily be replicated and will add to the legend of Messrs.  Dabbiere and Marshall—the company’s growth tract is sure to go down as one of the most successful—and profitable—in our industry.

 

AT&T: On Message With Lots to Share

 

I had the opportunity to attend AT&T’s annual Analyst Summit last week in Dallas Texas and came away with a clear purview into the company’s mobile ambitions moving forward. The company issued a flurry of news releases to coincide with the event ― the announcements show AT&T is moving in a coordinated way to ensure its participation in the ever expanding mobile ecosystem. In this vein, AT&T did very well in articulating how its network build commitment for LTE (project VIP) and continued focus on fostering an innovation from startups would help lead its customers towards the business transformational opportunity of mobile enablement.

The releases covered a variety of strategic areas of focus for AT&T that ranged from network API enhancements for customers, developers and partners, the expansion of and furthering of its innovation programs (The Innovation Pipeline (TIP) and Foundry initiatives), a partnership with SAP to resell its EMM and mobile app development solutions, as well as a cloud-oriented solution with Microsoft’s Azure cloud platform to integrate AT&T’s NetBond (which uses MPLS to establish a VPN connection from the customer to Azure).

AT&T and SAP Simplify Mobile Application Development for Business

Additional AT&T Foundry Innovation Center Opens in Plano

AT&T Launches Enterprise-Focused API Program

AT&T Expands Innovation, Industry Alliances to Deliver Mobility and Cloud Solutions to Businesses

These initiatives show AT&T flexing its muscle in the channel (the pact with SAP will surely expand beyond just a resell arrangement). The partnership with Microsoft also bodes well for the company as it positions itself to compete with services such as Amazon's AWS.

M2M – Key Strategic Initiative

Getting to visit AT&T’s new M2M Foundry facility in Plano was a treat ― I was able to speak with most of the startups in attendance, who showcased solutions for smarter cities (an instrumented irrigation system), asset tracking, and even an M2M simulation for analyze our commuting habits – I’m looking forward to instrumented luggage (on display at the facility). Most notable in my view, was the “Sly Fox” project – essentially a middleware platform to streamline the onboarding of M2M devices on to networks such as AT&T’s. Ultimately, connecting instrumented devices to back end systems and applications. In the words of Rohit Pasam of Xaptum, “a means of connecting the brains of our networks with the muscles of our smartphones, cars, homes, gadgets, medical devices, public infrastructure, and even our own bodies”. Xaptum’s demo was compelling but also demonstrative of the work that still needs to be done to instrument equipment. The company is just one of the innovators selected during the Fast Pitch process that AT&T conducts at its Foundry's.

On Message

Many of AT&T’s senior leaders addressed us through the course of the event. I was impressed with their ability to stay on message ― each referred to the graphic below and aligned it to their role within the business, and to the mobile opportunity for growth at AT&T. Each of the company’s executives made it clear that they see “only a handful of businesses” having been able realize true business transformation via mobile enablement.

Source: AT&T

AT&T had customers and partners on site who are making meaningful technology investments to augment their business strategies ― these discussions included executives from Ancero, Hertz, Maersk Line, and Red Bull Racing. Each detailed their unique experience in working with AT&T, and explained how the partnership was benefiting their business. For example, Hertz’s CTO discussed how his company was utilizing mobile solutions to assign vehicles to travelers and to provide location-based direction and roadside services to help drivers stay connected while on the go. Maersk’s CIO discussed his company’s sizable M2M investment ($200M) and how he viewed it as transforming remote container management and removing/reducing human error in his company’s processes.

Other Highlights

Meeting (and dining with) The Wireless History Foundations’ recent Hall of Fame inductee Kris Rinne (currently the SVP of Network Technologies at AT&T Labs) was a treat. I thoroughly enjoyed dialoguing with one of the wireless industry’s foremost experts on spectrum ― suffice it to say that she sees challenges ahead, with politics continuing to play a role. Finally, event attendees were given an exclusive tour of AT&T Stadium (formerly Cowboy Stadium) as well as a walk through of the NOC. The technology investments and IT infrastructure described in the stadium were mind blowing and rivaled that of a small city ― for geeks like me, this was too much fun ... I also had the opportunity to spend some quality time during the networking reception with AT&T’s CTO Krish Prabhu. Krish introduced me to several AT&T partners that I’m starting to track more closely (Vobi and Tropo). All in all, the trip to Dallas was time well spent, and has me looking forward to the developer event that AT&T hosts in January.

 

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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.

Handset OEMs Must Focus on the Enterprise to Remain Relevent

Carriers have been quite adept at adjusting their product/service mix to remain relevant through several mobile booms – this current one is no different. These vendors took the “dumb pipe” moniker to heart and recognized that they needed to make changes to remain relevant. As a consequence, we’ve seen carriers augment their professional services and cloud capabilities, developer communities, and aggressively partner with mobile-first ISVs, M2M vendors (and others in the mobile ecosystem) all in order to ensure their long-term sustainability in the market. Handset OEMs face a similar fate in the rapidly moving mobile market, and must also make adjustments to ensure they retain their own relevance. While the latest smartphones and tablets are indeed sophisticated pieces of equipment, the pace of commoditization is quickening, as component prices continue to fall and new vendors continue to enter the market. Moving forward, I see the “business” strategies of these vendors as being critical for long-term viability, as the opportunity to mobilize the enterprise is just beginning to be scratched.

The innovations occurring “device-side” are impressive, and are continuing at a rapid pace, but I see the work happening on the embedded security primitives and OS elements of upcoming devices as increasingly important, and where differentiation is most likely to occur. Today’s modern devices have the speed and storage capacity we require, and new form factors continue to emerge to cater to consumer preferences. The recent OS refreshes by the primary mobile platform providers show clear evidence that a key area of focus is on enhancing the security mechanisms of their respective platforms, to better position themselves for the enterprise. This trend has these vendors augmenting their device-side encryption and VPN clients, adding APIs and improving sandbox and containerization capabilities; and has OEMs committed to Android leveraging SE Android to further harden the security posture of their devices. What is most impressive is the adeptness employed to “hide” these important security features which are requisite for CIOs when considering these devices for their deployment environments.

Mobile-First ISVs are Beholden to Handset OEMs

Mobile-first ISVs know that they are beholden to OS refresh cycles of handset OEMs, as they must make adjustments to their products and work with / try to take advantage of new APIs with each successive release – they just can’t complain too loudly about it. This is a pain point that can be costly in terms of resources, as they must contend with the elements of these releases which simply just don’t work. Essentially, they — along with enterprise-oriented developers — are a free QA team for the handset OEM (in Apple and BlackBerry’s case at least). A recent example is Apple’s iOS7 release, which features per-app VPN functionality: this feature didn’t work properly until a very recent update, and had many vendors struggling mightily to get their software to take advantage of the function. Mobile-first ISVs are continuing to innovate but are likely to see their ability to differentiate become increasingly difficult, as handset OEMs sharpen their focus on the enterprise and incorporate features around app management and containerization. This will make partnership strategies increasingly important and will be a key battleground.

Handset OEMs get that they must appeal to consumers while making their devices “IT friendly” for enterprise use. To the credit of these vendors, they have made great strides. This can be evidenced by the expanding mobile deployments at large corporations and in federal markets, where agencies such as the Defense Information Systems Agency (DISA) have authorized Apple’s iOS6, Samsung’s Galaxy S4, and BlackBerry’s Z10/Q10 devices. This proves that large scale deployments of consumer-grade mobile devices are viable if the devices are complemented with the appropriate third party software. However, moving forward, I see these vendors facing difficult challenges related to privacy and government regulation. Entities such as the FTC have shown that they are serious about privacy (see FTC vs. HTC America Inc. for details) and other legal issues associated with the collection of potentially sensitive corporate and personal data on platforms such as Apple’s iOS and Google’s Android. Apple’s  Apple Push Notification service (APNs) and Google’s Google Cloud Management (GCM) are services which are requisite for third party solutions, such as those being provided to the market by EMM vendors. The problem is that little is known about the calls that these protocols are making — this won’t fly in certain corporate settings.

These topics are top of mind, and will be expounded upon in our upcoming EMM Report (publishing later this month).