VDC Research: Enterprise & Government Mobility Market Blog

How Quickly Will DYI Mobile Initiatives Give way to Mobile Managed Services?

Mobile device proliferation has IT departments reconsidering how to best deliver increasingly business-critical mobile IT services.

While business analysts are now more experienced with identifying the right use cases and design requirements for mobile applications, designing, developing, integrating, managing, and maintaining these apps remains a significant task. Mobilizing and integrating manual business processes and workflows with modern mobile platforms is not only complex but costly, particularly when considering that many legacy applications and systems are not being abandoned. Creating new mobile applications to integrate with legacy systems requires both a high degree of specialized skills and additional software. As a result, enterprises are quickly discovering that mobile enablement is not only costly and time-consuming, but that managing and maintaining their deployment environments may be best handled by an external 3rd party.

VDC sees expanded usage of mobile devices to facilitate day-to-day business as an enabler for IT to reassert the importance of its role in digital transformation initiatives. However, considering that these initiatives are (likely) already underway, selecting the right partner(s) to deliver a suite of more reliable and robust mobile IT services will become increasingly important – particularly for organizations where mobile initiatives have become business-critical. VDC's research shows that even the largest enterprises are inadequately staffed with the mobile expertise required to properly manage and maintain a rapidly growing mobile deployment environment. Professional services vendors have proved their ability to deliver strategic business impact to their customers, not just operating cost reductions. Additionally, these vendors are increasingly well equipped to help their customer implement mobile innovations with more speed and less pain.  

That said, end-to-end “as a service” mobility solutions will ultimately be the de facto choice for many enterprises going forward. Considering the early stages of true mobile enablement in enterprise, managed mobility services from managed service providers (MSPs), communication service providers (CSPs), and systems integrators (SIs) are poised to benefit from the current mobile boom. Due to limited mobile IT support capabilities, VDC expects organizations to expand their relationships with third-party solution providers that specialize in mobile solution support and integration. The services opportunity will expand well beyond traditional mobile hardware support and break-fix services that are common today. Mobility-oriented services to support expanding deployment environments, application and database integration, as well as security, asset management and logistics services will be key areas of focus for professional services firms going forward.

VDC has just released a comprehensive Report on the market opportunity for Mobile Professional Services. Vendors were profiled in this Report include:

CSPs: AT&T, Sprint, Verizon Business, and Vodafone Global Enterprise
SIs: Atos, Cognizant, HCL, IBM Global Services, and Infosys
Mobile-First Solution Providers: DMI, Enterprise Mobile, Stratix, Vox Mobile and Zebra Technologies

Click here to download the Executive Brief, or email me for more information.

VC $'s Flowing into Mobile Development Startups

More than $200M has been invested in notable vendors that are participating in mobile development platform and tools market in just the past ~12 months.

Significant venture capital investments continue to pour into the mobile development platform and tools space. More than $200M has been invested in notable vendors that are participating in this market in just the past 12 months (see below). VC's who are banking on successful exits have reason to optimistic in our view.

On the M&A front, there have been two notable (and recent) acquisitions. mBaaS vendor FeedHenry was acquired by Red Hat in September 2014 for $82M, and testing and UI framework specialist Telerik was acquired by Progress Software in October 2014 for $262.5M. These are large transactions when compared to prior acquisitions in this space, which were on the smaller end of the spectrum (RhoMobile by Motorola, Nitobi by Adobe, and Worklight by IBM).

VDC believes that M&A in the space will be on the rise in terms of the size and number of acquisitions; this is natural in a rapidly evolving space. Core engineering will play a big part in vetting the valuation of future transactions with open technology, scalability, security, and resilience leading the charge. VDC sees valuations rising, based not only on revenue and progress with customer acquisition but on innovation and the ability to tie into broader ecosystems and emerging markets.

There are several logical buckets for potential consolidators in this space. Large enterprise software/middleware (such as IBM, Microsoft, Oracle, and SAP); Cloud vendors in the PaaS space who are looking to augment their mobile capabilities (e.g., Amazon, Citrix, Salesforce, VMware etc.); application lifecycle vendors (such as Adobe, Opentext, and Progress Software); mobile solutions providers (such as Intel and Synchronous); and potentially IT professional service providers looking to integrate and assemble their own solution to service their customers. We also believe there will be consolidation among the distribution, discovery, and analytics players. In summary, we believe the mobile applications space has reached an inflection point and thus will gain increased interest on both the funding and M&A front.

For more insights into our coverage of the mobile development platforms and tools market you can download the executive brief to the recent Report that we published on this topic.

Samsung Continues to Expand its Enterprise Presence Through Samsung 360 Services

This summer, Samsung hired several key executives from BlackBerry and Nokia, and Disney to bolster its position in the enterprise market. The most notable was Robin Bienfait who was named executive vice president and chief enterprise innovation officer of Samsung's global enterprise services unit. Bienfait was previously BlackBerry's CIO, where she led the company's enterprise business unit, end-to-end security, customer service engagement, global network services and corporate IT functions.  Bienfait also brought fellow BlackBerry alumna Donna Henderson with her who will be instrumental in executing Samsung’s expansion into mobile enterprise services. The hires come at a time when Samsung is trying to present itself to government agencies and enterprises as a viable alternative to BlackBerry devices and Apple in corporate environments.

In addition to the hirings and revamping its Knox security software, with this year’s re-launch of KNOX 2.0, Samsung introduced its Global Enterprise Services, dubbed Samsung 360 Services for Businesses. The offering includes technical support and management for enterprise and security applications, as well as for the devices themselves. However, as some have noted, the surprising element is that these services are aimed not just at Samsung devices or devices within the Android ecosystem, but to the mobile device ecosystem writ large, regardless of make or platform. Critics have called the move iterative of Apple’s partnering with IBM to combine Apple’s devices with Big Blue’s applications and services, but the move does speak to the growing trend towards services as a more primary means of competitive differentiation.

The benefits for the enterprise are straightforward – faster deployments, and reduced cost and complexity – and providing firms with the opportunity to focus on more strategic tasks. Bottom line, many enterprises have limited mobile IT expertise and lack the infrastructure, management and application development platforms required for mobile enablement.

Mobility service specialists firms such as DMI, Enterprise Mobile, ISEC7, MSC Mobility and Peak-Ryzek (to name a few) are the most visible vendors with sophisticated mobile service offerings, although awareness of such as firms remains low, as they typically cater to regional markets and need partners to scale. However, these firms have demonstrated that they can cater to large deployment environments with extensive enterprise-grade mobility requirements. For this reason, VDC sees these firms as important regional partners for Samsung moving forward and could provide these firms with a significant boost to scale their businesses on a global level.

Large global SIs have sharpened their focus on their mobility services offerings and have launched mobile-specific business units. There is no question that these firms will be formidable competitors for Samsung – however, we see Samsung as having an advantage due to the partnerships it has formed with key enterprise mobility ISVs.

The service is anticipated to launch to a select group of pilot customers this quarter, with a full market launch in Q1 2015, and the anticipation of expansion into EMEA and APAC, as well as a broadening of the solutions portfolio beyond the initial offerings. While its range of mobile services being offered is robust, VDC believes that Samsung should incorporate Telecom Expense Management (TEM) to cater to its customers’ diverse deployment environment and varied device ownership models. While this could be considered an adjacent service, we see it as complementary services to those provided under Samsung 360 brand, and their omission would detract from Samsung’s desire to offer a holistic, one-stop shop for enterprise mobile support. Larger companies like SAP have already moved to partner with TEM providers like Tangoe, and a Samsung partnership with vendors like MobiDM or Tangoe would be smart move to complement its mobile managed service offerings. In that vein, Samsung has alluded that they are in discussions with several TEM vendors.

The question remains, though, as to whether hardware vendors can become truly platform agnostic to provide effective multi-platform support services. While it remains relatively easy to provide cross-platform support, the capabilities need to be the same on all levels, as do the rollouts to be truly successful in that sphere. This is an entirely new strategy for Samsung, who is looking to counter Apple’s recent strategic partnership with IBM; however, while the key hires to spearhead the 360 Services initiative were a required first step, it will require a significant financial commitment and will take time to bear fruit. Based on the company’s recent poor device forecast, this strategy becomes all the more critical moving forward. 

with Eric Klein, Senior Analyst

AT&T‘s 2020 Vision and Digital First Transformation

VDC 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 several notable news releases to coincide with the event — the announcements all show that AT&T is moving in a coordinated way to ensure its participation in the ever expanding mobile ecosystem. In this vein, AT&T’s executives did a great job in articulating how the company’s network build commitment (project VIP) along with its digital-first strategy would help lead its customers toward the business transformational opportunity of mobile enablement.

The releases covered a variety of strategic areas of focus for AT&T:

Secure Cloud Access: Through a strategic partnership with IBM, AT&T revealed that it can now offer its customers on-demand access to IBM’s SoftLayer (IBM’s cloud infrastructure as a service and managed hosting platform) through its network-enabled cloud solution (NetBond). The service will give both companies’ customers the ability to dynamically allocate VPN bandwidth and allow them to scale their IT resources and to expand their hybrid cloud solutions. (AT&T also has established key partnerships for its NetBond offering with Amazon, Box, CSC, Equinix, HP, Microsoft, Salesforce.com, and VMware). The service will be generally available in Q1 of 2015 (Whirlpool was mentioned as an early adopter that has begun to take advantage of the new service offering).

“Network on Demand”: AT&T announced a self-service portal that will allow business customers to add and change network services in near real time (In 90 seconds, according to John Donovan, AT&T’s SVP of Architecture, Technology and Operations.) Even though they would benefit from access to higher bandwidth circuits, many of AT&T’s customers are not doing so, despite the declining cost of bandwidth — we see bandwidth on demand solutions like AT&T’s as a great solution to this problem, as many companies are paying for bandwidth they are not using on a regular basis.

API platform enhancements: The company is wisely looking for ways to give its resellers and partners all of the tools they need to create applications and value-added services (e.g., giving them the ability to customize the quoting and ordering experience for their sales teams and business customers).

Not Much of a Toggle Update

While AT&T Toggle containerization solution was mentioned, there was no deep dive provided – this was disappointing. However, Sundhar Annamalai, a key executive in the Advanced Solutions Business did articulate to us how carriers such as AT&T have a distinct advantage, due to their ability to complement the solution with elements such as split billing and deeply integrate with complementary services, such as Box, using their NetBond solution.

Business Solutions + Mobility Means Cloud First for AT&T

Most of AT&T’s senior leadership participated at this event – we were impressed with their ability to stay on message and agree that enhancing their cloud capabilities and partner ecosystem will be critical for their ability to service the 2020 workforce that they envision. AT&T’s new mobility chief, Glenn Lurie, discussed the rapid evolution of mobility, and shared details of the progress AT&T has made with their connected car platform — named Drive — which was launched at CES earlier this year. Lurie’s speech was accompanied by a forward-looking video that showcased AT&T Digital Life strategy and was demonstrative of how important the company’s transition to an all-digital, IP-based network will be, moving forward.  We see the Digital Life solution as an interesting SMB offering moving forward. The solution began as a relatively basic home automation solution that featured a connected thermostat as its foundational solution component, but it is without question moving into vehicles. Lurie spoke of our devices as being “remote controls” for our lives — very compelling indeed. AT&T will need to continue to develop its cloud ecosystem to move many of its key initiatives forward — it was clear that this was in the works.

“Our vision is to smartly connect companies and people in all major industries … from GM cars to GE locomotives and medical technologies, we are making those connections and seizing the opportunity both here in the U.S. and globally.”

President and CEO of AT&T Mobile and Business Solutions

GE – Long Time and Key Customer

GE Software’s GM, Brad Surak, discussed how his company was moving forward with its initiatives to reinvent its future services portfolio by leveraging global connectivity in using AT&T’s Global SIM technology and network to optimize the transport of industrial data. Surak showed compelling data of how GE is “driving outcomes that matter”. While our market data consistently shows how large the opportunity is to instrument equipment from an end-user perspective, Surak shared revenue metrics that showed just how significant the opportunity can potentially be moving forward. Examples Surak showed included: the $27B opportunity globally to increasing freight utilization by reducing system inefficiency; the massive $60B+ opportunities to take advantage of predictive maintenance and diagnostics to reduce process inefficiencies in healthcare and the energy sector by reducing waste in gas-fired power plants. The data source was not cited, but it demonstates why technology investments and infrastructure modernization must become top strategic priorities and play a key role moving forward. In that vein, transforming processes was a big theme — Abhi Ingle, who is charged with running AT&T Advanced Solutions business, showed how solutions such as enhanced push-to-talk will continue to play an important role in improving collaboration and why field solutions will continue to be key business for AT&T. We agree, and see field service automation solutions taking on new important capabilities due to mobile technologies, which will continue to alter the core capabilities of field services personnel.

Wrap

The event was well rounded with corporate strategy, product plans, client perspectives, and breakout sessions that provided an additional level of insights in key areas of the business including Cloud, Small Business, Mobility, Security and M2M, just to name a few. All in all, the trip to Dallas was time well spent and has us looking forward to the developer event that AT&T hosts each January, prior to CES.

Event Recap: AirWatch Connect

Connecting the Ecosystem

I had the opportunity to attend and present at AirWatch Connect event last week in Atlanta. The event attracted 1,500 of the company's customers and partners who were eager to learn more about AirWatch’s vision for long-term growth. The fact that the company was able draw nearly every big name enterprise-oriented mobility vendor to its event was impressive given that CTIA's marquee event (Super Mobility Week) was taking place at the same time.

Since its acquisition by VMware earlier this year, AirWatch has continued on a considerable growth path, with a roughly 50% uptick to its customer roster (from 7,000 to 13,000) and a strong pipeline heading into Q4. Based on this progress, the product enhancements that were shared, and discussions with AirWatch and VMware executives, it is clear that the company is successfully implementing ways in which to further engage with its tenured customers and expand their deployments beyond basic MDM to more sophisticated mobile offerings, such as its containerization and secure content locker solutions.

AirWatch CEO John Marshall's keynote set the stage for the company's executive vision, described as utilizing innovation within its mobility platform and solution portfolio to assist customers in solving business problems (tight integration with best-of-breed and complementary go-to-market partners is also a key strength for the company). AirWatch made several announcements to broaden its opportunity and move customers (both current and prospective) along on their mobile journeys.

Seamless Integration with an Expanded Roster of Partners

Details of the company's plan to partner with mobile app development vendors were revealed - the program (named AppShield) will help to ensure that mobile app development platform products will work seamlessly with AirWatch's MAM SDK and app wrapping tools. Partners announced included Adobe, Appcelerator, Kony, MicroStrategy, Oracle, salesforce.com, Sencha, Telerik and Xamarin. AirWatch also shared details of its next generation of email solutions (AirWatch Inbox) which features extended security capabilities and improved usability (key improvements include a one-click dial-in for conference calls, and an optimized experience for iPad users) the solution also now features S/MIME for secure and encrypted messaging.

AirWatch also showcased its solution for managing desktops (specifically Macs); the demonstration noticeably impressed the audience, as it made managing and provisioning a Mac for a new user look both seamless and intuitive. Finally, the company revealed a new solution for the education market with tools designed specifically for teachers such as All Eyes Up Front, which temporarily disables devices to draw attention to the front of the classroom - the solution also allows teachers to create virtual classes and lock students into specific apps to keep the focus on education and eliminate distractions from games, videos and social networking. To its credit, AirWatch began focusing on the education vertical early on - the strategy has clearly payed off, as the company has secured several of the largest educational institutions as customers (including the largest, the Los Angeles United School District).

Mobile Managed Services win

Finally, Marshall revealed that VMware had secured a strategic partnership with Capgemini ― this is notable for Airwatch as the company will integrate VMware’s end-user computing solutions (including AirWatch's EMM) with its mobility consulting, application development and system integration expertise. We expect AirWatch (through VMware) to continue to expand its relationships with companies like Capgemini moving forward (coincidentally, HP was very visible and a major sponsor at Connect).

Marshall also described two new capabilities which VDC sees as key for its customer base moving forward - AirWatch Chat and AirWatch Video. Chat will bring customers the ability to communicate instantly and securely while ensuring that company information remains secure. Chat will be an attractive and complementary solution for AirWatch's customers in regulated industries. Similarly, AirWatch Video will give users the ability to share and view videos and will provide customers with a more effective way to push videos to their employees (training immediately comes to mind). Administrators can manage permission content and set expiration dates for videos, while employees can download videos for offline viewing. We expect both of these solutions to be integrated into the company's mobile workspace solution as well as integrate will with Secure Content Locker.

Entering the "Post PC Era"

I delivered a keynote on the Post PC Era, which proved timely and apropos given the attendee profile at Connect. I led off by asking the audience to raise their hands if they were frustrated with the pace of mobile enablement at their company (mind you that most of the companies represented at this event were very likely to be well along on their mobile journey)  and more than half of the room had their hands raised. While not surprising, it nevertheless speaks to the large opportunity ahead for companies like AirWatch and in the enterprise mobility ecosystem in general. While key AirWatch customers such as CSX, Pepsi, Stryker, Target, and United Airlines shared details of the evolution and expansion of their mobile initiatives, the wide majority of businesses we speak with still have a quite a ways to go particularly regarding mobilizing their backends and developing customer mobile applications for their workforce. With its new host of partners and solution refinement that were laid out at Connect, has made the case that it is prepared to help organizations in the post-PC era.

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.

IBM Steps up Competition with MobileFirst Initiative

This week, IBM announced the expansion of its MobileFirst Consulting Services, its mobile solution portfolio launched in 2013 to streamline and accelerate enterprise mobile adoption. The announcement highlighted eight services designed to solidify mobile infrastructure consulting, mobile application management, and mobile device procurement and management services.  With this, IBM is further expanding its reach within a market that has matured and consolidated considerably within the past year.

IBM paves the way to go big with mobile solutions

IBM has made significant strides to increase the scope of its services, increasingly eschewing hardware in favor of applications and services and bolstering its already strong presence in the cloud. The firm’s acquisition of Fiberlink in November of last year came as no surprise and will provide the opportunity for IBM to be a significant player in their mobile infrastructure consulting services space. As early as 2012, VDC blogged that the roster of vendors offering EMM solutions would likely broaden to include a spectrum of technology-oriented vendors including hardware OEMs. Fiberlink, a mobile-first MDM vendor, was a smart and necessary acquisition if IBM wants to become a leader of MDM consulting services. In light of the tech giant’s recent activity, we believe that IBM is in a position to put programs in place to enable partners to sell its MobileFirst platform both as a managed service and on an a la carte basis. Given IBM’s resources and brand recognition, VDC feels it’s only a matter of time before IBM launches a large-scale marketing campaign to fully leverage its position and kick the competition into high gear.

Let the mobile hunger games begin

Recent activity in the mobile solutions market underscores how the sector is more competitive than ever. Wave after wave of acquisition have mostly cleared the way for larger companies, who are increasingly feeling the pressure to perform either on price or innovation. Following IBM’s acquisition of Fiberlink, VMware’s January acquisition of AirWatch and the much-anticipated entrance of Microsoft with its EMM solution offering announced at its Build event last week shows that the stakes are higher than ever. While these acquisitions provide the means to offer a broad portfolio of solutions, integrating these vendors quickly and efficiently is still critical.  

Those who have survived the acquisitions are digging in their heels for the long run: just last week, MobileIron filed its S1 in anticipation of going public and Good Technology isn’t far behind as it moves towards its own S1. The filings show a proven business model and investor confidence, but competition will still be high as IBM expands its reach and other large firms like Oracle and Dell enter the space. The market has matured at a lightning pace, with smaller and larger firms alike experiencing compressed timeframes as ever-larger companies enter the ring. 

(Reserach and contributions by Eric Klein and Katelyn Moroney)

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).

Mobile Services Vendors are Leaving Money on the Table

As much as today's modern smartphone devices have revolutionized the world of mobile handheld technology, mobile devices have been around for decades. 

For tradtional rugged hardware vendors (such as Motorola Solutions, Honeywell, or  Datalogic), the notion of complementing mobile hardware sales with bundled professional service offerings is by no means new.  These vendors generate significant revenues each year from their help desk, field service and technical support service offerings.  

With smartphones and other mobile devices increasingly finding their way into the world of business, we see growing demand for new and enhanced mobile professional service offerings.

VDC explored this hypothesis in a recent survey and found that on average, organizations' current support service costs range from 8.5% - 15% of the upfront cost of a mobile device.  Yet, this data shows that over 75% of IT decision-makers would be willing to pay extra for enhanced mobile support services, including:  

• Customized cloud-based dashboard for KPI monitoring
• Proactive device monitoring
• Preventive maintenance
• Battery management
• Enhanced support of device accessories (e.g. stylus, battery door cover)
• Device imaging services

As the mobile landscape continues to evolve, who will rise to tackle this growing market opportunity? The mobile services market is seeing interest and activity from all corners of the technology ecosystem:

• Traditional rugged hardware OEMs looking to defend their turf 
• Large systems integrators investing to carve out a piece of this growing, increasingly relevant market opportunity
• Wireless carriers sharpening their professional services offerings to compensate for dwindling voice/data margins

Over the next 1-3 years, you can expect a battle in the mobile services arena as these vendors launch new and innovative services strategies.  We see pricing models shifting, the cloud cannibalizing traditional on-site services, and modern technological advances driving new opportunities in areas such as preventive maintenance.