VDC Research: Enterprise & Government Mobility Market Blog

BIG Again! NRF's 2012 BIG Show Brims With Traffic

National Retail Federation Expo 2012 took place in NYC this week and highlighted the future of retail. The attendance from solution providers including hardware, software and services providers was highly significant as well as visitors. Following a strong 2011 performance complemented by the holiday sales, the general outlook for retail remains strong, while the pace is expected to be slower than 2011. Nevertheless, NRF is projecting retail industry growth of 3.4% in 2012 to $2.5 trillion.

Members from VDC's Mobile and Wireless Practice spent Monday at the show meeting with a variety of established and emerging vendors. Some of our early impressions include:

Apple exhibits at NRF!

While Apple does not do tradeshows, based on the bevy of iOS devices on display at the show it clearly does not have to. A perhaps not so outrageous prediction of ours for 2012 was Apple's (and specifically iOS's) continued expansion into the retail market. Much of what we saw at NRF certainly confirmed this expectation. From customized sleds that convert the iTouch or iPhone into a secure mobile payment platform to sophisticated business intelligence applications designed for iPads, Apple's presence was widely felt. Secure payment solution providers such as Ingenico and VeriFone introduced their solutions targeting the iOS platform which are capable of processing both credit and debit cards, making them usable globally. While the mobile vendors typically selling into the retail segment continue to debate the Windows vs. Android scenario, Apple/ iOS - with no major push of their own - is establishing itself as a strong retail mobile platform. This only confirms another trend we are tracking in that Chief Marketing Officers are usurping power from traditional IT decision makers when it comes to which mobile solutions to deploy for highly visible and customer facing retail applications.

Are tablets right for retail?

The uptake in tablets appears to be noteworthy given that small form factor devices have traditionally dominated retail. In addition to small form factor vendors like Motorola which has been among the leading vendors in retail with their rugged handheld solutions debuting their ET1 tablet, rugged large form factor vendors such as Panasonic and Motion Computing are also going after the highly promising retail market with their recently introduced rugged tablet solutions. While tablets clearly have a role to play in retail operations - especially for customer facing applications and for solutions such as interactive displays - retailers are still evaluating the true potential of these devices. A recent survey did not perceive store associates equipped with tablets as providing superior service in comparison to those equipped with other mobile computing and communications solutions. While we expect tablets to represent a strong platform for certain retail workers and workflows, 2012 may bring more pilots and evaluations rather than large scale rollouts.

Consumer WiFi, mobile payments and mobile scanning providing more immersive retail experience

Similar to themes we have been discussing throughout 2011, customer engagement is expected to play a huge role in this move. More and more store associates are being equipped with mobile devices in order to lookup customer and product information during their interaction with customers. Most retailers we spoke with also talked about public WiFi for their shoppers to drive a more interactive experience while evaluating next generation presence applications.

Likewise, mobile payments and mobile POS solutions were in high demand during the show as many solution providers introduced their newest products. Not only answering the customer's product-related questions but also completing the transaction at that point of contact is becoming highly valuable for retailers as the traditional in-store environments which may have limited number of POS machines can result with long lines and lost revenue for these organizations. Thus, this enables the associates to not only sell the inventory in a particular store but to also order an out-of-stock product through their online/ mobile site and have it ship directly to the customer or the store based on the customers' preference. Hence, the up-sell and cross-sell opportunities that can be achieved through this interaction are very significant. Tracking how traditional retail POS vendors respond to this trend will be especially interesting as many of these have the most at stake. One interesting solution was from Wincor Nixdorf - a leading brand of traditional POS solutions. They are extending their mobile capabilities with their TP Application Suite, which provides two hardware independent modules: TPiSCAN supports all self-service solutions in the checkout area. TPiSHOP offers the possibility to implement mobile self-scanning either on retailer-owned devices or on individual smartphone of the customer.

Following a dynamic 2011, expectations for retail technology solutions - especially customer facing mobile solutions - remain robust in 2012.

Changing End-User Requirements are Forcing Field Mobility Solution Providers to Invest in Customer Engagement

Mobile computing solutions have long been deployed, and are relied heavily upon by field service and sales organizations to improve productivity, enhance decision making and achieve real-time visibility. However, VDC Research's most recent end-user study (fielded in Q2 2011) highlights an increasing interest in enabling customer engagement in field mobility among organizations of all sizes.

 

While the heavy reliance on mobile computing solutions for minimizing manual and labor-intensive processes in inefficient workflows continues, organizations are closely studying ways to engage with customers throughout the process. VDC expects the demand for improved customer service to continue to increase given the effect of customer satisfaction, loyalty and referral on the increase in sales through repeat business and potential cross-selling abilities. Understanding customer pain points and delivering personalized services that build customer relationships and increase customer commitment to their company or brand is among the key requirements that should be built into the service and sales strategies of solution providers.

Please click here if you would like to read our latest research note on Field Mobility.

Field Mobility - Empowering the Mobile Workforce

Field mobility solutions provide enterprises with real-time visibility, enabling field mobility workers to engage with customers at the point of interaction. With the continued need to improve real-time decision making and increase productivity, the market for field mobility solutions is expected to increase from $14 billion to $23 billion by 2015. Employing an efficient and effective field service operation is already becoming a competitive differentiator for a lot of forward thinking organizations, and capitalizing on technological advancements will be a key opportunity for suppliers. Please click here if you'd like to listen to our latest QuickCast on Field Mobility.

Based on our enterprise mobility end-user survey that was fielded in Q2 2011, the demand for real-time product and customer information ranked the highest among the field mobility pain points. Whether we are talking about a field service technician or a field sales representative, the advancements in technology, along with the improvements made in wireless coverage, enable organizations to equip these field workers with the necessary solutions to be fully capable of resolving issues/ closing transactions at the point of interaction. More information about the recently published Field Mobility Solutions Vertical & Applications Market Report can be found here.

Outlook for Mobile Devices is Bright - Continued Uplift Expected Through 2015

VDC's Mobile and Wireless Practice recently published our annual report on Mobile Devices for enterprise and government mobility applications. We have been publishing this annual report for almost 10 years running and it represents the keystone of our annual Enterprise and Government Mobility Research Service. The past 18-24 months have exposed some of the most volatile and difficult to predict market conditions and we do not expect the next 18-24 months to be any different. From rugged solutions supporting line of business applications, to enterprises enabling access to a variety of corporate assets and platforms (ERP, CRM, etc.) on smarpthones and next generation tablets being trialed for customer-facing applications, we see the level of investment and sophistication of solutions within enterprise and government organizations continuing to scale.

Some of the key findings from the 2011 report include:

• Rugged mobile market rebounds. Although this is perhaps not news anymore, the fact that most segments of the rugged mobile market will reach the prior highs established in 2008 by late 2011/ early 2012 is an astounding feat, considering the severe contraction experienced in 2009. In 2010, the global rugged mobile computing market exceeded $4.6 billion and we expect it to grow by just over 10% in 2011 to $5.1 billion. Much of the recent growth was driven by pent-up demand in the retail distribution sector and for field mobility solutions. In 2011 and 2012/13 we expect transportation and logistics to pick up - especially mail and courier - and drive growth. The outlook in the large form factor market - primarily the rugged notebook market - is slightly more uneven due to its large exposure to military and public sector markets.


• However, downside risk increasing. Although demand in the first half of 2011 has been strong and the outlook is positive, the downside risk in these markets is increasing due to the uncertain economic outlook in several country markets. We are beginning to hear about deals being postponed to later in 2011/ early 2012. Too few to call a trend at this point but certainly something we will be following.


• Rugged competitive environment undergoing change. Although still massively fragmented, one recent trend among rugged mobile vendors has been to more actively explore private label/ rebranding opportunities to fill gaps in line cards/ portfolios. Although this presents a low-risk/ moderate reward opportunity for vendors to expand their footrpint there are some potentially dire consequences specially as they relate to brand erosion and IP position/ value-add (real AND perceived) of vendors pursuing these tactics.


• Rugged handheld devices - Microsoft's predicament? It is well known that Microsoft is having a hard time scaling opportunities for its Windows Phone 7 OS. However, in the rugged handheld market, Microsoft remains the clear leader with over 80% market share for its Windows Embedded Handheld/ Embedded CE platforms. Although there is a fair amount of dissonance regarding this platform and its road-map - largely emanating from ISVs determining their future OS support strategies - enterprise end users (and handheld OEM/ ODMs) remain committed to the stability of this platform. Although Android does loom as an alternative, the more relevant discussion may be regarding the migration of HTML5 browser-based solutions.


• Smartphone growth (and tablet adoption) showing no sign of slowing. In contrast ot the rugged market which is discussed in the millions of units, the smartphone scale is in the hundreds of millions. Smartphone unit growth - although slowing - is expected to exceed 25% per year through 2015. In terms of enterprise adoption and support (of both corporate liable and individual liable devices) we expect shipments to near 500 million by 2015. With today's growing mobile workforce, the smartphone increasingly represents a key solution for enterprises to connect and engage with their employees. That means enabling access to a variety of enterprise assets (ERP, CRM, HR, etc.) and workflows (expense reporting, approvals, etc.) on these devices. Overall VDC expects that by 2015 the smartphone access to mobile applications (beyond email and messaging) will exceed 50%. The smartphone market is also increasingly challenging - and potentially eroding - the lower-end/ entry class segment of the rugged handheld market.


• The tablet wrinkle. The tablet computer market - traditionally supporting niche line of business workflows - has undergone a renaissance following the introduction of the iPad in 2010. Enterprises are exhibiting strong interest in these devices - and renewed interest in legacy solutions - to support a variety of applications and workflows. One development has been that application strategies within organizations are changing and often shifting from smartphone-centric solutions to ones that leverage the greater display real estate of the tablet.

The published report expands on these issues and addresses many others. Please click here for more information. We look forward to your feedback!

No Such Thing as "Late" in this Fast Moving Mobile Ecosystem - But the Stakes are High

The mobile ecosystem added more moving pieces this month with the release of two new OS platforms. Microsoft's long awaited Windows Phone 7 and HP's updated webOS 2.0 platforms have arrived. Both companies are actively expanding their carrier rosters/geographies. Whether Microsoft learned from its failure with its Kin, and if the Palm acquisition gives HP a vehicle to succeed in the Smartphone market remain to be seen–what is abundantly clear is that both of these heavyweights are deeply invested in the success of their new platform. While Apple, Google and RIM have captured significant market share, churn and competition between carriers (and the financial commitment) give both platforms an opportunity to not only participate, but to also gain new customers. The real "x-factor" is the applications–how important is the level of investment in applications a consumer has made on any given platform.

"Stickyness"

There has been a lot of discussion on app fatigue (meaning that an application's usage decreases over time). For example, while Foursquare, a popular application for "checking-in" to various venues continues to see it's user base ramp, the company must constantly be cautious of its users growing tired of the application. Today, in our view, the "stickyness" isn't there - particularly for the mobile applications aimed at consumers. So does the $50 I spent on mobile applications lock me in on a particular platform (as a consumer)? Maybe, for a certain amount of time, but it's a given that applications will continue to evolve and become more sophisticated and powerful devices will emerge and vie our attention / share of wallet–hence the opportunity for Microsoft and HP.

The Business Environment is Different

As the usage of mobile applications in enterprise environments continue to ramp and employees continue to bring their personal devices into the workplace, we see the equation around application "stickyness" being enitrely different in enterprise environments. When businesses make investments in mobile platforms, IT infrastructure, business process / workflow mapping and integration, they are making a commitment. By default, device management and security are mandatory in these environments, along with the ability to customize and upgrade applications. These investment levels and hardware (device) commitments translate into application "stickyness", as the pain involved in moving to new applications can be significant. Enterprises will always be challenged by application lifecycles, however growing tired/bored of the application isn't an option in these environments as the applications are integrated into corporate systems, and are required tools for conducting business.

The Challenge

So, while there is a window of opporuntity for both Microsoft and HP, the challenge will be to capitalize on the lack of app "stickyness" and to get software developers developing on thier respective platforms. Additionally, both will need to get carriers to promote their respective products. In aggregate, if I had to summarize all of the reviews/blogs I've read, I'd say that (generally) both platforms have received positive coverage. Indeed, both platforms are differentiated in terms of their UI, with very slick multi-tasking capability (Microsoft calls this "live tiles," HP calls it "stacking"). In terms of hardware, the current feature set for both platforms is comparable to the competition, and while both platforms seem to be off to a good start - many technology journalists are saying that Windows Phone 7 is Microsoft's "last chance" to be relevant and to compete against the likes of Google and Apple - they also knock both platforms for not having enough applications. While being "late" to a market can be a disadvantage, it definitely can work both ways - we'll be watching.

Do you agree/disagree? Please vote on our poll, we'd like to hear your comments on this topic as well!

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

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

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

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

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

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

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

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

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

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

Whither RIM?

Following the recent ‘missed quarter’ by RIM there has been much chatter about the future demise of the company and its widely deployed BlackBerry at the hands of Apple’s iPhone and devices running on the Google-backed Android platform. While the articles bring up many valid points – iPhone’s encroaching RIM’s enterprise stronghold, RIM lacking a strong touchscreen solution, RIM’s App World metrics - the desire for sensationalist reporting may have kept the reporters from addressing some of the more important issues. More to the point: there remains much to be bullish about RIM.

BlackBerry’s core value proposition revolves around its best in class – in terms of security and manageability – enterprise wireless email and messaging solution. This has and continues to resonate with enterprise customers. BlackBerry is viewed as the Gold Standard in sectors – especially where security and compliance mandates are tight – such as government, financial services and healthcare. While RIM has done well to maintain and expand its position in these core markets, it’s value proposition has recently been challenged by individually liable (IL) devices entering the enterprise.  During the recession enterprises have been increasingly receptive to the idea of supporting their employee’s personal device for some enterprise applications (email, messaging, etc.). Moreover, enterprises have succumbed to the pressure from individuals to support popular consumer devices such as the iPhone. This has loosened RIM’s vice grip on the enterprise segment and has created challenges for RIM as the company generally performs best in accounts where it is the only device.

These challenges have shown up in market share figures as – according to our research – BlackBerry’s share of the enterprise segment in North America is expected to decline from just over 50% in 2009 to just over 40% by the end of 2010. The primary beneficiaries here will be Apple – capturing 22% of the enterprise market by the end of 2010 – and the various Android-based devices. However, even as BlackBerry’s market share declines, overall shipments and new subscribers are expected to grow, driven by the continued strength in Smartphone demand.

RIM clearly needs to address the IL issue more effectively – it has been targeting the consumer market with mixed results for some time now. However, according to our research, the share of corporate liable devices is actually expected to increase slightly in North America. Conversely the share of IL devices purchased from ‘approved list’ is expected to give way to IL devices purchased from ‘any list’. In other words we are seeing a splintering in the enterprise between highly controlled and regulated environments and those that are more open to multiple platforms. RIM’s position in the former is unquestioned. What it needs is a more effective answer for the latter.

The fact remains that the Smartphone opportunity is massive with growth continuing unabated. While hardware innovation – such as Apple’s multi-touch interface – can define and reward vendors, this market is not (entirely) about hardware. It is about delivering appealing services and user experiences. The killer applications for RIM and its BlackBerry platform have been wireless email and BlackBerry Messenger which offers some of the strongest real time communication and presence capabilities (through GPS location integration and proximity sensing). RIM needs to build on these platforms to extend a broader range of services in a broader range of environments.

RIM is addressing this and several of its recent acquisitions are targeted squarely at both improving the user experience on the BlackBerry and also extending RIM’s reach beyond the traditional Smartphone. More specifically, last August 2009 RIM acquired Torch Mobile to support its WebKit-based browser development – a major hole in its portfolio. The browser was officially released earlier this year at MWC. (OK, this is more catch-up than trial blazing). More recently RIM acquired QNX Software Systems from Harman International. One of QNX’s leading markets for its Neutrino embedded OS is the automotive sector. This acquisition has the potential to significantly enhance the integration of RIM’s BlackBerry platform with in-car computing, navigation, entertainment platforms (check out VDC’s Embedded Practice’s blog post on this transaction).

Another – more traditional – opportunity for RIM to lead is the creation of the de facto enterprise mobile software application channel.  The fact remains that with all the success of Apple’s App Store, its most successful apps are for gaming and other entertainment/consumer applications. No viable channel exists today to address enterprise applications. While much of this is tied to issues relating to back-end integration requirements and customization requirements evident with so many enterprise mobile applications – enterprise organizations are clamoring for ways to more efficiently distribute and manage mobile applications. Getting the developer community excited about BlackBerry development opportunities will be critical here. BlackBerry has taken a step in the right direction with its recently enhanced development tools (especially the HotSwap simulator which significantly reduces development time).

RIM clearly has its work cut out for them. Apple, Google and others are nipping at their heels and are intensifying their enterprise play. However, considering RIM’s loyal customer base, broad global partner network and best in class services it would be reckless to write them off.

Keeping Pace with the Enterprise Mobility Solutions Market in 2010

By the end of 2010, the enterprise mobility market will have experienced the most change that we have seen in the past decade.  2009 budgets for enterprise mobility solutions – often one of the last segments of IT budgets to be crimped - were cut.  This exacerbated an already price and margin challenged mobile platform segment and has given managed services and hosted applications considerable traction.

Even before the latest recession, a number of core vertical markets and installation environments were slowing down, offering less margin, and forcing attrition in some supplier community segments.  We expect that this will continue and perhaps even accelerate in 2010.

Three years ago, application software became the first, and most important, solution element to be specified by users.  Today, wireless service is increasingly cited as the number one facet of an enterprise mobility solution to be specified; pushing traditional hardware platform, solution AND ISV providers aside marginally, or in some markets, materially.

These forces above, and others, are making channel architecture and partner decisions much more important. To help companies operating in, or targeting the enterprise mobility market analyze and compare their options - VDC is once again, planning to publish our Enterprise Mobility Solutions Service.  This market research will address the broad range of technology developments and consumer trends which we see unfolding in the enterprise mobility solutions market in 2010 and beyond.

We encourage you to contact us to learn more about this research, which is currently in our founding sponsorship period and provides early subscribers some significant benefits.