VDC Research: Enterprise & Government Mobility Market Blog

Hip to be Enterprise: New Enterprise Focused Tablets Stealing the Show

With the broader tablet market in the midst of an identity crisis one segment receiving increased attention are enterprise end users. VDC’s recently published 2015 Enterprise and Government Tablet analysis confirms this opportunity, forecasting annual growth of enterprise tablets – which represent approximately 15% of the overall tablet market – at 12.1% annually through 2019. A flurry of new products targeting the enterprise user from mega-brands Apple and Microsoft and specialty rugged mobile vendors Zebra and Xplore are directing the spotlight on this segment.

In comparison to other mobile form factors, tablets are an increasingly popular selection for enterprise line of business (LoB) applications. According to recent research conducted among enterprise mobility decision-makers, tablets are selected 33% of the time among devices issued to employees by enterprises in support of LoB applications. As the number of mobile deployments in LoB workflows continues to grow, consumer mobile devices are setting the benchmark for what any mobile device should look and feel like, resulting in the emergence of a new breed of enterprise tablets. Beyond enterprise-focused rugged OEMs, consumer-grade vendors are also turning their attention to the enterprise market through both their consumer portfolios and the introduction of more durable, enterprise-minded devices.

Enterprise Issued Mobile Devices Used to Support LoB Workflows by Form Factor

  

New Rugged Tablets from Zebra Technologies and Xplore Technologies

Zebra Technologies held its much anticipated Tablet Plus launch announcement on September 15 during which it unveiled the details of its new ET 50 and ET 55 tablet computers. As Zebra’s first new tablets to be released since the launch of the ET1 in 2011, notable features included support for both Windows 8.1 and Android Lollipop 5.1 in addition to Wi-Fi and/or LTE connectivity. Designed with a consumer feel and equipped for the enterprise, the tablets look to penetrate a still unsaturated enterprise tablet market. With a rugged design, comprehensive accessories to meet industry demands and unique scanning capabilities the ET 50 and ET 55 look to address a number of business use-cases, most notably those in the direct store delivery (DSD), field service, and retail verticals. However, a challenge for Zebra in our estimation will be aligning their tablets with the most appropriate use cases and target industries. Although tablets are being widely adopted in markets Zebra typically serves, these are mostly lower priced consumer devices. Demand for rugged tablets with the specifications and price points featured by Zebra’s new products is mostly concentrated in public safety, utilities, telecommunications and manufacturing environments, segments outside of Zebra’s traditional “sweetspot”. Another challenge, not uncommon in the rugged mobile market, will be the price points of the ET 50 and ET 55 which are $1,850 to $3,000, depending on the configuration. Although the benefits of rugged mobile devices are calculated by their lower failure rates, higher reliability and ultimately lower cost of ownership, even these target prices are high when compared to competitive rugged tablets.

Not to be outdone, Xplore Technologies unveiled the XSLATE B10, a fully rugged 10.1” tablet running Windows 8.1 (Windows 10 upgradeable), also on September 15th. The device is a fully featured tablet with multiple I/O and configuration options targeting field worker applications in transportation, manufacturing and telecommunications segments.  Xplore has undergone some significant changes in 2015, none more impactful than its acquisition of Motion Computing’s assets in April. According to VDC’s most recent rugged mobile research, boosted by the Motion acquisition and strong performance of its existing business, Xplore was the leading rugged tablet supplier in Q2 2015. Now with the target on their back Xplore will need to provide staying power and consistency in performance – especially surrounding support services for its increasingly global customer base – in order to build on its recent successes. 

   

Not the only new tablets in town

The Zebra and Xplore announcements comes on the heels of Apple’s release of the iPad Pro on September 9. The iPad Pro makes a stronger enterprise use-case argument as compared to Apple’s past consumer-focused tablets. Features including a large 12.9” display, the new A9X chip for increased speed and responsiveness and new iOS capabilities such as split screen viewing. In addition, accessories such as the new Apple Pencil and Smart Keyboard enable the device to more adequately serve end-users in corporate environments. Borrowing liberally from Microsoft’s playbook (which will be introducing the Surface Pro 4 in October), this device is Apple’s first foray into the rapidly growing 2-in-1 market. However, at the end of the day the iPad Pro is an iPad running iOS at a price point that makes it competitive with Apple’s MacBook Pro. While iOS9 does introduce some interesting features that make the platform more friendly to corporate users – for example, multi-tasking and app management including app-specific VPN management – it cannot be considered an enterprise alternative to Microsoft’s Surface Pro or other 2-in1s powered by big OS/x86 architectures.  

The enterprise limitations of the iPad Pro when compared with PCs is clear including the lack of file management capabilities and scripting technologies designed for PCs, compatibility with most productivity applications, lack of AD support and limited I/O options to name a few. At the end of the day this is just another, somewhat larger, iPad, albeit with a high end active stylus (pencil) at a higher price point.  While one could argue a future where iOS or other lightweight OSes become the enterprise OS of choice and laptops are promoted to the same architecture and framework as the rest of the mobile eco-system, that is a generational change and not one just around the corner. That said, Apple is not standing still and is clearly serious about the enterprise opportunity. Initiatives with IBM and Cisco are breaking enemy barriers and compelling use cases for iOS devices (especially tablets) are being created, often transforming existing workflows.  However, even with all of these enhancements, the iPad Pro is not a general purpose PC and cannot be considered a direct competitor to other two in one products like the Microsoft Surface Pro. Therefore we do expect Apple to encounter a bit of a positioning dilemma with the iPad Pro relative to existing iPads, 2-in1s and its own MacBooks.

What Makes a Tablet Enterprise Friendly?

According to a recent survey fielded by VDC Research among over 650 enterprise mobility decision makers, when evaluating mobile devices for line of business applications, battery life ranked predictably high on the list as did price and overall quality and reliability. With many of these tablets used in the field, wireless options—including embedded cellular capabilities—are critical (one key pain point for many enterprise and government tablet deployments has been sub-optimal GPS quality). In addition, overall ruggedness of the device—in terms of drop and water/dust protection—are key decision criteria for many applications. Surprisingly, however, security features such as integrated biometric capabilities did not crack the top five in overall importance.

However, tablets are often best characterized as a marriage of compromises. Therefore, for many enterprise line of business applications, of equal importance is the accessory and peripheral eco-systems developed by tablet OEMs and their partners. According to our research, protective cases lead the list of accessory requirements, in addition to solutions like payment and scanning sleds, multi-bay charging docks and vehicle mounts. In addition, highly application specific functionality, such as Zebra’s wireless DEX Bluetooth FOB (which addresses the huge headache and point of failure of cabled DEX solutions in the Direct Store Delivery market) often represent the keys to a well designed mobile solution. 

Mobile Device Requirements for Devices Supporting LoB Applications

The tablet form factor has unique appeal for mobile workers supporting a variety of enterprise and government workflows and applications. While the overall tablet is going through its most recent identity crisis, opportunities for business and public sector applications remain strong and robust annual unit growth (for both rugged and non-rugged tablets) is projected by VDC through 2019. The tablet form factor addresses mobile workers’ need for a portable mobile device while providing sufficient display real estate to support meaningful applications. From forms-based inspection and data collection applications to using the tablet as a customer engagement tool in high value retail environments, the opportunities for these devices are substantial.

To view our recently released report on the tablet market please click here.

Written by Matthew Hopkins and David Krebs (EVP)

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.

Table-side Tablets are on the Menu for the Hospitality Industry

The casual restaurant business has garnered buzz this month with the announcement of Applebee’s partnering with E la Carte to place 100,000 tableside tablets in 1,800 of the restaurant’s locations in 2014. This follows on the heels on the announcement of Chili’s deal with Ziosk to provide tableside tablets in 823 of its locations in March of next year. These two collaborations, with that of Applebee’s in particular, represent the largest rollout of tableside tablets to date in the industry. Other sectors, however, are not far behind. Chicago Public Schools have over 60,000 iPads within the school system as of last month, while the Los Angeles Unified School District boasts a robust 44,000 iPads in its system. This also excludes other companies, such as AIA Insurance, KLM and British Airways who have begun deploying tablets to employees.

In an interview with Forbes, Ziosk CEO Austen Mulinder referenced the tableside tablet’s design with a focus on durability and its ability to withstand spills and being dropped The rise in popularity for such a device in the restaurant industry could like provide an interesting opportunity for manufacturers of ruggedized devices who have been losing ground to consumer-oriented devices in the workplace. . The consumerization of IT to date has primarily meant taking consumer goods and placing them in a business environment, but this revolves around the ease-of-use associated with such devices, which the ruggedized community has been slow to adopt. The surge in popularity of tablet devices in consumer-facing industries highlights the central role that mobile devices can take regarding customer service, engagement and loyalty. However, the nature of certain businesses – like that of the casual dining industry – have specific requirements in terms of durability, printing and I/O that cannot be met by using modified consumer goods. These devices require higher levels of durability, environment-proofing and the ability to read and process specific information. While this shift does present an opportunity for firms that have specialized in more ruggedized and enterprise-specific hardware, much of their success will likely hinge ability to meet the economics of the deals. Right now, however, this is still an evolving market with no clear leader, but is nevertheless an area rife with opportunity. 

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.  

Honeywell's Intermec Acquisition Reshaping the Competitive Landscape of the Rugged Mobile Market

After monitoring the rugged mobile market and witnessing the consolidation trend that has been taking the market by storm for the past few years (e.g. Honeywell's acquisition of EMS Technologies, Inc and Motorola Solutions' acquisition of PSION), here at VDC Research, we were expecting 2012 to bring us more in terms of acquisitions - and the month of December did not disappoint us. On Monday, Honeywell International Inc. (NYSE: HON) announced that it would acquire Intermec Inc. (NYSE: IN) for about $600 million in cash ($10 per share).

Despite maintaining its competitive position, Intermec, the workflow performance company that develops, manufactures and integrates technologies that identify, track and manage supply chain assets has been going through restructuring and was in search of a new CEO in addition to evaluating its alternatives. In addition to being a key manufacturer of rugged mobile computers, RFID, barcode scanners and barcode printers, the company is a turnkey solution provider with offerings in hardware, software, services and integrated solutions.

In this blog post, we are going to be looking at Honeywell's acquisition of Intermec and its impact on the enterprise mobility market.

Sign of the Times*:The rugged mobile market - and more specifically the rugged handheld market - is at crossroads. In fact we appear to be entering a phase of lower growth. Some of this can be attributed to consumerization and increased market erosion by smartphones. In addition, macro factors such as the weak economic climate in Europe and the soft recovery in North America do not bode well for higher growth dynamics. What is increasingly clear for participants in this already wildly fragmented market is that without scale - or an extremely focused niche position - one's ability to compete is compromised. Although Motorola - fresh off its recent acquisition of PSION - remains the clear leader in the rugged handheld market with over 40% share, combining Honeywell (LXE) and Intermec creates a more viable "number two" with a market share reaching 20%. This substantially broadens the gap with the rest of the market as the next closest competitor's share hovers around 5%.

Portfolio Fit and Mix:Honeywell's enterprise mobility and AIDC products are part of its Scanning Mobility unit within its ACS division. From a hardware perspective, Intermec expands Honeywell's rugged handheld and forklift mounted portfolio, especially around devices for field mobile and logistics solutions. In addition, through Intermec's printer and media division Honeywell has effectively expanded its TAM by several billion. Moreover, with Intermec's Vocollect division (Vocollect is the leader in voice solutions for mobile workers) Honeywell is further enhancing its warehouse capabilities, a critical market for rugged mobile and data collection technologies. What is likely especially appealing to Honeywell, is access to Intermec's installed base - particularly in markets like DSD, industrial warehousing, logistics and field service. Beyond core hardware, Intermec also has some interesting capabilities around professional services - through its Enterprise Mobile business unit - and software. These could be critical as Honeywell explores possibilities to enhance its service footprint and scale its service offerings.

Consolidation Trend and Honeywell as a Serial Acquirer:Consolidation trend has been a common theme in theme in the enterprise mobility market over the past couple of years and VDC expects this trend to continue in areas where the market has reached a certain level of maturity. Honeywell has excelled as an acquirer of companies as the company acquired Hand Held Products, Metrologic, EMS Technologies and Intermec since 2007. PSION's acquisition by Motorola Solutions earlier in the year shook up the competitive landscape as the consolidated company is better positioned in the market with its expanded product portfolio and market share gains. While the overall tendency in the market might suggest being more cautious giving the economic uncertainties and volatility, Honeywell once again focused on the potential opportunities associated with it and decided to move forward with the acquisition. The company continues to focus on mid-market deals (under $1 billion) and use consolidation as a way to support its organic growth. Honeywell's expertise in consolidation perhaps gives the company a significant leverage over its peers as the company perceives these acquisitions as a safer way to grow its business.

Despite its large installed base of customers and devices and its strong position with its partner ecosystem, Intermec has been having some challenges over the past couple of quarters. It would be interesting to see how Honeywell successfully integrates the company and turns its business around. The impact of this acquisition on Intermec's employees and product lines is also yet to be seen.

*The figures reported in this section are from VDC Research's Strategic Insights 2012 Enterprise & Government Mobility Hardware Mobile Devices Report and references to consolidated companies when mentioning Motorola Solutions (includes PSION) and Honeywell (includes Intermec).

P.S. Since the announcement of the acquisition, multiple law firms announced that they will be investigating the acquisition as a result of the potential claims against the Board of Directors of Intermec, Inc. We will update this blog post as more information becomes available.

Mobile Operators, Systems Integrators, and ISVs Changing Channels for MEAPs

Our good friends in Stamford Connecticut did a great job in identifying and classifying the vendors who have brought a mix of solutions to the market that can be summarized as "mobile enterprise application platforms" or MEAPs - the core/primary capabilities that have been established are:

Rapid Application Development Tools: Drag-and-drop WYSIWYG design tools (including emulators/debuggers) with robust cross-platform/device support

Management and Security: Client-side security features with enterprise-grade encryption - along with management capabilities that include - application deployments, updates, reporting/analytics and mobile policies

Application Integration: The ability to integrate with a variety of "back-ends" referring to not only databases, but web services, proprietary/legacy systems as most importantly enterprise application suites such as SAP, Oracle, Microsoft etc.

The above are now table stakes for MEAPs - similar to other mobility categories or segments the MEAP space is maturing rapidly - not only has consolidation begun, but channels are evolving. MEAP vendors capabilities that allow for HTML, CSS and Javascript to native development tools are powerful, but the capabilities must expand in order to  remain relevant and have the ability participate in larger portions of the continually expanding "enterprise mobility value chain" (more on this concept later). Below are the areas we see MEAPs quickly moving towards:

HTML5: As ratification inches along, trends like Webkit standardization and a burgeoning developer community that is hungry to experiment and capitalize on the mobile "web app" market opportunity that HTML5 bringsare helping to move HTML5 apps forward. Our view is that HTML5 apps are elegant and service a purpose, however we don't see them usurping/replacing native applications. HTML5 apps are emerging as an important and complimentary element to MEAP vendor offerings as moving forward we see customers requiring both native and HTML5 apps and having a multi-pronged app strategy (more on this concept in future blog posts) - this is part of the "long tail" concept that we outlined in our research last year.

b2e App Stores: While businesses are still in the early stages of formulating mobile strategies, we believe that once they are fully formed, business-to-employee (B2E) app stores will naturally and quickly become a ‘must have’ feature on corporate intranets and as native apps on mobile devices for organizations of all sizes. SAP/Sybase plans to release a significant number of native mobile applications (~30) in the coming months and their strategy makes it clear that they see managing applications as a required element to provide to their customers along with their other platform capabilities - other MEAP vendors see the opportunity as well, and have either already built b2e app store functionlity into their platform, or are preparing (or looking to partner) to provide their customers with this capability.

Mobile Banking: Mobile commerce and banking have arrived - NFC capability will be featured every modern mobile OS by the end of 2012 - MEAPs like Kony Solutions have made significant headway and have caught up quickly to competitors like Sybase, Antenna and Pyxis who have long focused on the financial services vertical.

Vertical Market and Application Integration Expertise: Human capital has long been recognized as indispensible and a key differentiator to enter into specific vertical markets with a cogent and credible marketing  campaign. MEAPs have been hiring key personnel to spearhead specific vertical market initiatives - our view is that these investments are currently and will continue to bear fruit. Integration (implementation) and application consulting expertise in areas such as SOA and web services will also be key as legacy applications will continue to be modernized as IT budgets begin to open up.

The Channel and Partnerships are Critical

The channel opportunity for MEAP vendors is significant; with the solutions well positioned for white label arrangements with vendors with well established customer bases (i.e., systems integrators and mobile operators). We have recently seen AT&T move in this direction - the company currently works  with four prominent MEAP vendors (Antenna Software, Pyxis Mobile, Spring Wireless and Kony Solutions). Recently AT&T began offering Pyxis' solutions via a managed service - this is evidence not only of maturing channels, but is strong evidence supporting the point that MEAPs need to expand their range of capabilities.

Another important trend is the activities of ISVs - SAP (via Sybase), Oracle, Microsoft and MicroStrategy (and others) have mobile application platforms as well - moving forward they will try take more ownership of their customers (both for control and profit). Finaly, we see carriers and integrators moving in this direction as well (Infosys and SK C&C are prime examples).

MEAP vendors have oppporunities in front of them to partner with a broad range of complimentary mobility oriented ISVs - while this has already begun in a meaningful way, there are potential partnerships that have yet to be recognized that we see as beneficial for MEAPs to see the market traction that they have yet to see.

We are in the final stages of our research on MEAPs and plan on publishing a comprehensive report on this segment later this month. If you want to talk MEAPs, ping me! I'm @eakleiner on Twitter.

Cotendo Pressuring Established CDNs

Founded in 1998, dot com darling Akamai Technologies quickly became the market leader in the Content Delivery Network (CDN) segment.  For over a decade, the company’s unique product, established infrastructure and partnerships with powerful companies worldwide have assured Akamai’s continued success.

However, it seems the rapid pace of technological advancement may have caught Akamai off-guard.  In recent years, we have seen mobility-focused startups leverage their agility and innovative technologies to threaten established and powerful companies (Microsoft is a good example).  In the CDN space, VDC believes Akamai has found the startup Cotendo an increasingly formidable threat – particularly the company’s Mobile Acceleration Suite (MAS), a product that can enable high-quality mobile experiences for customers worldwide.  Leveraging the company’s unique distributed services, which develop real-time awareness of the user’s conditions, Cotendo’s MAS is able to make rapid network adjustments, facilitating improved “load times.”  

Given the product’s potential to reduce latency and instability in mobile networks, carriers, systems integrators, and businesses with mission-critical mobility deployments are very interested in and are actively investigating services such as those offered by Cotendo to improve the performance and security of their increasingly cloud-based applications. Recognizing the advantage MAS would represent to its users, Equinix (a provider of global data center services) has allowed Cotendo to colocate servers at each of the company’s data centers worldwide (IBXs).  Cotendo has leveraged this service to essentially quadruple their customer base.

Excitement around this three-year-old startup is far from confined to the world of IT.  In June of this year, the company secured $17M in a single round of private funding, which included contributions from Citrix Systems and Juniper Networks.  VDC believes that in the rapidly-changing world of enterprise mobility, Cotendo will experience rapid growth and potentially become a significant threat to competitors such as Akamai.  Beyond the content acceleration space, we wonder how this disruptive technology will impact private LTE networks that are beginning to emerge.  Cotendo has seasoned executives on their roster, and will continue to be aggressive and encroach on their competitors’ territory while offering unique mobile optimization solutions.  In coming years, VDC believes these solutions have the potential to gain in importance as spectrum becomes an increasingly valuable and precious commodity.

 

Mobile Health: Lots of Initiatives…Little Pulse

Spent the morning earlier this week at the Mobile Health Expo held at New York’s Javits Center which only confirmed one of my long held feelings about Healthcare IT and mobile health solutions specifically: frustration. The healthcare sector continues to be one of the most fickle adopters of IT solutions in general and mobile solutions more specifically and ranks well behind other service industries in terms of IT budgets as a percentage of operating expenses. However, at the same time, it represents the sector that perhaps the most to gain from the adoption of mobile solutions.

While there are no shortage of pilots, initiatives and proposed standards there is still very little to show for when it comes to actual deployments and investment. It is easy to point out what some of the issues or adoption barrier to mobile health solutions specifically – from interoperability issues with stove-piped legacy/proprietary systems and limited commitment and follow-through towards mobile capabilities from major HIS vendors to the obvious security concerns and the lack of agreement of what constitutes (EHR) meaningful use.

Nevertheless, the immense potential of and need for mobile health solutions remains. Moreover, federal money – by way of the ARRA – is beginning to make its way into the system.  VDC has long stated in its research that 2011 would be a turning point in this sector due – in part – to impact of the ARRA on HER penetration  (which is a precursor to many mobile health solutions). Could it just be that this process (in this case EHR adoption) needs more time. EHR adoption – and achieving meaningful use – is complex, especially for the many organizations that lack the appropriate infrastructure, redundancy plan and security capabilities.

There is (still) much to be excited about when it comes to mobile health opportunities. Healthcare providers are responding to the fact that over 60% of care occurs outside the hospital and are beginning to embrace the notion of connected health services that bridges personal and clinical environments through – for example – social tools. In addition, within healthcare facilities, organizations are responding to the need for more schedule and process flexibility among core caregivers with more advanced workforce management capabilities. In this case the adoption of next generation multi-channel redundant communications solutions are driving significant improvements in care coordination and workforce allocation, data acquisition and sharing and overall efficiency and effectiveness of services rendered.

VDC has just completed its annual survey of healthcare service providers. We will be publishing the results in our forthcoming Healthcare Mobility report and are eager measure change and compare results to our previous studies. Stay tuned.