Filling Out the Wireless Application
That's the word from Daniel Taylor, founder and managing director of the Mobile Enterprise Alliance. With more than 14 years of experience in IT and telecommunications, Taylor was formerly practice director for telecommunications at Giotto Perspectives and director of networking and telecommunications at Aberdeen Group . Under his leadership the MEA has grown to more than 1,000 enterprise IT organizations in 32 countries.
Since last year, when he launched the "enterprise class" mobility initiative, Taylor has been aggressively championing a new set of requirements and specifications for enterprise mobile devices, software, and services. He's been quoted widely on the need for new mission-specific applications and more effective sales channels to reach enterprise IT managers. He spoke with Unstrung about the enterprise mobility world beyond the Blackberry.
Unstrung: You've said that device manufacturers and wireless operators can't seem to really commit to the enterprise market. How come?
Daniel Taylor: Because the enterprise market is often forced to fit into the model of the consumer market, specifically for wireless data. The device manufacturers look at it the same way the carriers look at it, which is that it's not as big as the consumer market. Everybody's a consumer, but only a subset of consumers are actually business users. In the context of the carrier business model, it's difficult for manufacturers and wireless operators to decide whether the enterprise market even matters.
UN: And yet the margins in the enterprise market are higher.
DT: Absolutely. But one thing you have to remember is that the consumer wireless market has evolved so quickly. Usually in telecommunications it's the other way around: The business market grows, and then services and devices proliferate through the consumer-market side. A lot of features in landline voice service, for instance, found their way into the consumer market after they were rolled out to the business market.
Telecommunications are very much like any other business: There has to be a core service with a specific type of margin, and then additional services are packaged on top of that, usually with higher margins. What we've seen with the enterprise, in terms of mobility, is that everything is upside down. The business that has been extremely profitable to date has been Blackberry. The margins on Blackberry data are much higher than the same data that companies sell to consumers.
But because you have what would traditionally be this follow-on service, mobile email, leading the market, everything else pales in comparison to that.
UN: So, in a way, the success of Blackberry has hampered the rollout of additional enterprise applications.
DT: Right. Nobody at a carrier is going to get fired for rolling out Blackberry. If they start getting into these other vertical market applications, with smaller target segments, it's going to be harder to stand in front of management and says "Let's take this gamble on a service that will have lower margins than Blackberry."
Which is why you see all this stuff around video and downloads, those are really great services, and they're amazing technological feats; but I would summarize them as finding it extremely tough to measure up to Blackberry in terms of profits. BlackBerry makes a lot of money off of Blackberry, and the carriers do as well. The ARPU from a carrier perspective for Blackberry users is around $150 a month.
But you can't grow that market forever. There are only so many $150-a-month users out there. That's a small, finite group, and once you've exhausted that audience, we as an industry will begin to tackle these other services and applications.
UN: Do you see that happening now?
DT: Yes. But the challenge we have for the industry, and for wireless operators in particular, is defining what that baseline service is going to be. What is the high-volume, low-margin, bread-and-butter service going to be that we use as a basis for everything else?
The answer now is cellular. But carriers have a very difficult time integrating those accounts with other enterprise services, because workers provision their own cellular service. The dirty little secret in this industry is that for every $10 expenditure on cellular, which goes on a corporate credit or gets billed in an expense report, the enterprise spends another $1 on SMS and 50 cents on mobile email.
What you end up with is that the only piece of that the enterprise actually manages is about 4 percent of the overall expenditure on carrier services. To try to get this under control, you need to start with cellular. That is the sleeping giant nobody wants to wake.
Currently, the enterprise doesn't have a footprint on that cellular device that lets them own the device or have a user on it. I'm convinced that it's going to take that managerial footprint, in the form of small applications that provide users with services, to open the floodgates, as it were. I wouldn't expect carriers to try and lead that effort -- this is an enterprise process.
UN: What needs to happen for that process to accelerate?
DT: It's a matter of establishing processes and policies. You can have all the great technologies in the world, but the enterprise still needs a policy and a process, to articulate who's responsible for what, who pays what, and how they're accountable.
Right now the technologies allow IT departments and telecom managers to be traffic cops, telling users, "This is what you can and cannot get." That's not the way they really want to do things -- nobody wants be the bad guy. We're putting these guys in a tough situation if we expect them to take people's phones away from them, to take their ringtones and games away and say, "Here's this plain-jane black-and-white brickphone, it's yours and if you try to change it it'll electrocute you."
It's much more likely they will want to focus on creating new service opportunities. "Here, you've got your device, we don't want to get involved in the device per se, but here's a set of services you can choose from: You can see your voicemails, send voicemails to your co-workers rather than texting if don't like typing with your thumbs, you can look up the corporate directory, and so on. Those are the types of really positive things that will enable IT departments to be the good guys.
UN: What's the most important application that enterprises need or want right now?
DT: Anything to do with field force automation and field service reps, like electronic forms. That's a tremendous opportunity, and I hear universal excitement about it across the enterprise community.
UN: Can you give me an example?
DT: Say a company might be sending out a field-service rep, a delivery driver or a technician, with a clipboard and a bunch of paper-based forms. If you can take those and make them electronic, and give the worker a ruggedized PDA, there's tremendous ROI in doing that.
UN: That doesn't sound as sexy as mobile email.
DT: The reasons for deploying Blackberry are very strongly focused on the demands of the executive team. If the CEO says "I want a Blackberry," that's enough for IT to deploy them. But IT departments usually scratch their heads say, "They're nice to have, but if I had to develop the ROI for this internally it would be extremely hard." Left to its own devices, the IT department would be focusing on field service and sales operations. Getting computing power to people who have never had a computer, not even email.
Compared to something like Blackberry, that can be far less appealing on the surface. But when you start looking at deployments of 10,000 workers -- show me a 10,000-Blackberry deployment. We're talking the kinds of volumes here that really matter.
UN: So back to the original question: Why aren't these applications rolling out faster?
DT: The limitations are not to do with the availability of technology and devices or any of that. It's about the channel, and it just takes time.
Like everything else in the IT and telecoms community, sales channels took a real hit in the dotcom blowup. It takes time for companies to rebuild, for people to reemerge, and for capabilities to grow. Those capabilities are going to be largely at the ISV and VAR levels.
To date, the model is the same one that Blackberry followed: They are 100 percent distributed through carriers. That's fine for mobile email, but the carriers would be the first to admit that they have limited channel capabilities and sales resources when it comes to IT solutions.
Sprint Wireless (NYSE: PCS) is trying, with their Enterprise Mobility Group. (See Sprint's Enterprise Challenge.) Cingular Wireless is doing something similar, but those are still high-level consulting projects. If you're an enterprise IT manager who wants to roll out a salesforce automation application to 50 people, are you going to spend $200,000 on that? Probably not.
— Richard Martin, Senior Editor, Unstrung