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.