Enterprise Mobility Solutions

Market Update & 2010 Outlook

Mobile & Wireless PracticeDavid Krebs, Director

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These slides are from a webcast presented on 01/06/10These slides are from a webcast presented on 01/06/10.

A full audio recording is available for download at:

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VDC Research

Complimentary insights & marketing data on the

enterprise mobility market available at:

www.vdcresearch.com

3 – 2009 VDC Research Group, Inc.

Today’s Speaker

• David Krebs, Director – Mobile & Wireless Solutions Practice

10 + years covering the markets for enterprise and government mobility solutions, wireless data

communication technologies and automatic data-capture research and consulting.

Focus on identifying the key drivers and enablers in the adoption of mobile and wireless solutions among

mobile workers in the extended enterprise.

Consulting and advisory experience including: technology and market opportunity assessments, technology

penetration and adoption enablers, partner profiling and development, new product development and M&A due

diligence support.

Extensive primary market research management and execution experience to support market sizing and

forecasting, total cost of ownership (TCO), comparative product performance evaluation, competitive

benchmarking and end user requirements analysis.

Boston University (BSBA).

Enterprise Mobility SolutionsMarket Update & 2010 Outlook

Mobile & Wireless PracticeDavid Krebs, Director

5 – 2009 VDC Research Group, Inc.

Mobile & Wireless Practice

Enterprise Mobility Market Overview

• Market conditions to improve in 2010:

Following a immensely challenging 2009 campaign the market for enterprise mobility solutions is poised for

growth in 2010

However, the first half of 2010 will likely remain challenging and performance will sputter in some sectors

• Aging installed base driving failure and TCO concerns

Postponement of planned upgrades over past 18 months resulted in spike in average age of installed base

Drove increase in average failures rates of mobile devices which increased TCO

• Increasing complexity of mobile applications and changes to end user demographics driving

next generation mobile device requirements

Intense price pressures in market – best evidenced by increased adoption of smartphones for a broader

spectrum of enterprise mobility applications

Next generation of mobile users driving ‘consumerization’ of enterprise class devices and acceptance of new

form factors, I/O functionality

• Management of mobile solutions a top of mind concern…still

With an expanding installed base of mobile devices by device type, user type and application end users hungry

for more seamless approach to device and application management

Managed service and hosted business models will be increasingly relevant – questions remain around who is

best positioned to deliver

Improvement in market conditions

6 – 2009 VDC Research Group, Inc.

Mobile & Wireless Practice

Global Rugged Mobile Market

$1,1

75

$1,3

00

$1,0

16

412.4

494.6

423.8

200

300

400

500

600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

1H 2007 1H 2008 1H 2009

Unit S

hip

ments

('000)

Hard

ware

Ship

ments

(U

SD

Mill

ions)

$1,3

85

$1,3

59

$947

1421.31482.0

1,088.8

800

900

1000

1100

1200

1300

1400

1500

1600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

1H 2007 1H 2008 1H 2009

Unit S

hip

ments

('000)

Hard

ware

Ship

ments

(U

SD

Mill

ions)

The global rugged mobile computer market – comprising both large and small form factor mobile computers was down substantially during H1 2008. Large form factor shipments declined by 22% while small form factor shipments declined by just over 30%.

Substantial contraction in H1 2009 across all form factors, regional markets

Large Form Factor Shipments Small Form Factor Shipments

7 – 2009 VDC Research Group, Inc.

Mobile & Wireless Practice

Global Technology Revenue

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

100

200

300

400

500

600

Q1

: 9

6

Q3

: 9

6

Q1

: 9

7

Q3

: 9

7

Q1

: 9

8

Q3

: 9

8

Q1

: 9

9

Q3

: 9

9

Q1

: 0

0

Q3

: 0

0

Q1

: 0

1

Q3: 01

Q1

: 0

2

Q3

: 0

2

Q1

: 0

3

Q3

: 0

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Q1

: 0

4

Q3

: 0

4

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: 0

5

Q3

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6

Q3

: 0

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Q4

: 0

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Qu

arte

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Re

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ue

s ($

B)

Global Technology Sector Revenue & Y/Y Growth(source: Morgan Stanley)

Revenue ($B) Y/Y Growth

Strong Similarities (so far)

Strong similarities with 2001 Recession… so far

8 – 2009 VDC Research Group, Inc.

Mobile & Wireless Practice

-

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

2008 2009E 2010E 2011E 2012E 2013E

Har

dw

are

Rev

enu

es (

USD

mill

ion

s)

Global Rugged Hardware Forecasts

Large Form Factor

Small Form Factor

Global Rugged Mobile Market ForecastGrowth to resume in 2010 following substantial contraction in 2009

• Tier one account contribution

• Renewed retail investments

• Field mobility solutions

9 – 2009 VDC Research Group, Inc.

Mobile and Wireless Practice

Growth Expectation by Industry Varies Considerably

6%

8%

-6%

-6%

9%

-15%

-13%

4%

-21%

-17%

6%

-11%

17%

7%

13%

11%

21%

11%

13%

13%

10%

10%

4%

12%

-25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25%

Annual Revenue Growth Expectation by Sector2010

2009

According to channel organizations most sectors poised to rebound substantially in 2010

Wholesale

Utilities/ Telco

Prof. Service

Health Care

Military

Federal Non-Military

Transportation

Retail

Manufacturing

Industrial/ WH

State/ Local

Public Safety

10 – 2009 VDC Research Group, Inc.

Mobile and Wireless Practice

Margin Pressures Across All Offerings Continue

13.3%

14.6%

14.6%

19.8%

5.3%

6.3%

5.6%

6.5%

7.1%

8.8%

7.5%

11.0%

4.1%

4.7%

4.8%

4.9%

0% 5% 10% 15% 20% 25%

Notebooks

Rugged Notebooks

Smartphones/ Handheld Computers

Rugged Handheld/ PDAs

Minimum and Target Margins by Core Hardware Offerings

Minimum 2H

Minimum 1H

Target 2H

Target 1H

Hardware margins worsened considerably over second half of 2009 for channel organizations

11 – 2009 VDC Research Group, Inc.

Mobile & Wireless Practice

Mix of IT and operational issues represent primary investment barriers

Mobile Investment BarriersPrioritization of mobile and wireless solutions over other investments remains a challenge

46%

29%

17%

4%

4%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Other capital projects with higher priority

Unclear return on investment

Desire to wait for proven applications & technology in this industry

Security issues

Lack of people with appropriate skills

Leading Mobile Solution Investment Barriers(% of Respondents)

Source: Enterprise Mobility End-User Survey; Conducted June, 2009 (n=687)

Considering your organization's most recent mobile deployment, what level of

benefits has your organization achieved?

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Improved real time decision making

Increased mobile worker productivity

Improved customer loyalty and repeat business

Increased first time fix

Reduced asset failures

Increased SLA compliance

Reduced operating costs

Increased sales/revenues

12 – 2009 VDC Research Group, Inc.

Mobile and Wireless Practice

Tangible Mobile Investment Benefits Realized

End users reporting substantial improvements in a variety of workflows, processes, customer service and

revenues as a result of mobile solution investments.

Mobile solution ROI and technology investment drivers are consistently strong

13 – 2009 VDC Research Group, Inc.

Mobile & Wireless Practice

Although organizations are increasingly deploying non-rugged devices to support traditional rugged applications, total

cost of ownership remains a critical device evaluation criteria.

Mobile Device Requirements

51%

49%

45%

29%

29%

25%

21%

20%

17%

16%

15%

0% 10% 20% 30% 40% 50% 60%

Broadband wireless functionality

Battery life

Total cost of ownership

Device weight and ergonomics

Operating system

Level of ruggedisation

Integrated bar code scanner

Integrated voice AND data capability

Ability to print in the field

Touchscreen display

Integrated GPS/ Location awareness

Mobile Device Selection Criteria(% of Respondents)

TCO emerging as a key requirement

Rate the following mobility issues or concerns in terms of their level of

importance to your firm

(1=Extremely unimportant; 6=Extremely important)

0.0 1.0 2.0 3.0 4.0 5.0 6.0

Supporting dual mode devices (work and personal use)

Locate/track devices

Managing SW license conformance

Provide real time remote training to field users

Clear mobile asset and software inventory management

Remote provisioning of devices

Remote helpdesk

Security policies for handling lost/stolen devices/data

Reducing support costs

Preventing data breaches

Ensuring user friendliness of mobility solutions

Minimizing device downtime user productivity loss

14 – 2009 VDC Research Group, Inc.

Mobile and Wireless Practice

Leading Mobility Investment ConcernsMinimizing device downtime is a top of mind issue for organizations

Managing the TCO of mobile device deployments is a consistent ‘top of mind’ issue for organizations

deploying mobile solutions.

15– 2009 VDC Research Group, Inc.

Mobile & Wireless Practice

For your most recent mobile device deployment, what

percent of your installed base failed at least once?

Average Mobile Device Failure Rates

16.6%

4.6%

13.7%

7.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Large Form Factor -Commercial Grade

Large Form Factor -Rugged

Small Form Factor -Commercial Grade

Small Form Factor -Rugged

• Average Productivity Lost per Failure

• Large Form Factor: 85-90 minutes

• Small Form Factor: 50-75 minutes

• Average Internal Support per Failure

• Large Form Factor: 95-110 minutes

• Small Form Factor: 65-70 minutes

• Over the course of the past

2-3 years average failure rates –

especially for non-rugged devices –

have trended down.

• This was largely in response to the in-

creased focus on designing more durable

devices (integration of flash memory was

a key contributor).

• However, in response to the recent

economic pressures, end-users have

extended the life cycle of mobile devices

and adopted less expensive solutions

(such as netbooks) resulting in an

increase in failure rates.

After trending down, failure rates are again increasing

16– 2009 VDC Research Group, Inc.

Mobile & Wireless Practice

$0.00 $10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00

Large Form Factor - Commercial Grade

Large Form Factor - Rugged

Small Form Factor - Commercial Grade

Small Form Factor - Rugged

Total Cost of Ownership (Five Years)

Hard Costs

IT Support

Productivity Loss

27.3%

40.8%

29.2%

49.8%

TCO Cost Breakdown

Productivity Loss as a

Percent of TCO

Productivity loss represents a significant proportion of TCO – especially for non-rugged units

Five Year TCO by Form Factor and Key Contributor

Which of the following are the most important factors driving the shift

towards a service-based mobility deployment model?

0% 5% 10% 15% 20% 25%

Simplifying end user mobility

Integrating the full set of technologies required for enterprise …

Simplifying day to day IT and compliance operations

Ensure endpoint and data security

Ensuring universal connectivity and access control

Eliminating need to invest capital to continually grow a mobility …

Providing support for any mobile application

Multi-device support

Consolidated operations and reporting

17 – 2009 VDC Research Group, Inc.

Mobile and Wireless Practice

Factors Driving Shift Towards Managed ServicesSeamless mobile support and simplification of mobile solutions key drivers

Managed services opportunity driven by demand for an easier and more convenient approach to mobile

solutions

18 – VDC Research Group, Inc.

Benefits and Challenges of Mobility SolutionsMany mobility investment challenges can by addressed by managed service model

Customer

Issues

Deployment

Complexity

Remote

Management

Application

Management

Security

Management

LOWER TCO DATA SECURITY

OUT OF BOX EXPERIENCE EFFICIENT APP DEPLOYMENT

• OTA device

provisioning

• Software configuration

• Device diagnostics

• OTA fixes

• Validate settings

• OTA push of applications

and updates

• Seamless version control

• Security

• Remote lock and wipe

19 – 2009 VDC Research Group, Inc.

How VDC coverage will help clients stay on top of

the market in 2010?

The 2010 Enterprise Mobility Solutions Intelligence Service

• Track 1: Enterprise Mobility Hardware

• Track 2: Enterprise Mobility Software

• Track 3: Enterprise Mobility Professional Services

• Track 4: Vertical Market Reports with Demand Curves

• Track 5: Enterprise Mobility Solutions Channel Tracker

STUDY PUBLICATION DATE ACTUAL MARKET SIZE/SUPPLIER SHARE FORECAST MARKET SIZE

Service Year 2010 2009 2010-2013

20 – 2009 VDC Research Group, Inc.

Q&A Session

Thank You for Attending this VDC Webinar

For more information about VDC Research coverage of the global markets

for embedded software and tools – including the Enterprise Mobility

Solutions: 2010 Market Intelligence Service – please contact:

David Krebs

Director, Mobile & Wireless Solutions Practice

davidk@vdcresearch.com | 508-653-9000 ext.136

Gerrald Smith

Account Executive

gsmith@vdcresearch.com | 508-653-9000 ext.113