Last week Verizon Wireless announced it will begin selling Apple’s iPhone 4 to customers in February 2011. The new relationship between Verizon Wireless and Apple terminates the exclusive relationship AT&T had with Apple since 2007 to distribute iPhones in the US. Verizon Wireless will be able to address pent-up demand for iPhones among existing customers, as well as from customers who switch from competitors such as Sprint and T-Mobile to gain access to these devices. The introduction of Verizon’s iPhone also impacts the competitive smartphone landscape, mobile application developers, network operators, and other participants in the mobility ecosystem. Details regarding the Verizon Wireless iPhone announcement are highlighted in the report “Verizon’s iPhone Sets The Battleground For iPhone 5,” written by my colleague Charles Golvin.
Verizon’s iPhone and AT&T’s iPhone will look and cost the same, however Verizon Wireless has not yet announced the cost of voice and data service for these devices. There are also key differences in Verizon’s iPhone, which have important implications on enterprise smartphone purchasing decisions. Verizon’s iPhone will not have a multimode chip, so these devices will only roam onto CDMA networks, which are used in Verizon’s network. CDMA network technology is not as common in other countries so firms with employees who travel internationally may find this to be a limitation. Also, the timeline for replacing corporate liable smartphone devices is often 18 months. Therefore, although Verizon Wireless will begin offering the iPhone 4 in February, enterprise smartphone contract renewal cycles may mean these devices do not make their way into the hands of employees for more than a year.
On December 5th, Verizon Wireless launched its Long Term Evolution (LTE) network in 38 cities and in over 60 airports. This deployment signals the beginning of the 4G/LTE wars. The fuss over 4G/LTE networks is based on significantly faster network speeds which enable a smoother, faster, less jittery video experience for customers. Verizon’s LTE network is expected to run nearly 10 times faster than the company’s 3G EVDO network with downstream speeds of 5 Mbps to 12 Mbps and upstream speeds of 2Mbps to 5Mbps.
Initially, Verizon Wireless is taking a land grab approach to marketing its LTE network service primarily to business customers who can connect to the Internet using their laptops. Data plans start at $50 per month for 5GB of data, or $80 per month for 10B of data. Additional data use above these data plan caps will cost $10 per GB. Lower price point plans which would appeal to cost conscious consumers were not identified. Verizon plans to offer LTE enabled smartphones in mid 2011.
The $50 per month baseline LTE data pricing plan is undercutting Verizon’s current 3G data access prices. Why undercut 3G data prices? Because the 4G/LTE competitive landscape is heating up. Clearwire is deploying a WiMax network in 68 markets, and T-Mobile is positioning its HSPA+ network as 4G in more than 80 markets. In addition, Verizon is hoping to capture a significant share of customers in the 4G market before AT&T jumps into the 4G arena in 2011, so expect more 4G/LTE announcements and increased competition for 4G customers in the coming year.
During the past year, many companies have revisited their corporate mobility initiatives, device support, and mobile application deployment strategies. In addition, a growing number of firms are prioritizing mobility initiatives as a key strategic focus, expanding the use of smartphone devices, and investing in a range of mobile applications to address the needs of employees in various roles.
As the population and diversity of smartphones making their way into firms increases, so do the challenges for IT organizations. Below are key drivers of increased corporate mobility complexity:
Most enterprises support multiple wireless networks.
Many firms also support a wide variety of mobile devices.
New segments of mobile workers are emerging.
Employees use a wide range of mobile applications.
Some employees choose non-approved devices.
Smartphone security concerns loom over mobile adoption.
Last week, Microsoft unveiled its Windows Phone 7 software, which is dramatically different from this company’s previous software for mobile devices. This new mobile operating system software provides an improved user interface, animated icons, a colorful touchscreen, and personalization features which enable users to customize aspects of the phone’s appearance and performance. In addition, these smartphones work with Sharepoint servers, which are being deployed by enterprises.
Sixty mobile operators, including América Móvil, AT&T, Deutsche Telekom, O2, Orange, SFR, SingTel, Telstra, Telus, and Vodafone, will be supporting Windows Phone 7 in 30 countries. In the US, Windows phones will be available in November. AT&T will sell Windows phones from HTC, Samsung, and LG Electronics, and T-Mobile USA will offer phones from HTC and Dell Inc.
Even with these distribution channels, Microsoft faces tough competition in the smartphone arena. The US smartphone market is dominated by Research in Motion’s BlackBerry devices, Apple iPhones, and devices that run on Google’s Android operating system. Given this intense competition, Microsoft is going to be fighting for fourth place in the US. Microsoft has a better chance to capture a significant share of the smartphone market in developing regions, including China and Latin America, where customers are not tied to Android or Apple smartphone devices.
The mobility priorities of small and medium-size businesses (SMBs) are increasingly similar to those of enterprise organizations. Results from Forrester’s survey of IT decision-makers in SMB organizations with between 20 and 999 employees in North America and Europe show that 3 of the top 10 telecom initiatives in SMBs this year are related to mobility. More specifically, 43% of SMBs identify supporting more mobile devices or smartphones as a key telecom initiative. Supporting more smartphone devices includes increasing the number of employees who use smartphones for work activities, as well as broadening the types of smartphone devices and operating systems supported by the organization.
When it comes to mobile application initiatives, 44% of SMB firms identify supporting more mobile applications for employees who work out of the office as a critical priority to help these workers remain more productive while they are on the road. It is more interesting that 33% of surveyed firms identify supporting more mobile applications for employees who work in the office as a key priority. These employees are not traditionally the focus of mobile application deployment because they spend a majority of time working at their desks. However, they could benefit from productivity enhancing mobile applications such as document viewing applications, business unit reports, or access to mobile time sheet or expense applications when they are away from their desks. Examples of workers in this category include customer service employees, administrative assistants, and marketing personnel.
Nokia recently announced that it will focus on expanding its US presence by strengthening relationships with communication service providers and developing smartphones to address US customer requirements. We have heard this US market focus refrain from Nokia multiple times during the past few years. Nokia is the leading handset manufacturer in many other regions of the world, but the company has not had the same success in the US. Can Nokia succeed with its US market efforts this time around? To succeed, Nokia must address three key issues:
Consumer smartphone usage is driving US market momentum. Nokia’s strength is in developing enterprise grade smartphones; however, the US smartphone market is increasingly driven by consumer purchases. Results from Forrester’s survey of IT decision-makers in North America reinforce this trend with approximately 60% of firms in North America providing some level of support to some types of personal mobile devices.
Intense competition is coming from other mobile device manufacturers with a strong presence in North America. To succeed in the US market, Nokia will face stiff competition from RIM, Apple, and Android smartphones. RIM’s BlackBerry devices are the most commonly used operating system among North American enterprises, with 73% of firms officially supporting these devices. We are also seeing a rise in enterprise support of new types of mobile operating systems to support iPhone and Android smartphones. Currently 30% of North American enterprises support iPhone devices, and 16% support Android devices. In comparison, Symbian operating system devices, which Nokia develops, are currently only supported by 4% of US firms.
During the past few months, telecom service providers including AT&T, Sprint and Verizon have highlighted their roadmaps and deployment plans for 4G network technologies. These 4G technologies include Long-Term Evolution (LTE) and WiMax networks. Enterprises in North America and Europe are in the early stages of 4G network adoption based on results from Forrester’s SMB and Enterprise Networks and Telecommunication survey. Approximately 4% of surveyed enterprises currently implement or are expanding their implementation of fixed or mobile WiMax networks, and 3% of firms are implementing or expanding their implementation of LTE networks. These implementation percentages are expected to increase as the service providers pursue their 4G deployment initiatives.
Each year, Forrester analysts field over 20,000 inquiries on a variety of topics, which provide insight into the key issues and challenges facing our clients in a variety of roles, including CIOs, enterprise architects, vendor strategists, and marketing professionals. Forrester defines enterprise mobility as the ability of an enterprise to communicate with suppliers, partners, employees, assets, and customers irrespective of location. During 2009, analysts fielded nearly 700 inquiries related to enterprise mobility issues, jumping from 550+ inquiries in 2008 and 360+ inquiries in 2007. What are these inquiries asking about? The key focus of these inquiries is on mobile applications, mobile devices, and mobile employee segmentation.
Questions about mobile applications accounted for over 20% of all enterprise mobility inquiries in 2009. The majority of these application inquiries were focused on vertical applications, including fleet management solutions in the transportation industry that enable more efficient, real-time routing of vehicles. Today, email and calendaring mobile applications are mainstream in most enterprises, so many companies are broadening their mobile application initiatives to address the needs of particular types of line-of-business workers in their industry (e.g., retail, healthcare, transportation, financial services.) We expect continued growth in the number of mobile application inquiries during the coming year.
Enterprises are deploying a wide range of horizontal and vertical mobile applications. Results from Forrester’s 2010 Network and Telecom survey of IT decision makers at North America and European firms show that horizontal mobile applications such wireless email, have been implemented or are being implemented by 86% of firms, and calendaring and personal information management applications have been deployed by 68% of firms. The next wave of mobile application deployment is focused on meeting the needs of line of business (LOB) workers such as sales force and field service professionals, or industry-specific requirements such as inventory management applications in retail, or location-based applications in the transportation arena. Survey data shows a persistent level of application implementation and planned deployment among 14% – 19% of enterprises for mobile sales force, field service and emergency response applications. We expect this mobile LOB application deployment to gain momentum in 2010.
The methods enterprises use to acquire and develop these mobile applications vary widely. Homegrown or in-house mobile application development is commonly used by 40% of North American and European enterprises. Approximately 30% of all enterprise organizations use a local, regional, or national external developer for mobile application development requirements. North American enterprises are significantly more likely to purchase mobile applications from a mobile service provider portal site or from a mobile application store. Between 24% and 29% of North American enterprises use these two types of mobile application development approaches, compared with only 11% to 15% of European firms.
On Monday, June 7th, AT&T will introduce two new smartphone data plans, which will replace the current $30/month unlimited data plan offer and will make smartphone data packages affordable to more customers. The DataPlus package does, indeed, lower the entry-level price for smartphone users. The DataPlus package costs $15 per month for 200 megabytes of data, with the option of purchasing an additional 200 megabytes of data for $15. Customers who are heavy data users can purchase the DataPro plan, which is a 2-gigabyte package for $25 per month. If customers go over this limit, an additional gigabyte of data costs $10. DataPro customers can also use their mobile devices as wireless modems to connect other devices (e.g., laptops) to the network for an additional $20 per month.
The net-net of these new packages is that customers using the DataPlus plan get a voice and data plan for $55 per month and customers on the DataPro plan pay $65 per month, compared with the current price of $70 per month. These price cuts will benefit the increasing number of employees who are responsible for paying for their own voice and data plans. Results from Forrester’s 2010 Enterprise And SMB Networks And Telecommunications Survey show that approximately 30% of over 1,000 surveyed enterprises have already cut the number of employees who qualify for corporate-liable mobile data and voice services, and 17% plan to cut the number of employees on corporate-liable voice and data services this year.