Mobile device management is a fully commoditized market. In the strictest definition of MDM, the available functionality is limited to those application programmer interfaces that are made available by the operating system vendor (Google or Apple). There is very little that traditional MDM offerings can do to differentiate themselves from the other 100+ vendors in the market. This causes significant price pressure on the offerings. Value for MDM is rapidly approaching zero. As we have seen over the past year-and-a-half, core MDM component offerings have been continuously lowering their prices in an attempt to maintain market share. There is a transition by the major MDM players to expand well beyond the traditional "wipe," "lock," and "locate" concepts available to them into more advanced technologies such as content and collaboration systems, security components at the network and application layer, as well as partnerships and integrations with secondary market offerings. These features have value. MDM at its core does not.
I think it's about time someone came out and said it. Just like Dobby from the Harry Potter books, MDM should be free. I've been telling all of the vendors that I work with that if they don't put out their MDM offering in a freemium model very shortly, the other vendors will beat them to the punch. Traditional MDM offerings are a land grab for enterprise market share and should be used as an upsell or wedge into more advanced and differentiable offerings. I predict that in the next 6 to 9 months we will see most, if not all, of the leading MDM vendors giving away their core functionality.
It's hard to believe that a company could burn through $225 MILLION dollars in 11 months, but it looks like that may have been exactly what AirWatch did. According to data released by AirWatch and written by financial analysts (links to all data sources at bottom of post), AirWatch likely had burned through nearly all of its available cash in record time. Based on an assumption of $120K burn per employee (fully loaded) per year and an assumed removal of $50M in equity at the time of the venture round, AirWatch would have had somewhere between 5 and 6 months of runway left as of January 2014. These assumptions are corroborated by the fact that VMware has contractually extended AirWatch an offer to provide a bridge loan if the acquisition deal does not close in the next 6 months.
What did AirWatch do wrong? It sounds like they may have made some over-assumptions with regards to their growth rates for 2013. It could have possibly been the adoption rates in countries outside of North America. It may have just been bad luck. Or it could even be a cooling off of interest in mobile device management technologies based on containerization. We won't know exactly why they were getting near the end of the runway, but what we can say is that VMware may have overpaid in multiple. Based on the data provided by VMware of AirWatch bookings for 2013, VMware paid somewhere around 16x bookings for AirWatch. Man, that's a lot of bread!
On January 22, 2014, a new mobile security player was born. This is the date that VMware announced its intention to purchase the mobile device management (MDM) firm AirWatch. With a price tag of $1.5 billion, this acquisition confirms that the mobile security market is scorchingly hot. This news comes on the heels of the November acquisition of Fiberlink by IBM. I expect additional mobile security market consolidation to occur throughout the remainder of 2014. This acquisition is a shot across the bow of any other major vendor looking to play in the mobile security market. If you don't step up and spend now, you might just be left holding the bag.
There is a 14-dog race going on, with a goal to win the wallets of the enterprise for mobile security spend. When lined up in the starting blocks, the racers may all seem to have equal chances, but a few are better poised to cross the finish line first and bask in the glory of the winners' circle. Three of these technologies are the odds-on favorites to lead from start to finish, with the rest of the racers struggling to remain relevant.
Coming off the starting block with the "holeshot" are the mobile device management vendors. With huge engines of revenue, large customer counts, and first-mover advantage, this dog is the odds-on favorite to take the championship trophy. Mobile device management vendors are already expanding their technologies and products into security platforms to diversify their rapidly commoditized product offerings. The move is paying off for the biggest and toughest MDM participants in the race, giving them the early, and potentially insurmountable, lead.
$2 billion. That's billion with a "B". That's a lot of money. That is also what Aaron Levie's Inc. Magazine Entrepreneur of the Year company, Box Inc., is being valued at today. According to an article in the Wall Street Journal, Box has said it recieved a fresh round of $125 million in investment, with $100 million of that money coming from a single private equity firm. Also according to the article, Box is expecting to close out 2013 with approximately $100 million in revenue, giving the company a 20x multiple. The numbers are certainly impressive, but is this a bubble or are we seeing a fundamental shift in how businesses of the future will operate, thus justifying the big dollar signs?
A recent article in Forbes stated the following: "Taking a cue from the Dot-com bubble’s playbook, investors have resorted to valuing today’s profitless tech companies on a price-to-sales ratio basis, yet even this metric shows that Twitter’s valuation is quite overvalued at 22 times its expected 2014 sales, which is approximately double the multiple carried by Facebook and LinkedIn (which have high multiples in their own right)."
We are about to kickoff a Forrester Wave on Application Security Testing. The focus of this Wave is on both static application security testing (SAST) as well as dynamic application security testing (DAST) offerings. This Wave will cover both tools and SaaS based delivery methods. What does this mean for you?
Vendors: If you feel that your solution applies to this Wave, please contact us and let us know that you'd like to be sent the prequalification survey. We will be limiting the number of vendors participating in this evaluation.
There are many ways to skin a cat. The same can be said of innovation. When I mention innovation in conversation, people generally think about a process of making a product bigger, faster, better, or stronger. However, product improvement is just one type of innovation. Innovation can target the process around creating a product, resulting in lower costs such as the "lean manufacturing" innovations from the automobile company Toyota. Innovation can target improvements in the design of marketing materials, creating a more emotionally appealing advertising campaign and resulting in higher revenue. Marketing innovation has been used by numerous firms over the years to reinvigorate their concepts and company. Samsung designed their Bordeaux television line after being inspired by a wine glass. They have been on the top of the television market ever since. Innovation can even mean cultural innovation in which the culture of the company changes and innovates to come in line with a newly updated corporate vision increasing employee loyalty, retention, and overall happiness. Innovation has many faces.
All of the fighting has resulted in multiple casualties. BlackBerry couldn't keep up the pace and was eventually chopped off at the knees. Microsoft has yet to gain enough developer volume to be a real threat and will eventually reinvent itself as a new company under new leadership. Third-party app stores are distributed and nimble but really amount to nothing more than splinter groups using guerrilla tactics against the major nation states. They just can't compete in the long term.
In the United States, Google Play and Apple iTunes have become the two superpowers in the mobile app war. With exceptional mobile application uptake, these two players have come to dominate the consumer mobile space. Phones don't sell phones. . .applications sell phones, and these two players have won.
Enterprises are struggling to understand the risk and privacy impacts of the mobile applications in use in their environment. As the consumerization of mobile continues to shove BYOD into the enterprise, the number of applications in use is growing exponentially. Organizations must get a better handle on just how much risk is accumulating from the proliferation of mobile apps on their user’s devices.
I'm currently researching a concept designed to help an enterprise know where they are on the mobile application security maturity curve. Understanding where one currently resides is the quickest method to determine the path required to improving your standing in the future.
Does your organization allow BYOD?
Do you inventory all of the mobile applications in use in your environment?
Do you execute security and privacy analysis on mobile applications in an organized fashion?
How do you define and enforce policies around mobile application security?
I’ve created a survey to determine current baseline enterprise mobile application maturity levels. If you are involved in the mobile management and security decisions of your enterprise now is your time to help. Please go to the survey link below and fill out the form. I will summarize some of the findings in a future blog post.