Today we spoke with a top sales executive from a major wireless carrier, as well as several sources close to the smartphone enterprise market.
The conversations support our thesis that:
1) Smartphones will continue to gain share of the enterprise market (duh).
2) Apple’s iPhone will continue to gain share of the enterprise smartphone market (largely a non-consensus view at this stage).
SMARTPHONES WILL CONTINUE TO GAIN SHARE OF CORPORATE PHONES
Our channel checks suggest that smartphones are continuing to gain share in the corporate market.
Applications are driving some enterprise adoption. The wireless sales exec we spoke with estimated that about 10% of all enterprise clients that move to smartphones are driven by an application that helps their business (more than we would have thought). For example:
- MVS (mobile voice service) is causing firms with significant international business to move to smartphones. MVS enables users to make and receive calls from smartphones as if they were on their corporate wireline. This is important because wireless international calling fees can be much more expensive than corporate wireline plans. Lower calling fees associated with MVS are a big selling point in getting enterprise clients to switch to smartphones. Set-up fees have recently increased materially, causing mostly large firms with the bulk of their business overseas to move to this en masse. You can view a demo on MVS here.
- Applications were a big reason Major League Soccer (MLS) moved to smartphones. In the past, referees for MLS had to fill out paper forms that were then mailed to the league office and filed away in drawers. In order to win the business, AT&T created an application for the league where the referees input game information into a mobile app that then electronically delivers it to the league. The app is available on both the iPhone and Blackberry.
Right now, there are a limited number of businesses that can see real value in a mobile app. But as more applications like the ones described above are made, especially those that save money, this should help drive increased smartphone share in the enterprise market.
iPHONES GAINING SHARE DUE TO LOWER COST, WEB SURFING, AND INTERNATIONAL ACCESS
Our sources say three primary drivers are causing Blackberry enterprise clients to switch to the iPhone:
- Cost: For a company with about 1,000 employees it can cost tens of thousands of dollars to manage and maintain the Blackberry service annually. This is because experienced, sophisticated IT people are needed to manage and maintain the Blackberry enterprise servers and updates or this function is outsourced to a third-party vendor. iPhones, on the other hand, are less resource-intensive, and Apple’s active sync can handle most of of the service remotely through Apple. “Tens of thousands of dollars” may not seem like much to a big company, but even the biggest companies are cutting any costs they can these days. The wireless sales exec says one client switched all 400 employees from Blackberry to iPhone for this reason.
- International Access: A major Japanese client with offices in America moved from the Blackberry to the iPhone because iPhones work seamlessly in Japan and Korea as well as the United States. Only the Blackberry Bold offers seamless integration when travelling in those countries. We’re told all new Blackberry releases will have the necessary number of bands to enable seamless integration with Japan and Korea so this will become less of an issue over time.
- Web Surfing: Internet surfing is less of a differentiator at this stage but more clients have been discussing it in recent months, which indicates this is a growing preference. We believe Apple marketing for the iPhone and the general buzz around the product from a consumer perspective has largely driven demand for this at the enterprise level from the bottom up (i.e. employees asking for them from their IT departments).
Still, while interest in the iPhone at the enterprise level has been building our sources say this is proving to be a very gradual process with moves only happening in the past six months.
Less than 10% of the wireless sales exec’s clients have moved to the iPhone from the Blackberry in the past six months. This is a jump from “practically zero” a year ago, but still indicates this increase is in the early stages and will take time to materialise to a meaningful level.
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