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The Power Stuggle Between Carriers and Enterprises is an Incredible Opportunty

June 29, 2008

It is evident there is a gap between what enterprises would like to see and how carriers are serving business customers. Customer’s perception is that “Carriers do not understand Enterprise Mobility and are slowing adoption as a consequence” (actual quote from from a F500 customer).  Carriers want to protect their business and control the customer experience, especially in the U.S.

I don’t mean to be critical of carriers: every unmet customer opportunity is a business opporutnity. After all , the rule for a successful business is simple: give people what they want, make money, repeat. How is this an opporutnity: the carrier that is willing to listen to the market and adapt to the new world of enterprise mobility will have a significant competitive advantage. This change will require a change in perceptions, a strong determination for an unbiased understanding for enterprise customer needs and a bold business plan.

During the last few years, I have had the opportunity to work directly with many enterprise customers through executive brefings, executive summits, mobility workshops and many 1:1 interactions. Here is a summary of what I have heard:

Enterprises need CONTROL over Devices

          To embark in large deployments, enterprises require more control over the devices they use. Customers would like to see carriers embracing the new world of enterprise mobility versus being over-protective. They need different strategies for retail versus enterprise. Three specific examples:

1.       Carriers are subtracting value by locking-out features that exist in many devices (i.e. GPS, WiFi, Windows Live Hotmail, VoIP).  Large companies do not care what are the carrier’s consumer strategy for up-selling apps like TeleNav.

 2.       Installed software should be kept to a minimum  (operator-specific/custom email (i.e. Xpressmail, VZEmail), home screen elements, TeleNav, demo games, etc.). 

·         A company deploying the same phone model across 30 countries does not want to deal with 30 different versions of the software for that single phone model.

·         In the PC world, this is why DELL launched the Vostro line of PCs without all the pre-installed utilities.

·         Different version of office, explorer and other components (i.e. remote desktop) makes deployment, application compatibility, support and planned upgrades very complex. Companies that want to standardize on a platform must track what software pieces are included in each phone model – and these sometimes change with a new software update!

·         Quote from a company deploying thousands of phones re: a new and very cool phone “We will not look at it because it does not have Office Mobile, which is our coporate standard

3.       Customers would like to increase their ability to upgrade and downgrade the OS on a phone just like they do with PCs today. This represents large technical, legal and business challenges, here are a few ideas on how to get there:

·         Allowing customer to downgrade or upgrade from a software licensing perspective.

·         Providing tools for companies to do mass upgrades and updates – i.e. Volume licensing, corporate licensing agreements, enterprise deployment tools. In a large deployment, organizations cannot ask individual users to download software, accept license the agreement, install the software and maintain it thorugh upgrades.

4.       Carriers should retain control of Core OS telephony functions and release control of applications, configuration and other software on the device.

·         An example of how this works well is with 3G laptop modems – carrier only controls connectivity software with no influence over the OS or the apps that run on the laptop. the risk for malware and high data consumption is much larger on PCs with 3G cards than on PDAs and smartphones, yet the same carriers want to control everything on a smartphone.

5.       Companies prefer custom ROMs that include their software, configuration and preferences. A custom ROM has the advantage of simplifying setup, lower data costs, and more importantly, surviving a hard reset.

·         Large companies are used to buying from companies like Dell, Toshiba, HP and others who provide custom SKUs that  ship pre-loaded with a custom image specific to the customer. i.e. Dell has a number of Microsoft-specific SKUS that any MS employee can order.

·         HP is taking a big step here promoting custom ROMs for customers ordering as little as 200 units for devices like the iPAQ 910. Bravo.

6.       Enterprises need to have the confidence in the ability to apply upgrades or security patches as needed without having to rely on carrier schedules. Perfect example is the DST patch. Imagine coordinating a worldwide upgrade strategy that is carrier dependent.

Partnering through the Device Lifecycle

7.       Fortune 500 companies should participate in a beta during the Technical Acceptance process to test real-world applications and provide feedback that will result in improved quality and more confidence in deploying devices. They understand it is an unfinished product and will not form an opinion or hold the carrier liable based on a beta product. These companies start working with the core software that is mission critical for them (Windows Server, SQL, etc.) 18 months ahead of commercial release.

8.       Companies with large deployments want to have an opportunity to test a phone before it is commercially available. Worst case scenario is when an employee buys a phone at retail, expecting IT to support it, when the IT department has not heard about or has not had an opportunity to test.

9.       Managing accessories is becoming a nightmare. Carriers need to work with OEMs to set standards for power adapters, audio interfaces, etc. The PC world has matured and there are standards for keyboard/mouse interfaces, ISA slots for add-on cards, USB as a standard for connecting to peripherals. This simplifies dramatically the management of accessories, spare parts and support.

10.   Customers want more visibility into lifecycle of a phone:  Understanding what are the future upgrades that will become available and a 2 year commitment to provide OS upgrades for devices, maybe for a subset of a carrier’s portfolio.

12.   Always paying for subsidies – enterprises prefer a straight device cost with no subsidy. Obviously, a percentage of the monthly wireless cost goes to cover subsidy, yet after the 2 year commitment, the price does not go down and a customer continues paying for a subsidy that they are no longer benefiting from.

International

1.       International roaming is a requirement for global deployments.  AT&T’s 40Mb international data plan is a great step in the right direction and a big competitive advantage for any international company.  Sprint offers free roaming in Canada in Mexico, which again is an advantage for companies who operate in north America. Unfortunately, Sprint does not promote this very vocally.  There is no predictability of what the data cost will be when an employee travels overseas.

2.       Ideally would like a single global wireless contract. This is Nirvana and years away.  Yet companies like Vodafone/Verizon have a chance at making it happen.

ironically, the launch if the iPhone, with AT&T surrendering much of its control to Apple, might be the catalyst the industry needs to start evolcing into a more enterprise-friendly model. Verizon’s open initiative could be interesting but there are still many unkowns, and unfortunately CDMA devices are not very open by definition.

The carriers in the US have really smart people who are trying to do what is best for their customers (and shareholders). I know most of them are listening to the market and I am sure they are thinking about these problems today. Let’s see who is the first mover…

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