Large wireless carriers like AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ) are in the midst of redefining their organizations in order to take advantage of the growing mobile enterprise opportunity. And in some cases, these carriers are outselling traditional enterprise outfits like Accenture and IBM--a notable outcome as more and more enterprise functions go mobile.
According to research firm Gartner, wireless carriers will account for 40 percent of the global sales of mobile device management software to businesses this year. That figure surpasses the 25 percent of sales that travel through the Mobile Device Management (MDM) vendors themselves and the 35 percent of sales that go through IT companies and resellers like IBM and Accenture.
Although the MDM market is still relatively small--Gartner estimates it will be worth around $500 million this year--mobile enterprise in general "is becoming a big business," said Gartner analyst Phillip Redman.
Redman said big wireless carriers like AT&T and Verizon have thousands of salespeople focused on the enterprise channel. He said around 95 percent of carrier sales to businesses involve the basics: phones and wireless service. But carriers see an opportunity to expand those sales to include a variety of high-margin software and services like MDM, mobile security and mobile enterprise apps.
Kathryn Weldon, a mobile enterprise analyst at Current Analysis, said she has been tracking the mobile enterprise space for eight years and during that entire time it has been hyped as a potential growth area. But now, with the rise of smartphones and the bring-your-own-device-to-work trend, the market is showing signs of real traction.
Carriers "don't want to just be a bit pipe," Weldon explained. "They see much more of an opportunity on the services side." She said wireless carriers entered the enterprise market with products like mobile device management, and are now moving into more advanced areas like application development, cloud services and, in some cases, virtualization.
"Each year they (the carriers) kind of progress on this curve," she said. "It's going to get bigger and bigger over time."
"Telcos' IT services capabilities are maturing," wrote Ovum analyst David Molony recently. "They are delivering more IT services to enterprise, and not just out of the cloud. Over the past five years, telcos have acquired local and regional IT assets and operations that support activities from data hosting to website optimization."
Not surprisingly, wireless carrier executives agree that they are well positioned.
"I think carriers are in a great spot to do that (mobile enterprise management) today," said M. Mobeen Khan, executive director of Advanced Mobility Solutions for AT&T Business Solutions. "We have the opportunity to help these customers mobilize."
Under Khan's direction, AT&T has worked to flesh out its enterprise chops. Khan said the carrier commands an enterprise sales force that targets specific verticals like automotive and fleet management, and can build customized services and applications through internal engineering and consulting teams like "application consultants" and "mobility services." Khan said AT&T generally resells enterprise-focused products (for example the carrier resells Good Technology's mobile device management product) but also has the ability to layer on its own customized offerings.
The results? McGladrey, the nation's fifth largest assurance, tax and accounting firm, in October announced it would deploy 6,500 iPads to workers that are powered by AT&T's enterprise services, including its MDM offering.
"The business is growing at a tremendous rate," Khan said.
Wireless carriers have obvious advantages when it comes to selling mobile services to businesses: Carriers generally have established connections to large corporations that buy wireless phones and services in bulk; and wireless carriers have experience with wireless applications and services.
However, as Gartner's Redman pointed out, wireless carrier salespeople sometimes have trouble making connections with the IT manager in charge of software and services. (Carriers traditionally deal with IT networking engineers.) Further, Redman said carriers sometimes have trouble clearly advertising the enterprise services they can provide. And he said IT outsourcers like IBM and Accenture have a much better grasp on global business needs, and can therefore more easily sell mobile products and services into multi-national corporations.
Current Analysis' Weldon added that wireless carriers could face integration challenges. She said major corporations typically run software installed by IT companies like IBM and Accenture, which means that a carrier would need to link into those legacy systems in order to mobilize them. Such a chore might be better handled by the company that installed the system in the first place.
Nonetheless, major wireless carriers like Verizon and AT&T obviously understand that businesses are hungry for mobility. And since carriers generally don't want to be relegated to the role of a bit pipe provider, I expect them to continue to grow their enterprise-focused software and service operations. +Mike Dano