Why have so many mobile enterprise companies made financial
announcements within the last few weeks? In the mobile device management (MDM)
space, Good Technology has filed an S1 to go public and MobileIron successfully
executed an IPO. In the File Sync and Share (FSS) space, Dropbox announced a
$500M line of credit after having raised $325M in funding only months earlier,
and Box just announced another $100M investment.
Why these companies … and why now?
In Search of the 'Second Tier of Value'
The answer has to do with the state of the market.
Enterprises have put millions of powerful computing handsets and tablets into
the hands of mobile workers, yet all these workers can do is email and use
calendaring and contacts apps. In order to realize the anytime, anywhere vision
of the mobile enterprise, companies need to extract true business value out of
their mobile investments — what Gartner calls the “second tier of value.”
Letting employees share documents with colleagues is the obvious next step;
doing so securely is a critical business requirement.
This explains why so many companies are vying to be leaders
in file sync and share and in mobile device management. Each one wants to be
the player that organizations turn to, to extract business value from their
mobile devices. And because the stakes are so large, the market has attracted
many such players. Forrester estimates between 30 to 40 active players in the
FSS space and the 2013 Gartner Magic Quadrant for MDM report listed 17
companies in the MDM market. With all of these players vying for market leadership,
MDM and FSS have become primary battlefields in today’s enterprise mobile
marketplace.
With so many companies competing for the finite number of
enterprise dollars, the competition is fierce. Fierce competition calls for
high-stake strategies, which is causing vendors to make several moves. First,
some are adding features to differentiate themselves and to offer a larger
piece of the mobile enterprise solution. Second, some are buying companies to
gain market share, extend their solution and reduce the number of competitors.
Third, some vendors are buying market share by offering below market prices to
get a foothold in the enterprise. Most vendors are employing a combination of
these choices.
Regardless of the strategy each vendor pursues, they all require
cash — and lots of it. And so we have the sudden spate of investments and IPO
announcements.
Who Will Be the Last Man Standing?
The survivors of this market showdown will not only needs
lots of cash, they will need a solid market and partner strategy to pull
through. The recent (re)entry of Microsoft and of Google to the FSS fight with
their expanded file storage offerings of OneDrive and Google Drive is certainly
driving up the stakes. Dropbox, Box and others who have secured many millions
of users on the proposition of free (or almost free) file storage clearly need
to broaden their product line to compete, particularly with Microsoft’s strong
enterprise offerings.
On the MDM front, AirWatch, Fiberlink, Bitzer and BoxTone
have been acquired, clearing the way for the likes of IBM, Good Technology,
Citrix and MobileIron to duke it out for market leadership. These remaining MDM
players are also broadening their basic offerings by building partner
ecosystems and augmenting security with support for critical productivity
applications, like file access and document editing.
Whoever wins, two things are clear: One, it’s going to take
more than cash to win. And two, the battle will last a lot longer than the
original showdown at the OK Corral (which supposedly lasted only 30 seconds).
One thing is sure: When the dust settles in the FSS and MDM market shakeout,
there will only be a few winners left standing.
