Jon3G
18th April 2005, 04:11 PM
By Wireless Watch
Published Monday 18th April 2005 14:37 GMT
Wireless email has always been the first application to be adopted by a company seeking to become a mobile enterprise, and the litmus test for all the other mobilized applications that can then be built on top of the basic architecture. This means that the market for mobile email infrastructure suppliers is not just large, with email becoming a default application in high end handsets and PDAs, but one that can give successful players a strategic importance beyond their size or sophistication. To capitalize on that, suppliers need to form strong alliances and be global in scope, hence the announcement this week that one of the most promising contenders for Research In Motion's wireless email crown, US-based Seven, is to acquire Finnish rival Smartner.
Seven and Smartner
All RIM's challengers are small. The combination of Seven and Smartner, both privately held, is estimated to be valued at about $250m, compared to RIM's $14bn market capitalization. But there are several players that are taking the right approach to stealing some share away from the leader, focusing on chinks in its armor, and so making themselves more attractive in the inevitable upcoming shake-out. With Microsoft itself set to enter the space, the best-placed independents could acquire a strategic significance to the larger players seeking to compete with the giant, but the others are likely to fall by the wayside.
Seven has made some shrewd decisions about how to enhance its own standing, notably by focusing on Asia and Europe, where RIM is not well established, and with some good handset relationships. The new acquisition brings it the European presence and relationships with Nokia, Ericsson, Vodafone, Telefonica and O2. Seven itself already has deals with Motorola, Samsung, Cingular and Sprint, and importantly, with NTT DoCoMo in Japan, a market RIM has hardly penetrated.
Unlike the heavily branded BlackBerry, Seven's offering is a 'white label' one embedded by the operators and handset makers into their own platforms, and is lower end than RIM's software, mainly appealing to smaller companies and power consumers.
This focus could make it stronger in a market where it has to live alongside Microsoft. The more email becomes embedded into phones - Gartner Group, in new estimates, believes it will be in 80 per cent of smartphones by 2008, a forecast that seems conservative - the more valuable a white label solution will be to the operators. Here, Microsoft will not be able to compete except on Windows handsets, which have very low penetration in the smaller business/consumer sectors.
RIM's challenges
Supporters of alternative platforms to Windows will use strong email functionality as a way to keep their operating systems ahead. This is hard in the enterprise because of the strength of the Microsoft Exchange installed base and the fact that users are accustomed to the Windows interface through use of PDAs - not to mention Microsoft's ability to bundle email at attractive prices. Nokia has already had to license synchronization software to allow its operating systems to link to Exchange, and Microsoft's forthcoming upgrade to Windows Mobile will incorporate push email functionality similar to that in BlackBerry, in a direct attack on RIM and its licensees, most significantly Nokia.
In the mass market, however, the power of Exchange and Windows are less relevant and the user sensitivity to the cellphone interface is far higher - significant changes must be made to an interface that was created for a PC, not a phone, to give Windows Mobile any hope of gaining consumer uptake.
This could see RIM being squeezed between the consumer offerings and Microsoft, with its supporters certainly being forced to reduce its high prices to remain competitive once enterprises start their next round of mobile infrastructure upgrades. RIM's other problem is that it has so far failed to capitalize on the tendency of companies to build more complex applications on top of their email structures. Microsoft will not miss the potential to pull the trick that Lotus did so well, of encouraging users to build a complex web of applications and services on top of an initially basic email roll-out.
The market leader will feel the heat of Microsoft's entry, at least in the short term, far more strongly than Seven-Smartner - though perhaps less strongly than smaller enterprise players such as Good, which now claims a user base of 5,000 large enterprises. Good is pre-empting the likely threat with an expansion of its platform, planning to make its software available for Symbian OS smartphones soon, in addition to PalmOS and Windows Mobile. Like RIM, Good has moved away from designing devices that are tied to its email system and realized that survival will depend on support from larger device and operating system partners.
Microsoft's dilemma
This is a decision Microsoft still faces. Porting its mobile middleware and the Magneto email functionality to non-Windows platforms would be a huge symbolic setback - though not a huge financial one, since most of the value to the giant lies in the middleware, in terms of revenue, control of the user and the chance to add further products and services over time. But it is the only way that Microsoft can hope to bid for dominance of the new mobile markets. Windows will never be a universal device OS in these sectors, but Microsoft can still have a good shot at some serious market share in the middleware and services that feed the devices - in the enterprise and even in the less familiar carrier market.
Magneto delivered, directly or as a hosted service by operators, on multiple handhelds could accelerate the mobile email trend and place it firmly in the hands of Microsoft, especially given that the high prices charged by carriers for BlackBerry are seen as one of the key factors slowing the progress of email roll-out now. This and the limited additional functionality of BlackBerry will make it, over time, less attractive to corporates and their service providers and Microsoft will be busily positioning itself to take over. Without a port to multiple platforms, however, the market will remain fragmented and the likes of Seven- Smartner could achieve high levels of success.
Copyright © 2005, Wireless Watch
Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.
Published Monday 18th April 2005 14:37 GMT
Wireless email has always been the first application to be adopted by a company seeking to become a mobile enterprise, and the litmus test for all the other mobilized applications that can then be built on top of the basic architecture. This means that the market for mobile email infrastructure suppliers is not just large, with email becoming a default application in high end handsets and PDAs, but one that can give successful players a strategic importance beyond their size or sophistication. To capitalize on that, suppliers need to form strong alliances and be global in scope, hence the announcement this week that one of the most promising contenders for Research In Motion's wireless email crown, US-based Seven, is to acquire Finnish rival Smartner.
Seven and Smartner
All RIM's challengers are small. The combination of Seven and Smartner, both privately held, is estimated to be valued at about $250m, compared to RIM's $14bn market capitalization. But there are several players that are taking the right approach to stealing some share away from the leader, focusing on chinks in its armor, and so making themselves more attractive in the inevitable upcoming shake-out. With Microsoft itself set to enter the space, the best-placed independents could acquire a strategic significance to the larger players seeking to compete with the giant, but the others are likely to fall by the wayside.
Seven has made some shrewd decisions about how to enhance its own standing, notably by focusing on Asia and Europe, where RIM is not well established, and with some good handset relationships. The new acquisition brings it the European presence and relationships with Nokia, Ericsson, Vodafone, Telefonica and O2. Seven itself already has deals with Motorola, Samsung, Cingular and Sprint, and importantly, with NTT DoCoMo in Japan, a market RIM has hardly penetrated.
Unlike the heavily branded BlackBerry, Seven's offering is a 'white label' one embedded by the operators and handset makers into their own platforms, and is lower end than RIM's software, mainly appealing to smaller companies and power consumers.
This focus could make it stronger in a market where it has to live alongside Microsoft. The more email becomes embedded into phones - Gartner Group, in new estimates, believes it will be in 80 per cent of smartphones by 2008, a forecast that seems conservative - the more valuable a white label solution will be to the operators. Here, Microsoft will not be able to compete except on Windows handsets, which have very low penetration in the smaller business/consumer sectors.
RIM's challenges
Supporters of alternative platforms to Windows will use strong email functionality as a way to keep their operating systems ahead. This is hard in the enterprise because of the strength of the Microsoft Exchange installed base and the fact that users are accustomed to the Windows interface through use of PDAs - not to mention Microsoft's ability to bundle email at attractive prices. Nokia has already had to license synchronization software to allow its operating systems to link to Exchange, and Microsoft's forthcoming upgrade to Windows Mobile will incorporate push email functionality similar to that in BlackBerry, in a direct attack on RIM and its licensees, most significantly Nokia.
In the mass market, however, the power of Exchange and Windows are less relevant and the user sensitivity to the cellphone interface is far higher - significant changes must be made to an interface that was created for a PC, not a phone, to give Windows Mobile any hope of gaining consumer uptake.
This could see RIM being squeezed between the consumer offerings and Microsoft, with its supporters certainly being forced to reduce its high prices to remain competitive once enterprises start their next round of mobile infrastructure upgrades. RIM's other problem is that it has so far failed to capitalize on the tendency of companies to build more complex applications on top of their email structures. Microsoft will not miss the potential to pull the trick that Lotus did so well, of encouraging users to build a complex web of applications and services on top of an initially basic email roll-out.
The market leader will feel the heat of Microsoft's entry, at least in the short term, far more strongly than Seven-Smartner - though perhaps less strongly than smaller enterprise players such as Good, which now claims a user base of 5,000 large enterprises. Good is pre-empting the likely threat with an expansion of its platform, planning to make its software available for Symbian OS smartphones soon, in addition to PalmOS and Windows Mobile. Like RIM, Good has moved away from designing devices that are tied to its email system and realized that survival will depend on support from larger device and operating system partners.
Microsoft's dilemma
This is a decision Microsoft still faces. Porting its mobile middleware and the Magneto email functionality to non-Windows platforms would be a huge symbolic setback - though not a huge financial one, since most of the value to the giant lies in the middleware, in terms of revenue, control of the user and the chance to add further products and services over time. But it is the only way that Microsoft can hope to bid for dominance of the new mobile markets. Windows will never be a universal device OS in these sectors, but Microsoft can still have a good shot at some serious market share in the middleware and services that feed the devices - in the enterprise and even in the less familiar carrier market.
Magneto delivered, directly or as a hosted service by operators, on multiple handhelds could accelerate the mobile email trend and place it firmly in the hands of Microsoft, especially given that the high prices charged by carriers for BlackBerry are seen as one of the key factors slowing the progress of email roll-out now. This and the limited additional functionality of BlackBerry will make it, over time, less attractive to corporates and their service providers and Microsoft will be busily positioning itself to take over. Without a port to multiple platforms, however, the market will remain fragmented and the likes of Seven- Smartner could achieve high levels of success.
Copyright © 2005, Wireless Watch
Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.