Issue #2003 - 07
DataMonitor's Commentary on European
Mobile Business Solutions
The market for European mobile business solutions is growing strongly, but most large vendors have flawed strategies.
DataMonitor's Nick Greenway examines how suppliers can make the most of the
European enterprises spent a total of $460 million on mobile business solutions in 2002 and that figure is expected to reach an estimated $2.9 billion by 2006. Even so, many vendors have yet to hit on the best way to harness that growth.
Not every sector of the market will enjoy the same level of investment. If they are to make headway, suppliers must focus first on opportunities in specific industry verticals or on product orientated business.
Mobile and wireless technologies can transform organizational efficiency and improve customer service, with the emerging mobile web-service technologies, mobile portals and information-aggregation middleware helping to link sub-sectors of particular vertical markets.
So, for example, the auto industry will be able to make a seamless whole out
of the previously disparate jobs of component supply, automotive assembly, forecourt sales, after-sales, service and repair and roadside-assistance.
A flawed approach
As the market expands, suppliers will be forced to decide whether they want to remain as specialists or transform themselves into solution providers or generic volume application suppliers.
Understandable protectionist fears mean that most large vendors are targeting existing sub-vertical segments in isolation, an approach that is fundamentally flawed. While it's no surprise that defensive strategies abound at a time when revenues remain hard to come by, they miss the point about the future of enterprise mobility.
Rather than wasting money trying to develop end-to-end offerings, a far greater focus must come on partnering with smaller, innovative mobile niche players. This will allow vendors to target the range of sub-sectors within a vertical.
Most existing mobile middleware vendors will survive, as such partnerships leverage their competence in the medium term, and the mass-market sustains them in the longer term as larger vendors pass over on the smaller deals.
Demand for front office applications will rise
Over the last decade, the largest slice of money spent on mobile
application solutions has gone to vertical application segment. But that is set to change. Despite the current rise in packaged vertical applications, front office applications are expected to reap the lion's share of European investment by 2006, rising from $145 million in 2002 to an estimated $970 million.
Enabling software set to grow
Makers of devices and enabling software currently lead the market, accounting for over 50% of total solution value between them. Behind them come vendors of hardware and components with 19% of the market, and systems integrators with 15%.
Indeed, vendors of enabling software will still account for around 25% of the mobile solutions market in 2006, even though the amount of money spent on other aspects of the market, most notably devices and management, will have dropped.
Healthcare sector to show the fastest growth
The industry's traditional big spenders - financial services, telecommunications, utilities and manufacturing industries - will continue to spend the most on mobile enterprise solutions in the years to 2006. But they will be joined by an additional force in the market, as investment by the healthcare sector outstrips all others, with a predicted 93% CAGR between 2001-2006.
The larger incumbent independent software vendors and systems houses such as Siebel and Oracle are only really bringing considered mobile propositions to market now - far later than start-up competitors. In the end though, they will win out, because they sell to those big spending verticals that account for the largest markets.
Source: DataMonitor and PMN in UK
For more information: http://www.DataMonitor.com
MobileInfo Comments and Advisory: DataMonitor's
analysis of the enterprise mobile market is quite interesting. We
agree that devices and enabling software may form the largest
percentage of investment in a solution. But let us take enterprise's
point of view. For them, this is a only one time capital cost.
Operational costs (network usage, software licenses, maintenance and
systems integration costs) are far more important. DataMonitor is
right in suggesting to the large network players that they should
focus on their core expertise and build relationships with solution
providers. Enterprises want business solutions. Network is only one
(even though, an important) of several components. We see systems
integrators playing the most important role.
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