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Mobile device management has big profit margin for wireless carriers

If wireless carriers aren't already offering some form of mobile device management, they likely soon will be -- adding services like inventory, expense and security management -- as the market for wireless business services barrels toward the global arena.

If wireless carriers aren't already offering some form of mobile device management, they likely soon will be --...

adding services like inventory, expense and security management -- as the market for wireless business services barrels toward the global arena.

You could see professional services for enterprises being worth multiple hundreds of millions of dollars.

Tom Nolle
President, CIMI Corp.

"Every carrier in the world is headed in that direction," said Kathryn Weldon, a principal analyst at Current Analysis Inc. "They can provide a real outsourcing solution or they can provide more of a managed services solution. All the carriers are kind of in different phases of [deploying their strategies]."

Demand for mobility management has followed the rising tide of complexity in devices and the breadth of their use, leaving even enterprises with ample IT departments with more than they can or want to manage.

"Businesses are finding that their reliance on technology is exceeding their ability to support the technology they rely on. As a result of that, there's both an opportunity to provide services and an incentive to provide them," said Tom Nolle, president of CIMI Corp. "You could see professional services for enterprises being worth multiple hundreds of millions of dollars. It's not at all an insignificant amount of money."

The market for mobile device management has been heating up for the past two years, and Verizon is the latest to come out swinging. The Tier 1 telecommunications giant is the first to offer a worldwide mobile device management service, Verizon Managed Mobility Solutions. The service targets global enterprises and launches in the U.S. and 19 European countries on Sept. 30.

The service suite offers support in inventory and expense management, logistics, mobile device management, mobile security and application management. Enterprises can choose a la carte which services to subscribe to. Verizon officials estimated the average subscription would cost $4 per device. 

The only service not immediately available will be application management, which is set to be offered in 2010.

Verizon's service suite is built on partnerships with three mobility vendors. Quickcomm and Sybase provide software to manage many of the services offered. Vodafone, a joint partner of Verizon Wireless, will provide logistical support and fulfill device orders for areas outside the U.S.

"As the market matures, you get more and more companies that want the benefit but don't want to actually have to do the nitty-gritty implementation. They want to buy the car and drive it," said Rob Veitch, senior director of business development at Sybase, based in Dublin, Calif. "Companies can do all this stuff themselves. Verizon's making it easy."

But it's not just the revenue that is drawing carriers into the market, Nolle said.

"A big service provider like Verizon could contribute as much gross profit from professional services as they do from the totality of their business communications data and voice services," he said. "The profit return on something like this is very high."

Wireless business services not just for enterprises or top carriers

Although Verizon may have been the first to deploy a global mobility management service, other major carriers, such as AT&T, have launched similar programs domestically. Sprint does not offer services directly, but instead through manufacturers and third-party software developers the company has chosen not to disclose, a company spokeswoman said.

Meanwhile, regional carriers might find selling mobility management services tricky, but not impossible.

"As a rule, it's hard to make a professional services business work in a city with a population of less than about 500,000," said Nolle, a wireless analyst. "The difficulty you're going to have in a place like Iowa is the scope of the market opportunity for you is not large enough that you can sustain this manpower requirement any better than your customers could."

Rather than looking at enterprises headquartered in their metropolitan area, regional wireless operators should instead look to service vertical markets, he said. A regional carrier serving Des Moines, Iowa, may not have many corporate headquarters to sell to, but in the state capital, could likely win state and government contracts, Nolle said.

"It's not a niche opportunity, but it's an opportunity that like nearly all opportunities does have finite limitations," Nolle said. "The notion here is to get your support organization up to enough size that you achieve what I'll call 'support economy of scale.'"

Given the time, labor and costs that businesses associate with mobility management – and the dangers of not doing it -- the market is anyone's for the taking, Weldon said. For now, Tier 1 mobile operators will probably target enterprises for the lucrative sales deals, she said.

"Managed services is always talked about as a midmarket play and an SMB [small to medium-sized business] play because enterprises have these IT departments in-house," she said. "I think this is a little different because wireless technology is still so fragmented. Even large enterprises have a headache with this."

Let us know what you think about the story; email: Jessica Scarpati, News Writer

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