Enterprise Smartphones Chasing the Unicorn
Posted: 11.17.04 - By Bob Egan

What’s Happening: A new crop of smartphones is hitting the market, including the Audiovox PPC 6601, the palmOne Treo 650 and the RIM BlackBerry 7100. Although several models are aimed at enterprise users, they’re a mixed bag in terms of features, network options and total cost of ownership (TCO). From an enterprise user perspective, the latest crop is more like gadgets out of Austin Powers than James Bond – except that no one is laughing.

Our Conclusions: Enterprises should brace themselves for the onslaught of mobile devices finding their way into the enterprise in 2005. Most will be unsuitable as enterprise tools – the Treo 650 and BlackBerry 7100 being the exceptions. Vendors continue to favor a Swiss Army knife approach to handset design, which so far has produced more ergonomic misses than hits.

Meanwhile, vendors continue to expand their 3G PC card modem offerings, with new models from Kyocera, Sierra Wireless and Sony Ericsson. This trend is likely more an artifact that reflects operator intent rather then handset manufacturer innovation design misstep.

Action: Enterprises that already equip employees with laptops should consider buying 3G PC card modems, which leverage the laptop investment. We believe this will demonstrate the lowest TCO and highest potential for ROI within the enterprise because employees who already have a phone for voice and a laptop don’t have to be issued new handsets, which would be an additional expense in terms of capital outlay and support costs.

CIOs and IT managers are well advised to consider whether handsets are the best devices for giving employees wireless access to enterprise resources. This recommendation doesn't obviate the requirement for enterprise IT to install an architecture and procurement policy the controls the purchase and network attachment of an array of phones and PDA’s with wireless connectivity to their networks.

Discussion: We believe from an operator viewpoint wireless modems are to data as phones are to voice - a plug & play device sale. This device, activation sale fits the traditional sales model of wireless operators and allows them to sidestep many of the complexities – and long sales cycles of rolling out a new, or extending an old enterprise solution through a phone or wireless PDA. Thus, we believe device manufacturers are responding with a variety of modems and diverting critical resources away from making smartphones smart, based on the requirements that are being set by the operators.

When it comes to smartphones, vendors continue to favor a Swiss Army knife approach to handset design, which so far has produced more ergonomic misses than hits. A prime example is the increasingly common use of flip-open QWERTY keyboards, which make handsets such as the Sierra Wireless Voq top-heavy and thus impractical for typing. Based on our discussions with CIOs and IT managers, enterprises believe that today’s handsets are good primarily for voice and have some potential for inbox management (e.g., deleting spam or simple email awareness) rather than reading or composing e-mail. Enterprise users tell us that with the exception of BlackBerry handsets and the Treo 600/650, all-in-one devices in general have too many ergonomic trade-offs.

We’re also disappointed that few handset vendors are responding to the wide availability of EDGE and growing CDMA2000 1xEV-DO coverage. Almost all new enterprise-focused devices support 1XRTT or GPRS rather than DO or EDGE. A prime example is the Audiovox PPC 6601, which has a processor capable of supporting DO, yet is limited to 1X.

Although some EDGE and DO handsets are available, they’re all consumer-focused because they include cameras, lack keyboards or both. (Examples are the Audiovox CDM-8940 and LG VX8000.) We see no evidence that this situation will change through 1H05, based on the recent product releases and what we see in vendors’ pipelines.


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