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.