The inexorable pressure to launch a handset-as scheduled-for maximum impact-has created a growing market for mobile device management (MDM) products, including firmware over the air, or FOTA.
As network operators increasingly rush to introduce new revenue-generating services and applications, market growth from a modest field of mostly small MDM players will ramp up, according to MDM players and analysts.
The same statements might have been made a year ago, but growth now appears as much a no-brainer as MDM itself as the technology improves, handset software grows more complex and the business case for operators becomes clearer. Look no further than Apple Inc.’s need to fix iPhone bugs by having users cable their devices into a PC to achieve a similar end for the space’s raison d’etre.
‘Hockey stick’ projections
Today the adjective “nascent” still applies to this space, though recent studies forecast strong growth in the next five years. One vendor suggested that the proverbial “hockey stick” ramp is happening under our very noses this year.
According to IDC analyst Stephen Drake, last year’s global MDM market-including money spent by device OEMs and network operators-produced related revenue of about $77 million. At a projected compound annual growth rate of 34%, that market will see revenue of about $334 million by 2011.
That’s good news for the venture capitalists who’ve placed bets in the space by funding several of the prominent players, such as Red Bend Software and Innopath Software.
“Because most vendors in this space are small pure-plays, vendor maturity plays an important role in market development,” Drake said in a recent report. “Through acquisitions, product development and customer adoption, smaller entities (will) morph into larger, more viable players with a global customer base.”
Backup, restore and secure
The players are appealing to tier-one network operators and handset vendors in mature markets with next-generation application offerings, while basic services such as fixing bugs on-the-fly continue to find traction. Next-gen MDM offerings include, for example, backup-and-restore services, software management and security measures. The ability to update a handset’s functionality on-the-fly before the subscriber decides to purchase an upgrade device-when both handset brand loyalty is at risk and operator churn is possible-provides a powerful incentive for OEMs and operators to jump on the MDM bandwagon. Recent Ovum research found 28% of devices shipped in the first quarter were FOTA-enabled.
North American operators have been relatively slow to adopt MDM and FOTA services, Drake said, but that has created a likely, higher-than-industry-average 40% growth rate as adoption occurs. Other regions that will grow faster than the global average include Latin America, the EMEA region (Eastern Europe, the Middle East and Africa) and Asia/Pacific. The analyst credited growing support for standards in the segment as an engine of adoption.
One MDM/FOTA pure-play is Red Bend, based in Framingham, Mass. Red Bend focuses on a handset-based FOTA client and enjoyed a 43% sequential jump in FOTA shipments in the second quarter when 45 million phones in 19 different models were shipped with its client, vCurrent Mobile. Clients include Motorola Inc., Sony Ericsson Mobile Communications, LG Electronics Co. and a host of Japanese handset vendors. Grauballe said that his firm expects to ship its FOTA client on about 50 million handsets in the third quarter.
Red Bend has 70 employees and chugs along on $23 million in venture capital, all garnered by 2005, while maintaining offices in Japan, Korea, China, Israel, the United Kingdom and the United States.
Target: 80% of handsets
“We think we’ve hit the hockey-stick curve in terms of growth this year,” said Morten Grauballe, Red Bend’s vice president for marketing.
Grauballe said that 80% of all handsets, except for ultra-low cost phones, are a potential market for MDM and FOTA-like services. While the U.S. and Japanese carrier-dominated markets have embraced FOTA, Europe is still on the upswing, he said.
Grauballe said that technical improvements are fueling growth. For example, in the past, FOTA required as much as 20 minutes off-line, while today 2 to 10 minutes are required and the subscriber can use their phone while the update is in progress.
“This changes the paradigm for FOTA and addresses barriers to uptake,” Grauballe said.
In the 2008-2009 timeframe, FOTA updates will be delivered in more granular fashion, he said. Rather than completely resetting a handset’s firmware, operators will be able to offer a la carte updates that enable new services, such as an offer to provide YouTube.
Sunnyvale, Calif.-based Innopath Software offers both handset FOTA clients and the network side. With 175 employees and offices in Japan, Korea, China, Germany, Sweden and Brazil, Innopath is evolving from its CDMA roots in Asia to cover the GSM world as well, according to Dave Ginsburg, VP of marketing and product management. That means pursuing technical innovation internally and with partners, he said.
The evolution of single software platforms to address all MDM functions is blurring the line between consumer and enterprise applications in the space and that will grow the overall market as well, Ginsburg said.
