Open-Device Policies Create Opportunity for VARs

As mobile device manufacturers continue to look for additional revenue streams in the U.S. marketplace, more and more of them are turning to the enterprise channel as a prime target of opportunity.

In the past, this path has not been pursued by manufacturers, customers or the value added distributors (VAD) that work to bring these devices and solutions to market. That’s because mobile operators work to prevent “non-sanctioned” devices from being offered to their customers and activated on their networks.

The proliferation of the smartphone, however, as well as the ever-increasing power and flexibility offered by the various operating systems, has allowed the enterprise or small and medium business to consider “true mobility” by deploying their applications utilizing a handheld device. The major U.S. carriers also are shifting their thinking and now becoming increasingly eager to partner with these customers in their endeavors — to a point. The Tier 1 carriers are still limited to offering handsets that are in their portfolios and trying to make one of those devices work for a specific customer need. In many cases this is accomplished — easily or otherwise — and their particular health care or construction customer deploys their applications on a set of Research in Motion or Microsoft Corp. Windows devices.

However, as mobile applications continue to become more complex, and devices flood the market, the enterprise can and, in many cases, must look outside the carrier lineup for a solution to their particular needs. This is where the direct manufacturer to enterprise (with a distributor sometimes thrown in the mix) has increasingly come into play.

Tier 1 carriers neither can, nor want, to approve every device released by major OEMs and capable of running on their networks. In some cases, it is a matter of the device duplicating one they already offer; in others it may be the price — the cost of the device from the manufacturer and where it lies in relation to the other devices in the lineup. Enterprise-specific devices customarily are niche in nature and do not appeal to a wide spectrum of buyers. A high price tag contributes to this situation. Other times, it is due to exclusivity rights precluding adoption during a specific time frame. Whatever the cause, the effect is that there are multiple handsets from multiple manufacturers that are not available through the Tier 1 carriers.

Even when a device is available from a specific operator, it may not be what the enterprise needs. That’s because it comes pre-loaded with a number of applications that the enterprise does not want or, in some cases, conflicts with the smooth performance of the enterprise-specific application that is driving the device purchase in the first place.

The solution to this bottleneck is for the enterprise to source product outside of their normal carrier sales channels, so they can then customize — usually with the help of a distributor, VAR or independent retailer/dealer with a business-to-business focus — to meet their specific needs.

Companies in vertical industries such as health care, pharmaceutical and real estate are likely targets. An in-home nursing provider, for example, can be equipped with a device running a company-specific application that allows nurses to communicate with their company servers to retrieve and update patient information, care records, treatment options and other time-critical pieces of information. In other instances, the enterprise might be searching for a device, or series of devices that will run a consumer-grade application that it can resell, such as a VoIP client that it pre-loads on a device that is then sold into business or consumer channels.

Carriers are very protective of their data pipes and have a vested interest in controlling access to them and how they are used. Many of the new applications that are beginning to come to market use these pipes in new ways and the carriers still are searching for the “correct” way to monetize them while preserving control over their network traffic. Some enterprises are looking to use these applications in conjunction with the networks available to them in order to monetize in advance of the carrier

This new carrier-agnostic channel model is beneficial to the entire supply chain. The manufacturer has a new or additional outlet to ship product. The VAD and VAR are involved in the sourcing and customization side for product that they otherwise wouldn’t have sold. The enterprise is able to deploy (or sell) a product and solution that brings additional value and efficiencies to its business. Even the carrier benefits from the traffic on its network even though it didn’t directly sell the device. In addition, retention of a large enterprise customer can mean millions of dollars to a carrier, not only in monthly recurring dollars, but also in reduced acquisition costs, lowered churn and other derived benefits.

While these efforts are still in their infancy in the U.S. market, the efforts by the manufacturers and their VAD partners will only increase as additional, ultra-capable devices come to market and as carriers become increasingly cognizant of the bottom-line benefits of these arrangements and look to actively participate in making them happen rather than putting up roadblocks to their success. Many of the devices that are coming to market, in conjunction with the applications also now becoming available are allowing VARs/VADs and independent dealers to target market segments with new offerings that differentiate themselves from the standard carrier approach while still offering them the ability to generate their traditional subscription bounties that they have profited from. The initiatives being undertaken by carriers to approve “open” devices (i.e., devices that they will approve for use on their network but not bring into their standard portfolios) are designed to provide the confidence that the dealer can sell the device and be assured that they will still collect the subscription bounty.

Anurag Gupta is senior vice president of global strategy and business development for Brightpoint Inc., a global distributor of wireless devices that provides distribution, channel development, fulfillment, product customization, e-Business solutions, and other outsourced services.

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