The AMI-Partners Blog

After the first four months of 2013, it seems obvious that the US economy continues to at least inch upwards, despite the uncertain path to full recovery. Albeit to a modest extent, consumers are buying and companies are hiring. This positivity is reflected in the equities markets, but not all sectors are created equal.

If we take a look at the S&P 500 sector performance over the last 12 months, the sell-off in technology stock appetite is apparent and tells a tale that is worrisome for many players in the tech industry.

Large cap technology firms have seen their market caps falter in the year ending March 31, 2013, with the Info Tech sector price return at -2.66%, compared to the S&P 500’s 11.41% aggregate performance over the same period. This means giants and pioneers like Apple, Microsoft, and IBM, which together account for 41% of the tech sector weighting, are not reflecting investor hopes.

Abundant Opportunity

Technology is one of the most rapidly changing industries today, and has been for some time now. In a shifting economic climate, technology companies are faced with the pressure to innovate their solutions while they adjust their business strategies to deal with external pressures.

The technology landscape has many shifting macro trends that collectively make it difficult for tech giants to plan and strategize. The rate of change is best matched with an agility that many large firms simply cannot afford to employ. But with so many moving parts, there remains a tremendous opportunity for IT vendors to grab mindshare.

The small & medium business end-user opportunity is particularly interesting. IT has moved from a back-office necessity to a front-office strategy for many SMBs, and this is reflected in the rate of technology adoption among even the smallest firms. A large proportion of SMBs surveyed by AMI-Partners noted that they are looking to strategically leverage technology to improve their businesses. Some of the key priorities or planned actions cited by SMBs include:

-          Improving customer experience & retention

-          Reducing overall expenditures

-          Expanding into new markets & opportunities

-          Launching new products & services

In many cases, SMBs don’t understand how technology can help with these types of business priorities. Successful vendors are already starting to have discussions with SMBs around their business pain points, rather than simply focusing on IT needs. It is also important for tech vendors to align and enable their sales channels to better serve the SMB space. With the emergence of cloud and mobile technology demand, AMI-Partners has noted a significant shift in the channel partner ecosystem for reaching SMB customers.

Vendor strategy teams should embrace the changing technology sector as a sign of opportunity and profitability. As the popular idiom goes, it’s not about what happens, but how you react to it that matters.

-Monik Sheth, Research Analyst

In December 2012, AMI-Partners in Singapore launched a survey to interview 300 IT decision makers about their views on Windows 8.  These companies are from various industries and of different sizes (SMEs [small and medium enterprises] and enterprise are both included)

The survey was carried out just one month after Microsoft officially launched Windows 8, but the awareness level was already very high: 60% of the total businesses in Singapore were aware of Windows 8. 91% of the enterprises and 54% of SMEs  had heard of Windows 8. Among these companies,  almost 40% of enterprise businesses have tried Windows 8 and 22% of SMEs have done so.

Many businesses are holding a wait-and-see attitude towards adopting Windows 8 in their traditional PC environment (desktops, notebooks, etc.).  Compared with SMEs, enterprises are more concerned with Windows 8 “stability” and “performance” issues. The additional training required for users also adds another barrier to the adoption of Windows 8. Thus, although SMEs’ awareness level of Windows 8 was lower, through an effective channel management, SMEs is a very promising group of early adopters of the operating system.

The impact of Windows 8 is definitely more than just a new PC operating system. It is actually a driving force for business mobility and the adoption of new PC form factors.  In Singapore, as of 2012, only about 5% of the PC businesses own tablets[1]. Due to the iOS security features and popularity in the consumer segment it is the dominate platform.  Now with Windows 8 entering the market,  IT managers are given one more option.  In the business environment, Windows 8 is proven to be a much more powerful platform than iOS. Windows 8’s own cloud features and seamless collaboration with Microsoft Office enable employees to carry out heavy-editing work on their tablets (mostly with a docking station) just as easily as on their desktops/notebooks.  Many PC original equipment manufacturers (OEM) are trying to boost their PC sales by launching tablet convertibles, e.g  Dell XPS 12 and HP Envy x2. Companies that are phasing out desktops or upgrade notebooks are already considering convertible tablets.

Windows 8 is a promising solution that might integrate the PC platform with the mobile platform one day – an ideal world for all the IT managers. It requires a lot of collaborative effort from mobile/PC application developers, OEMs, and Microsoft to make it happen.

-Peifei Zhang, APAC Analyst

About two weeks ago, I happen to get tickets to the exclusive launch event for Samsung’s Experience Shop™ in New York City. As I was getting the tickets, there were people giving away all kinds of Samsung gear and making the event very interactive. It was interactive in that we watched demonstrations of key features of various products from the Samsung experts and then showed them how the feature works through playing with the device. Once the interaction is completed each person would get tokens that could be redeemed for a number of prizes at the event–even a Galaxy S4!

The event definitely provided a one-of-a-kind experience. Samsung had nicely laid out all their products at the venue (Cunard Hall) in New York for the launch party. The setup is much like how their “experience shops” will be at Best Buy locations across the US, which just launched Saturday, April 27^th. The whole pop-up like shop within Best Buy stores offers an opportunity for people to touch and feel a widespread of Samsung products as well as having a dedicated Samsung expert to ask questions. Additionally, there would be Samsung Smart Service™ and support offered at the shops as well, where customers can have on-site activation as well as any device technical support.

AMI recently conducted a mobility study that showed an increasing trend of BYOD (Bring-Your-Own-Device). The study showed that nearly 60% of SMBs worldwide deploy bring their own tablet devices as well as 69% of the SMBs have their employees bring their own smartphones. Many consumers bring their own devices and use them for work as well. With 7.2 billion SMBs worldwide, this would be a sizable opportunity for vendors to target and capture. The rising trend of BYOD among SMBs also grows the number of customers who take their own personal smartphones and/or tablets to use for work as well. Even though the new kind of “experience shops” from Samsung seem to be geared more towards consumers, I think it’s a great way to capture the ones who are  taking their personal devices and using them for work as well. Overall, it seems that Samsung is building a strong brand identity and marketing to the target audience they are trying to capture with a fun and unique interaction with their products to provide customers with a full experience. They are definitely a vendor to watch!

-Kimberly Chau, Marketing Associate

AMI has written several blogs that talk about the cloud opportunity in North America and other mature markets, but we have yet to write a blog showing the growing opportunity in emerging markets.  Our recent ICT tracking study helped define the cloud opportunity on a global basis, detailing information and communication technology (ICT) needs at the country level, including China, India, Russia, Brazil, and Mexico.

The data suggests that these emerging markets are increasingly looking to the cloud to fulfill their information ICT needs, especially among small businesses with 1 to 99 employees (SBs).  These SBs have seen rapid expansion in high-speed internet penetration and overall internet connectivity speed (graphs showing the weighted average of these countries below).

As high-speed penetration and overall speed approaches the levels seen in mature countries, SBs are more enabled to enact cloud solutions.  Overall, 20-30% of emerging SBs indicated that they were likely to migrate more of their ICT spending to cloud solutions compared to on-premise ICT products and services.

Most of this planned spending appears to be allocated towards Software-as-a-Service (SaaS) products such as hosted accounting/financials, business intelligence/analytics (BI), and/or customer relationship management (CRM).  Approximately 10-15% of SBs in India, Brazil, and Mexico are planning to use business intelligence/analytics over the next 12 months, with similar numbers planning to use BI and CRM in China and Brazil.  Hosted collaboration solutions are also expected to grow, with almost one in five of emerging SBs looking to add hosted document collaboration and online storage, hosted A/V/W conferencing, and/or hosted VoIP.

While there will be several firms adding solutions ad hoc, capturing SBs with a bundled solution will be the key to success in  emerging markets.  Almost half of most emerging SBs (with slightly less in China and more in LATAM) were interested in a suite of online business services that included hosted business e-mail, calendar functionality, online meeting, desktop sharing & collaboration tools, IM & PC to PC calling, an online productivity suite, and bundled support and service.  A similar number indicated that they would be likely to purchase hardware that was bundled/pre-configured with access to such an online business services product.

Understanding differences in buying behavior and properly navigating the channels will be vital for vendors looking capture market share as emerging SBs continue to shift to the cloud.  As always, AMIs targeted research on the topics will continue to provide go-to-market strategies to effectively sell to SMBs.

-Clayton Miller, Associate

Convenience or Chaos?  Is there a game plan in the near future?

Bring Your Own Device or BYOD is a policy that allows employees to bring their personal mobile computing devices to work places and connect them on the corporate network. Some of the many benefits of a BYOD program include: keeping employees happy as they enjoy a seamless experience with their devices, improving productivity by being available at all times for corporate tasks, and reducing costs of acquiring hardware by organizations. In fact, when I spoke of the seamless experience with BYOD, a CIO of a large manufacturing group in India, almost jumped up at the word – saying it will be the ‘mantra’ to push internally.

The 2013 AMI India ICT Overview report reveals that BYOD policies are less stringently adopted by SMBs at present – 55% of SBs and 43% of MBs do not place any restrictions on employees regarding the brands of smartphones used for business. The report further indicates that mobility needs are paramount among MBs who have employees traveling to build relationships with their business partners across cities, states, and even national borders at times are a main trigger in increasing the adoption of mobile devices and BYOD.  Consequently, MBs display high levels of mobile device penetration:  55% have tablets and 80-85% have smartphones/wireless Internet cards (WICs). Penetration of smartphones/WICs is also fairly high within SBs at 55-65%.

How are they managing all this proliferation of devices across varying platforms and different OS?

Despite all of the threats that abound with a BYOD policy, SMBs are not taking the correct precautions because of cost and time concerns. The time and cost that organizations need to spend on proper BYOD policies seem daunting to SMBs.

My recent discussions with CIOs across a gamut of small, medium, as well as large businesses sheds some light on the recent trends. First, irrespective of the vertical, revenue bracket, employee size, etc. they are accepting it as an inevitable trend. Secondly, they are not really trying to stop development – rather they are going with the flow. A third and interesting phenomenon is that IT departments are not really tightening up the policies – rather they are adopting a wait and watch policy. Most are waiting to see how the market will unfold – which operating system will dominate? Which form factor will surge ahead and become the norm? Which brands will outperform others…?

In fact one CIO said, “We have put our Blackberry policy on hold for now… we are allowing users to bring their devices and we are supporting e- mail on them… let us see what we offer next as part of corporate policy”.

Another CEO of a medium business in the IT space says, “There is need to identify and protect data which needs to be secured. Hence our idea is that for different types of data, different people are responsible. For example the accountant has access to some of the financial data which he needs to prepare certain statements and answer queries. He just has access to that. Anybody else in the organization needs that data gets in touch with him. He is responsible in the case that it is deduced that the data has been used for any illegal purpose.”  Here, they are currently classifying data access depending on the employee’s role and usage. While they felt that it was difficult to control privacy of all the data ’in these changing times’ they try and ensure that nobody has a complete picture. Role based authorization has being taken to the next level – identity based authorization, all with a view towards tightening up data security. Overall, the approach is ad hoc and loose.

Only about a third of Indian SMBs, actually enforce a preferred list of brands that can be purchased for business use. This is heavily dominated by the senior management who bring in their personal devices. A CIO of a leading private sector bank explained that iOS devices have gained momentum and popularity among the senior managers, the IT team has taken the initiative to put Android devices on hold for now in order to reduce complexity.

I had started writing the blog with the aim of answering the question -”BYOD and the India SMBs – Convenience or Chaos? Is there a game plan in the near future?”

The way the market is poised, I can only conclude that at present it is rather ‘carefree’. In fact, the ‘fun’ element is high. To a great extent the consumerization of IT is dominating the scene–making it very subjective.  The convenience is not doubted, but it is only when the chaos that SMBs will face once they start moving up the IT maturity curve becomes evident, then tighter policies around BYOD will be implemented.

-Rati Ghose, Bangalore Director of Market Insights

As small and medium business (SMB) demand for cloud services continues to accelerate, vendors are finding it increasingly challenging to support their partners in the migration to a cloud based business model. To this end, AMI is introducing its Partner Transformation and Enablement Program. This program provides vendors’ partners with an actionable strategic blueprint and tactical go-to-market (GTM) resources to be successful in selling cloud and hosted solutions to SMB customers.

The program is unique in that it helps partners with both internal business transformation (e.g., from traditional resellers to cloud partners) and also provides very tactical guidance and tools to support effective SMB targeting and sales.

The program is flexible and could be customized to focus on the vendor’s key solutions, ranging from:

Once the solution area(s) selected, we’ll work with vendors to align the program to help partners win in the SMB space. The program has four main components, each leveraging AMIs rich assets and knowledge capital. These resources can be delivered in a variety of ways depending on the size of the partner audience. Below are samples of the resources that could be provided:

• Planning and Opportunity Pinpointing –Detailed guidance on effectively planning to align commitment, resources and GTM approach.  Includes drill down on competitors, market trends, top bundles, and revenue projections.
• SMB Targeting –Actionable guidance on ‘how to’ profile & target high value SMBs. Detailed playbooks based on the solution, detailed targetable characteristics, SMB needs, and decision making.
• Selling & Lead Generation – A review of key marketing tactics and messaging to win new customers. Through the prioritization of marketing and sales activities partners are able to maximize ROI on demand generation investments.
• Business Transformation – A comprehensive blueprint for measuring partners against the best-in-class for marketing and selling Cloud solutions.  An interactive benchmarking tool offers the partner an opportunity to prioritize areas for improvement and investment. The program is highly customizable and can be tailored around specific partner types (such as VARs [value added resellers], ISVs [independent software vendors], MSPs [managed service providers], etc) and audience size (one-to-many vs. one-on-one).  Check out our new program to help partners transform their business and move the Cloud sales needle for vendors.

-Rohan Bose, Associate

Get connected, get secure – should become the new mantra for small and medium businesses (SMBs)

 New age technologies like mobile devices and cloud-based technologies have totally changed our lives and provided it with new impetus as well as a new degree of freedom. We use tablets, smartphones, or other mobile devices to access the web from anywhere and find any information! Hence – to achieve the same rhythm at the workplace, ‘new-breed’ employees are flooding their work environment with a gamut of mobile platforms and devices. Thus, a new phrase – “consumerization of IT” has come in vogue recently which implies the usage of consumer-based technologies (mobile devices and applications) at office. Hence, the thin line between ‘home’ and ‘office’ is getting increasingly blurred.

There are of course multiple advantages of this phenomenon in terms of enhancement of employee productivity and efficiency. However, it is also fraught with manifold risks, since most of these devices are not secured or managed at all. For information technology (IT) departments this is a major headache-area since infected personal devices, if connected, may affect and slow down the entire corporate network.

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In North America, Apple’s iPad is the leading tablet brand utilized by either SMBs (small and medium businesses) or their employees. Although this is clear in terms of current usage and even planned purchases to an extent, the tablet market between other well-known original equipment manufacturers (OEM) players, like Dell, Lenovo, Microsoft, and HP is still anyone’s game. With relatively recent introductions, such as Dell’s Latitude, HP’s Slate & ElitePad, Microsoft’s Surface, and Lenovo’s ThinkPad and IdeaPad, tech giants Dell, HP, Microsoft, and Lenovo could make greater inroads into the SMB tablet space if they play their cards right.

There are a couple of reasons why these smaller tablet players may be able to further infiltrate the SMB space.

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As per AMI-Partners ICT tracking study the smartphone penetration in India is close to 65%. Additionally, according to a report by GSMA, a global telecom body, penetration of unique mobile subscribers in India is at 25%. The report also notes that 2.2 SIM cards per user is the average in India, whereas the worldwide average is 1.85 SIM cards per person. The implication of this is that the ARPU (Average Revenue per User) per operator is actually fairly low.

Recently, I was a part of a study on the voice and data market in the country. In this capacity, I interviewed the functional head of a leading telecom operator in India. He agreed that voice is quickly becoming a tired medium of generating revenues for Indian telecommunication companies. Currently, voice services account for a majority of ARPU.  However, this scenario is changing from the dependency on voice services and moving to greater emphasis on MVAS (Mobile Value Added Services). MVAS is a non core service (all services beyond standard voice call services) that is provided by telecommunication companies. The components of MVAS include: mobile Internet, color ring back tone, and other allied services (horoscopes, score updates, etc.).

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Tablets have had an incredible impact on mobility among the SMB (small and medium business) market, and the horizon promises advancements that will blur the line between tablets and ultrabooks – possibly even smartphones as well.  As the market evolves, monitoring SMB buying behavior will become increasingly more important.  For example, will SMBs be buying tablets as a supplement to or as a replacement of other hardware?  How many SMBs will be able to bear the increased price of the next generation tablets?

AMI-Partners 2013 Tablet and Mobility study took a deep dive into products, software, and attitudes of SMBs.  The report answers several key questions about SMB preferences and also offers some potential answers to the questions raised above. By offering insights to help vendors understand a typical SMB, they are better equipped to reach the proper segment with a specific technology offering.

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