by Brad Moon | May 9, 2012 1:31 pm
BYOD (Bring Your Own Device) is the acronym that’s likely had the biggest and most rapid effect on enterprise IT since the personal computer began supplanting typewriters and mainframes.
The trend of employees bringing and using their own devices — including smartphones, tablets or even laptops — has been rapidly transforming the way companies manage their networks and computer resources, with ripple effects that are being felt across the tech world. And, as with any major transformation, there are winners and losers.
Before reviewing who’s coming out ahead in the BYOD trend and who’s taking it on the chin, it’s worth a quick look at some statistics:
• BYOD is spreading like wildfire. According to a survey by Citrix (NASDAQ:CTXS), 44% of companies already have a BYOD policy in place, while 94% expect to by 2013. Policy or not, other surveys (such as this one by Aberdeen) show that up to 75% of companies currently allow employees to use their own smartphones and tablets on the job.
• Unlike most PCs, which are wired, employee devices connect to company networks via WiFi or WLAN networks. This has resulted in a surge of demand for wireless bandwidth. Research firm Dell’Oro Group says the market for WLAN equipment will hit $7 billion annually, from $ 4.3 billion in 2009.
• According to Infoworld, two of the most highly regulated industries — finance and health care — are currently the most likely to support BYOD.
There’s no denying that Apple (NASDAQ:AAPL) and Samsung (PINK:SSNLF), manufacturers of the most popular smartphones and tablets, have benefited from BYOD. Samsung is coming off a record quarter, while Apple recently hit a market cap of $600 billion.
Mobile devices — not computers — are driving the profits for both these giants.
The manufacturers of wireless-networking gear benefit from the overload on corporate WLANs and have seen sales climb across the industry by 24% in 2011 at a time when wired switches are seeing flat sales. Cisco (NASDAQ:CSCO) controls nearly 50% of the world WLAN market and stands to gain as companies continue to add wireless capacity to meet the demand of BYOD employees.
Companies that offer products designed to manage wireless access have seen rapid growth in an enterprise market where one size definitely does not fit all. With a huge variety of devices in use — Citrix reports that its employees use 149 different smartphone models and 37 different tablets on the job — there’s a growing need for solutions that will help IT departments manage all these devices.
Companies such as privately owned Bradford Networks saw year-over-year revenue growth of 70% for the first half of 2012. Citrix’s own mobile data-management products helped drive its quarterly revenue to 20% growth and an $86 share price that’s just off its five-year high of $87.
Security companies also stand to benefit from BYOD. With personal devices accessing corporate networks, carrying corporate files and receiving corporate e-mail, security is a primary concern among IT departments. According to Infonetics Research, BYOD has led to a 76% jump in the market for mobile security products, with continued growth forecast at 35% through 2016.
And Infonetics notes that the top computer-security companies — Symantec (NASDAQ:SYMC), Trend Micro, McAfee (NYSE:MFE) and Kapersky — all posted double-digit revenue increases in 2011, and all have increased revenue for at least five straight quarters.
The single biggest loser in BYOD has been Research in Motion (NASDAQ:RIMM). Its BlackBerry devices were once the darling of enterprise IT, and it’s no secret that RIMM’s devices continue to be favored by many IT departments, which find them secure and easy to manage.
But consumers prefer the Apple iPhone or Samsung Galaxy, and under BYOD, the BlackBerry has been increasingly pushed out. As a result, RIMM is not only getting trounced in the consumer smartphone and tablet markets but its corporate market share is rapidly eroding as well. RIMM’s enterprise problem is summed up by Wharton New Media Director Kendall Whitehouse in a recent Knowledge@Wharton interview: “RIMM may have all the inroads to corporate IT managers, but if everyone is walking in the door with an iPhone, none of that matters.”
The erosion of RIMM’s crucial corporate base, on top of the beating it’s taking at the consumer level, has seen RIMM’s share price hit an eight-year low, its $12 trading price a fraction of the $148 it commanded in 2008, when it was the go-to mobile device for enterprise.
Companies such as Cisco and Hewlett-Packard (NYSE:HPQ), which are leaders in wired-networking infrastructure, saw little or no growth in those divisions last year. Between slumping PC sales and IT departments focusing on expanding mobile support, wired networking was largely in maintenance mode. Despite this, the market was still worth nearly $12 billion in 2011, and many manufacturers saw gains in their wireless divisions that more than offset the poor wired performance.
Projections have as much as 90% of businesses embracing BYOD within the next two years. But there are ways the movement could stall and even begin rolling back. Two scenarios: a backlash from a major security breach or an employee revolt if IT departments try to exert too much control over their personal devices. At this point, though, the horse is out of the stable, and it will be difficult, if not impossible, to get it back in.
BYOD shows every sign of being a lasting trend, not just a fad, and that means the winners should continue to do well, while losers like RIMM might just find BYOD to be fatal.
Source URL: http://investorplace.com/2012/05/byods-winners-and-losers/
Short URL: http://invstplc.com/1frzjLW
Copyright ©2015 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.