In today’s increasingly mobile workforce, employees can’t wait to ditch corporate-owned clunkers for their own sleek Apple (NASDAQ:AAPL) iPhone 5, Samsung Galaxy S III or Microsoft (NASDAQ:MSFT) Surface tablet. There are about 150 million employee-owned smartphones and tablets used at work now and that number is expected to reach 350 million by 2014, according to a recent report by Juniper Research.
But while the “Bring Your Own Device” (BYOD) trend makes employees happier and more productive, having multi-vendor devices with different operating systems makes things difficult from a security perspective. Most employee-owned smart devices don’t have security software installed — leaving corporate networks vulnerable to malware, viruses and other threats — while most employees don’t remotely delete data when devices go missing.
Of course, that also means there is quite a bit of demand for technology that can build a wall between your personal life and work applications, like “dual-identity” technology. This niche could mean big business for vendors — and a boost to your investments.
With that in mind, here’s an early report card for investors on three players in the space, from both a technology and stock perspective:
Research in Motion
Research in Motion‘s (NASDAQ:RIMM) BlackBerry franchise has taken a lot of lumps as consumers have opted to bring their iPhones, iPads and Google (NASDAQ:GOOG) Android devices into work instead. RIMM is striking back with its new dual-persona Blackberry 10 operating system, though, which will launch in late January. Its companion Blackberry Balance mobile device management (MDM) tool uses “containerization” to separate work applications from personal data.
Technology Grade: B. Enterprises will be comfortable with RIM’s robust device control. But BB10 faces an uphill and likely losing battle in its effort to unseat iOS and Android devices, which are far more popular with consumers. It doesn’t help that BB10 will launch too late for holiday shoppers.
Stock Grade: D. RIMM bulls say its time to buy, but I don’t buy into that logic. With the company’s future riding on BB10, it announced big incentives for enterprise users on Thursday. I think it’s too little, too late. Number me among the RIM doubters with InvestorPlace Editor Jeff Reeves.
Network virtualization and cloud-computing company VMware (NYSE:VMW) is staking a claim in BYOD. The Horizon Mobile virtualization platform and hypervisor are at the core of VMW’s dual persona strategy. Manufacturers can embed the hypervisor into their smartphones; the technology will be available on some new models next year. IT administrators can then activate and manage the employee’s corporate persona with VMware’s management interface.
Technology Grade: A. VMware’s approach, which supports iOS and Android-based smartphones, blends enterprise-level security with mobile devices that consumers want to use in the workplace. The company has inked agreements with multiple device manufacturers including Samsung, Motorola (NYSE:MSI) and LG Electronics.
Stock Grade: C+. I love the company’s business plan and position in the mobile device/BYOD market, as well as its strong desktop virtualization franchise. Still, I’m afraid to commit to VMW right now for two reasons. One, the valuation is lofty: VMW has a price to earnings growth (PEG) ratio of 1.42 and a forward P/E of over 28. Two, the stock has seen a lot of bearish options activity lately. Hold if you’re in it, but wait to buy.
Citrix (NASDAQ:CTXS), another virtualization and cloud provider, views your smart device as suspect and uses its CloudGateway to secure corporate applications and data in motion. The company’s approach builds on the virtual private network idea, creating a sort of safehouse on your device where your employer can control work applications and encrypt its own data.
Technology Grade: A. Citrix’s purchase of mobile device management (MDM) firm Zenprise this week for $355 million could be a game changer. Zenprise currently has more than a million devices under management and offers a wide array of on-premise, cloud and hybrid solutions. With this deal, CTXS can step up its game by offering a complete solution to manage applications and multi-vendor devices with different mobile operating systems.
Stock Grade: B. With a PEG ratio of 1.31 and a forward P/E of 19, CTXS is pricier than I’d like, but still not as overbought as VMW. It enters the Zenprise deal with no debt to speak of — always welcome in this sector. If the combined company can deliver a turnkey mobile BYOD solution, CTXS could take off in 2013. I rank Citrix a buy.
As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned stocks.