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To set the context for a BYOD discussion Techaisle’s survey on end-point technology status of SMBs provide an intriguing set of statistics through which we can assess recent endpoint trends. BYOD is clearly a major force in the US SMB market. BYOD purchases accounted for 13% of all new laptops, 17% of all new tablets, and 22% of all new smartphones purchased by US SMBs in 2013. This creates challenges for both IT management, which needs to establish methods of managing these devices, and for suppliers, who need to work with SMBIT to secure their position in the main endpoint categories, and also appeal to business managers and individual buyers to ensure that they are not left out of a major portion of the market. Techaisle’s SMB End-point survey data shows that approaches to BYOD –brand selection, reimbursement, application download and support – vary with employee size, with small SMBs leaving most of the decision, cost and support to individual users, and larger SMBs tending to involve business and/or IT management in these activities.

The survey data also shows that overall frequency of device purchases, which speaks to the erosion of the notebook market as emphasis shifts to alternative screens; in 2013, a higher percentage of US SMB employees were using tablets and smartphones than notebooks purchased within the year.

Suppliers need to recognize the distinctions that are apparent across employee size categories, and structure their offerings accordingly. IT vendors courting the very small business (1-19 employee) segment should recognize that employees are most likely paying for and supporting these devise themselves; as a result, IT vendors will need to offer financing and vendor/carrier-supplied, business-grade support options. In larger SMBs, specifically, mid-market businesses, funding and support is more likely to come from business and IT management; in these segments, OEMs are advised to establish programs that make it easy to onboard, secure and support new devices and users. In both cases, there are gaps in policies; suppliers who help businesses to establish and implement effective BYOD practices may be able to position their products favorably as a result.

SMB employees driving much of the activity is also creating sales and marketing challenge for suppliers: opportunities to sell brands and configurations that are outside corporate specifications, and challenges in aligning channel strategies to a market that includes both IT and individual employees (business management) as important buying groups.

Within the SMB context, BYOD itself comes in several ‘flavors.’ Techaisle survey data shows that on hand an SMB employee both selects and pays for a new device, delighting the CFO, but causing problems for IT. On the other, the SMB employee pays for the device, but selects it based on guidelines or an approved list – an approach (referred to in some cases as CYOD) that appeals to both the CFO and IT, but might not be completely satisfactory for the employee. BYOD can take any one of these paths and add some level of reimbursement for the purchase from the company and/or technical support for the devices, which has both upside (because the employee selects technology that he/she is comfortable with) and downside (the cost burden rests, at least to some extent, with the company rather than the employee) for the SMB business owner. And regardless of the approach chosen, some SMBs are instituting formal contracts that provide them with authorization to secure and (if necessary) ‘wipe’ employee-owned devices.

Who selects the BYOD brand?

The most critical BYOD question for IT manufacturers revolves around brand selection: is it done by the employee or the employer? Survey data shows that the answer depends largely on the size of the SMB business.

Who pays the BYOD bill?

One of the contentious issues in BYOD is the matter of responsibility for funding the device purchase. Many employees view BYOD as an attempt by their SMB employers to shift costs from the business to its staff. Many SMBs, on the other hand, see BYOD as a means of ensuring that employees have access to the technology that they like best. Some employers view paying for the devices as a means of building goodwill with staff (and/or as a means of building a basis for exerting management control over the devices), while others believe that simply allowing the devices to be connected to corporate assets represents contribution enough.

Who is responsible for BYOD support?

In our survey, we asked respondents to identify the ways in which their organizations support BYOD devices. The findings provide a fascinating insight into the ways in which BYOD devices are integrated into the corporate endpoint portfolio from no support at all to commitment to full integration of BYOD devices.

What is the policy with respect to app downloads on BYOD devices?

One of the key employee benefits associated with BYOD devices is that employees have a platform on which to run personal applications. What, though, is the implication for business applications? Are employees free to select any app that they choose, or should the business play a role in directing or determining the selection of business apps? Results from the survey suggest that the degree of formalization associated with app selection and installation varies from no formal policy to a very structured approach.

Is there a contract in place to govern BYOD use?

The final BYOD issue investigated by our survey related to the creation of contracts between employers and employees. Techaisle considers these contracts to be important to the success of BYOD strategies, as they provide explicit employee agreement to IT activities necessary to safeguarding corporate apps and data and we expect that this will become standard HR practice in BYOD-friendly SMBs over time.

About the Report

Coverage:

• Current and Planned purchase Intentions of client devices


• Tablet OS & Application software adoption – Behind the Screen


• BYOD: Employers vs. Employees, or Micros vs. Larger SMBs?


• Across the OS generations: XP, Windows 8 refresh intentions


• The Android Opportunity: Google in the PC Market


• Converged Mobility PCs: 2-in-1 PCs


• PC Purchase Channel and Sources of Information

More details about the report can be found here.

Related Research Articles

Seven Key Trends and their Meaning: SMB Endpoint Device Market in 2014

SMB Purchase Intentions for Android PCs

Key Attributes of Successful SMB Mobility Solutions

Techaisle’s SMB Channel Partner Trend study shows that there has been a big leap in percentage of SMB channel partners offering cloud computing services to SMBs in the last year across several countries. For example, in the US the percentage offering cloud services has jumped from 38 percent in 2012 to 64 percent in 2013 and another 22 percent are planning to offer cloud solutions. Similarly, in Australia the percentage has gone up substantially from 34 percent in 2012 and in Germany from less than 30 percent to over 60 percent. The biggest change is seen among the VARs. In 2012 only 34 percent were offering cloud solutions and in 2013 74 percent of them are offering cloud solutions to SMB customers. In Germany, the biggest jump has been within the SPs (Service Providers). However, not all channel partners (VARs, SPs, MSPs, SIs) have become successful in selling cloud to SMBs. Techaisle’s Winning Strategies of Successful SMB Cloud Channel Partners study finds that there are quantitative, meaningful and actionable differences between channel partners who are successful in the business of selling cloud and those that have not developed successful cloud practices.

Industry expertise and the ability to offer vertical solution is one such key area that is creating a distance between the successful and unsuccessful SMB cloud channel partners. Techaisle’s SMB studies have shown that SMBs are increasingly looking for vertical industry solutions but channels have been relatively slow in offering such solutions. Year 2014 will be important as this is the first year when SMB business issues have flip-flopped from reducing operational costs to increasing business growth and cloud-based line of business vertical solutions is an important area of investment.

Combining the data from Techaisle's SMB and Channel Partner studies we find that a significant gap exists between percent of SMBs adopting vertical cloud solutions and percent of SMB channel partners offering such solutions though it must be said that the gap has narrowed in the last 2 years as shown in the chart below.



The Winning Strategies of Successful SMB Cloud Channel Partners study data shows (chart below) that 21 times as many successful cloud partners are offer vertical solutions to SMBs as those that are not successful.



Most of the successful SMB cloud channel partners have product/service portfolios that are mapped to the full set of SMB technology needs: compute and storage infrastructure, applications, communications, support for test/development, and solutions addressing specific vertical requirements. The majority of unsuccessful SMB channel partners have limited their offerings to storage, backup, and basic SaaS offerings like Office 365 or Google Apps.

Some may argue that there is a ‘chicken and egg’ effect: that successful partners have broader portfolios because they have more engaged SMB customers. As with the chickens and eggs themselves, though, it may not matter where the cycle begins, if SMB channel partners that are not currently successful in the cloud wish to compete with those that are, they will need to develop portfolios that extend beyond IaaS to vertical-specific applications.



Above chart from the Winning Strategies study shows that 50 percent more successful cloud channel partners than unsuccessful partners report that vertical industry knowledge is a key component of the value that they bring to their SMB customers. These successful channel partners are able to demonstrate knowledge of the SMBs’ industry, and are therefore able to create confidence within their SMB clients. These channel partners are also the most likely to build and maintain long-term relationships with their SMB customers. Unsuccessful channel partners claim that they are able to demonstrate understanding of their SMB customers’ business needs – but at a technical level – and are constrained by a lack of vertical understanding. 70 percent of unsuccessful channel partners emphasize their technical expertise during interactions with SMBs as they lack the understanding of their SMB customers’ industry vertical to be able to offer sophisticated cloud solutions. They emphasize service quality without necessarily understanding what this means in a cloud context. In addition, many of the unsuccessful partners tend to stress price when positioning cloud computing solutions.

Therefore it is imperative for SMB channel partners to go beyond technical knowledge and really understand the dynamics of industries in which their SMB customers operate and become industry subject matter experts.

Techaisle’s Winning Strategies of Successful SMB Cloud Channel Partners study covers critical differences between the activities and approaches of successful and unsuccessful cloud partners in three key areas: Business Priorities and Resource Allocations, Current and Planned Cloud offerings, Sales and Marketing Strategies and Tactics

Techaisle’s SMB Channel Partner Trend report covers: Mobility, Cloud, Managed Services, Virtualization, Backup, Data Integration, Sales & Marketing including Social Media & Lead Generation

 

 

In 2012, a total of 47.2 million households and 1.9 million SMBs purchased a PC for the first time (Techaisle estimates), increasing global PC penetration by 2% in both the consumer and small business segments as an average of 5,200 small businesses and 130,000 households per day purchased a PC for the first time.

According to IDC, a total of 350 million PCs (desktops + notebooks) were shipped worldwide in 2012. Assuming that each first-time buyer in both the consumer and small business segments bought one PC, a total of 49.2 million PCs were first-time purchases. Therefore, the remaining 300 million PCs purchased in 2012 were either for increasing density or for replacements.

There are three elements that contribute to PC shipments. These are:

1. Increasing Penetration: businesses or households that purchase and use PCs for the first time

 

1. Increasing Density: purchase and use of PCs for either additional members of a household or employees within a business

 

1. Replacements: replacing older PCs with new PCs

Increasing Penetration

PC market penetration will continue to be driven by emerging market countries. There are 1.26 billion addressable households in emerging markets but only one in four have a PC. Similarly, there are 44.7 million SMBs in emerging markets, but only two in five have a PC. Both of these figures indicate a huge opportunity for new PC sales as there are still 26.4 million SMBs and 994 million households that
have yet to buy a PC – a huge gap indeed!.

It is true that many of these households and small businesses may choose to purchase a tablet first rather than a PC if the planned usage is focused on consuming content through activities such as emailing, browsing, playing games, following news and watching videos. However, it is also true that PCs will
remain an important part of the device market. A tablet’s weight, portability and convenience cannot be ignored, but Techaisle believes that the tablet market may reach the same set of conundrums – lengthening replacement cycles and fully saturated addressable density – that are affecting the PC market today, causing tablet sales to skid. Since 1982 when the first PC was introduced, a combined one billion households and small businesses have yet to purchase a PC. It is hard to say that tablets will fill that void, especially when the market gets flooded with too many configuration choices and a profusion of different brands with unique value propositions; for a majority of buyers, the tablet purchase decision process will become as difficult as for PCs.

Increasing Density

Increasing density is certainly a problem area within mature markets as the household PC density is more than 1 in most countries. However, in emerging markets the household PC density varies from 0.5 to 0.9 devices per person depending upon the country. Similarly, in the case of small businesses the density is also almost 1.0 in mature market countries and varies from 0.4 to 0.7 in emerging market countries. There is therefore potential for PC vendors to increase density in emerging market countries both within households and small businesses. But here again, we may find that tablets become a device of choice thus impeding density increase. However, these conditions will also hold true for tablets in the next 3-4 years when the number of tablets within a household and a small business will reach a density saturation point beyond which no new tablets will be purchased for additional employees or household members.

Replacements

This is where the most brouhaha is currently. PC replacement cycles are getting extended and users – both corporate and consumers – are buying tablets. Notwithstanding the tepid acceptance of Windows 8, the PC buying process has become a daunting task even for the most technological savvy individual. PCs are variously categorized as Ultrabooks, ultra-thins, light and thin, long battery life, anti-glare screen, Premium HD screen, SSD, HDD, All-in-ones – it makes one’s brain dizzy. So the consumer ends up either pushing back the decision or continues to shop for a suitable configuration at an affordable price. “A PC in hand is worth two in a bush” begins to hold true. The consumer may then default to a tablet, which is still a novelty device. But the question remains, at least, within the context of small businesses – are the tablets they are purchasing really replacing PCs? Let us look at Techaisle survey data below based on total sample size of 9,500 SMBs.

Above data (will not add to 100 percent due to multiple responses) clearly suggests that while there are some incidences of replacements, consistently over 60 percent of SMBs either currently use tablets or plan to use tablets as additions to PCs. However, it is interesting to note that the density of tablets in many small businesses is not always 1.0. For example, a small retail store may have 4 employees but uses 6 tablets and 2 PCs. These tablets are used for point-of-sale, display advertising or self-serve terminals. So in effect tablets are doing the work of PCs with more convenience and a smaller foot-print. It is debatable whether retailers would have used PCs for these tasks in the absence of tablets.

This brings us back to the point that we started with. If 300 million PCs were purchased for either replacements or density increase, are tablets then really replacing PCs, or is the PC market itself getting saturated, with fewer compelling reasons to purchase additions or replacements? Are the PC vendors sufficiently targeting the first time buyers, as this group would have the highest potential for increasing penetration and driving increasing density? IDC also said that a total of 128 million Tablets were shipped in 2012. Approximately 32 million Tablets were purchased by SMBs assuming that SMB share was 25 percent. The two charts above when combined with IDC data gives a rough number of 5 million tablets displacing PC sales. The data for SMBs demonstrates that tablets are not replacing PCs, but are being used in addition to PCs.

Techaisle’s bottom line: PC vendors should therefore market PCs to new users and current users with two very distinct messaging to open up the market.

 

Techaisle’s SMB Mobility adoption research and corresponding segmentation shows that there are three distinct SMB segments of mobility solution users.

Aggressive Adopters: Mobility is Strategic to their business; these form 13 percent of SMBs

Steady Movers: Mobility is enabled in their business; by far the largest segment at 49 percent of SMBs

Fence Sitters: Mobility is a convenience for their business; these form 19 percent of SMBs

It is imperative for IT Vendors and channels to understand the segments' different attitudes towards mobility, current and planned usage of mobility and firmographics to create an actionable marketing strategey. For example, Techaisle’s SMB Mobility Segmentation shows that for 13 percent of SMBs that fall into the Aggressive Adopters segment mobility is strategic to their business growth and survival. A deep understanding of the three segments will help IT vendors and channel partners identify their target markets and how to sell into them.

Sales Strategies for SMB Mobility Segments



Even in terms of spending, aggressive adopters are spending a higher percentage of their IT budget on mobility solutions. Interestingly, Fence Sitters are spending comparatively higher percentage on mobility consulting assessments looking for advice on the most appropriate solutions before adopting mobility enterprise-wide.

BYOD Policy and Use of Tablets & Smartphones

Not only Aggressive Adopters were the first to use tablets and smartphones but they also have the highest density (mobile devices per employees) and highest average number of tablets and smartphones being used at all employee size levels among all three segments.



There are twice as many SMBs in the Aggressive Adopters segment as Fence Sitters that use Tablets and Smartphones.

Aggressive Adopters have also moved quickly to implement a BYOD policy whereas a large percentage of Steady Movers do not have a BYOD policy but they also do not stop their employees from using their own devices.

 

Aggressive Adopters also have a very healthy attitude towards employees using consumer applications at work as they feel it is a good way to learn about technology that their employees find useful and can be officially integrated into their business.

 

 

Adoption of mobility solutions has also led to a positive effect on work-life balance of their employees. Aggressive Adopters have also seen improved productivity, higher employee satisfaction and improved quality of work.

 

With improved productivity and quality of work there will be a continued proliferation of mobile devices and corresponding solutions that will drive new forms of collaboration of content and communication. As devices become increasingly small, smart, connected and powerful, the server and network become less visible progressively moving offsite both physically and from a management perspective, simultaneously serving more computing power, storage and bandwidth; mobility will revolve around collaboration delivered through an enhanced browser. Therefore, todays Aggressive Adopters will look for integration of communication channels, content and workflow as the foundation on which to build their strategic mobile solutions.

The responsibility lies with the IT Vendors and their channel partners to effectively mine the Aggressive Adopters’ segment at the same time using realized proof points to move each of the other two segments (Steady Movers and Fence Sitters) to the Aggressive Adopter segment.

In terms of market opportunity, Aggressive Adopters show the highest growth rate for mobility spending requiring sophisticated solutions whereas Steady Movers have the biggest size due to sheer volume of SMBs falling into the category.