What mobility hardware strategy delivers the best ROI in the long run – a Consumer, or an Enterprise level rugged mobile device?
I love technology and the benefits it can bring. But it is important not to lose opportunities because of poor decision making. We encourage our customers to make decisions based on realistic, honest, and unbiased inputs. It is crucial not to decide on a solution and then make a case to justify that decision.
Be informed, be smart and be logical. Hopefully the following analysis can aid in your decision making process.
– Les Morley, Managing Director
Manufacturers of consumer devices are claiming that their devices are substantially more rugged. So, is the historic ‘received wisdom’ that an enterprise mobile device will give business users a better return still valid today?
Many companies have already transitioned to consumer platforms and we now can look back to see if they have realised the benefits they expected.
Comparison is only realistically valid in certain environments and functional applications. Typically enterprise mobile devices come in a wide variety of forms depending on their optimisation for specific applications. But in certain areas, like field service or mobile working, there is clear functional overlap and scope for serious comparison. So for the sake of this paper I will be evaluating smart phones vs enterprise mobile PDAs.
Consumer devices are essentially manufactured for the mass market. There are well known brands that embrace smart phones, tablets, and notebooks, manufactured in their millions to a global market. Apple, Samsung, Google and their ilk operate in a highly competitive market that drives incremental improvement with frequent product churn. The latest generation devices continue a strong trend of greater processing power, memory and data storage etc.
I take nothing away from the fact these are great products. But they are manufactured in vast numbers for the consumer market which keeps the cost of the technology platform relatively low. Enterprise mobility devices, however, are typically engineered to be more rugged as befits equipment designed for tough work place environments. Those engineering differences are pretty obvious when you dismantle the devices, both in the design and manufacture at component level but also in the way the device is architected.
Consequently, enterprise mobile devices are usually heavier, chunkier and not so sexy but they don’t bend if you put one in your pocket! They include features not commonly seen on consumer devices, specifically things like 1D or 2D lasers or imagers. Supporters of the smartphone alternative will point to a variety of sleds, blue tooth attachments and cases to make your smartphone more enterprise usable and robust. The additional costs of these add-ons will close the gap to enterprise mobile devices significantly but, you could argue the user ends up with a compromised solution not functionally or ergonomically ‘best in class’ for enterprise use.
Despite enterprise devices now doubling as mobile phones, like for like, enterprise mobile devices have always been more expensive (although the gap is gradually closing from both angles). But when everyone has a mobile anyway, why invest in a second platform?
Surely that’s it then. Debate over! Unless you have a very specific functional requirement from an enterprise device, choose a consumer device. It’s better, cheaper and you get a lot more tech for your money. It looks a lot sexier too! But is it really that simple?
Initial Capital Investment
As stated, smart phones are typically cheaper, but there is a significant variation in price. At the top end of the market you will probably also pay a brand premium. Middle of the road devices with a reasonably good processor will probably set you back between £250-£400. With thin margins for the resellers, discounts for volume don’t amount to much either but you can mitigate the initial capital investment within an airtime contract.
A comparable enterprise device will cost between £500-£1000. There is, however, room to negotiate sizable discounts for volume when you are dealing with a reseller able to provide expertise and supported pricing. Broadly speaking, your capital investment will be easily double.
Customers expect enterprise mobile devices to keep going – and they do. Traditionally, the big brands used to target their clients to churn their estate after 5 years. However market leader Zebra have now acknowledged that their customers are looking to sweat their assets for much longer with up to 10 years support. This shift was accompanied by Zebra’s commitment to deliver on that. At the sharp end, our experience at Pen Mobile has been that clients will plan for 5 – 7 years, and sweat their assets for at least another two, but there are still plenty of companies with estates over 10 years old. How much of that is down to ‘if it ain’t broke…’ and how much is a traditional UK malaise of underinvestment in productivity improvements – who knows.
How long will your smart phone estate last before you have to replace it? Probably 2 years, 3 if you’re lucky. Statistically nearly 40% are retired before the 2 year mark. Consumer devices are simply not designed to last. There is no redundancy in the build when everything is pared down for lightness and size. And, even if you wrapped up your phone in cotton wool the battery will fail after two years. To be fair, the same chemistry applies to enterprise level device batteries too. This is countered by the availability of replacement batteries, both OEM or aftermarket and the ease at which batteries can be switched. The same cannot be said of consumer devices.
This is, of course, a reflection of the much higher level of model churn in consumer devices. Smartphone manufacturers are under pressure to deliver near annual model upgrades or be left behind in both the sales race and fashion parade. This turnover rate is constantly underpinned by the ubiquitous 2 year airtime contract.
Broadly speaking you will end up replacing your consumer level device 2-3 times as often as the comparable enterprise alternative. By the time you take into account the capital investment, replacement cycles, discounted cash flow and cost of funds etc. the calculations could go one way or the other. This assumes the replacement exercise is cost free. Additional costs to evaluate, source, on board, configure, and distribute can quickly add up. Throw into the mix the potential for enterprise software compatibility issues with the latest OS (Operating System) build of the latest smart phone and the whole exercise just got potentially very very expensive! Trust us, we’ve seen it!
The biggest operational running costs will always be device failure. Therefore a comparative cost analysis has to include the rate of device failure and the cost of those failures. Accordingly to market research, the failure rate for smart phones is an extraordinary 38% per annum compared to 11% for rugged enterprise devices. That is a net 27% more of your installed estate failing each year if you opt for the ‘smart’ option. This statistic, combined with the lifecycles of the 2 device, asserts that in a 6 year period you will encounter 162% more failures using consumer devices vs. enterprise devices. Think about that for a second
The cost of this higher failure rate is compounded further by 2 factors:
- Downtime at the point of failure
- Cost of repair
According to industry sources, mobile workers lose 75 minutes each time a device fails. That figure will vary significantly between different business models. If your enterprise mobility device is used to pick up emails and call the office, it’s irritating, but potentially not going to inhibit you too much. On the other hand if this is the platform that supports your work scheduling, proof of delivery, mobile payments, order taking, on-site servicing, maintenance etc. you are stuck until you get another device. 75 minutes seems optimistic if you are out on the road at the point of failure and have to return to your base, assuming there is a replacement device immediately available. So your organisation may have to rely on a manual fall back system. Another operational overhead and one, which in practice, is easy to allow to fall into abeyance. Of course, enterprise devices fail too, so the stock of spare devices need to be maintained for that scenario unless you judge that the failure rate is so low that the associated cost is not merited. How much is 75 minutes of lost productivity? Professional field service billables start at around £40 per hour – and can be as high as £200 per hour.
The cost of repair is, in practice, not a significant variant between consumer and rugged devices. Whilst some parts, for enterprise mobile devices, are more expensive, in our experience the vast majority of consumer breakage is down to broken screens, the cost of which sets a floor limit for repair costs, lifting the average cost of repair. Since these consumer devices are engineered for slim line lightness, the main PCBs are not insulated from the peripheral components like switches, buttons and ports so we see more instances of impact trauma creating referred damage to the PCB. In essence impacted button caused by trauma (a couple of dollars to source) is rarely the full extent of the damage and board level repairs are not cheap. Once a consumer device goes end of life, parts availability dries up quickly as a reflection of market forces. We have difficulty in sourcing parts for some mainstream brands today that were only rolled out live to our customer 3 years ago.
Cost of Ownership
So far most of the pros and cons can be crystallised into a financial model. At the simplest level they are represented in the following equation
Initial Capital Expenditure + Sourcing /Implementation costs
Working life of the device
Frequency of failure probability % × Lost productivity + Cost of Repair/ Replacement
There are still a few other considerations to consider, not so easy to define in financial terms, but in some instances they can have serious implications.
Consumer devices, whatever the brand or OS, are frequently subject to OS revision/ upgrades. Mostly these have no effect on your enterprise software. Occasionally they will. At consumer level these are either automatic or the user is invited to confirm. We’ve all done it, often without a second thought. Businesses, however, need to carefully determine the risks of allowing these to be implemented or not and create a controlled process. We have seen a number of cases where business critical software ceased to work after an upgrade.
These events will cost a significant amount in lost revenue and additional work and expense to restore. In contrast the OS on enterprise mobile devices is typically supported for an extended period and much more stable. They are also slimmed down to remove certain unnecessary elements.
In our experience the initial roll out of a new estate of devices is nearly always supplemented at some point by a need for more equipment. Businesses expand, or devices get lost or irretrievably damaged. Given that consumer device churn rate is much faster than enterprise devices, the ability to source matching devices ceases quickly. Hence businesses end up having to manage a mixed estate. Indeed, they may also find that devices may be on different Operating Systems too. Neither of these is attractive to the management of your hardware estates.
There is a place and role for both classes of device in the marketplace, but this does not mean that both types of device can fill every role as well. There are technical and support issues to be considered as well as the initial cost outlay. From a pure Capital Expenditure perspective, the shorter lifespan of the consumer device makes the equation pretty balanced, but in most cases the better ROI will come from investing in an enterprise device.
If you are considering an investment into a new estate of devices this is something you would need to consider carefully. Our engineers and account managers are happy to assist you independently and honestly to help you reach a conclusion based on a logical cost of ownership.