There can be little doubting the impact that the Apple iPhone, and especially the newly released 3G version, has had on the consumer market as far as the mobile phone sector is concerned.
Richard Hales, UK and Ireland country manager with F-Secure says: “The iPhone is not a relevant product for the channel – users have no choice in their use of network provider and most businesses already have pre-existing contracts.”
But while the iPhone is not aimed directly at the business user, the reseller simply cannot ignore it. Nor, indeed, can they afford to.
Smartphones are like manna from a mobile heaven, a growth area within a shrinking marketplace. Some 30 million mobile phones were sold in the UK in 2007 – a figure that is expected to drop to 25 million by the end of 2008. In the face of the credit crunch, don’t expect the situation to improve any time soon.
Much of the problem is that with people signing up to ever longer network contracts – 18 months is now the norm and 24 months is not uncommon – when it comes to hardware, the growth comes in spurts.
Of course, this should not be a problem for the channel as the
business market demands much more than just straightforward hardware sales. Indeed it demands much more from mobile devices all round, which is great news for the reseller looking to get moving in the smartphone
sector.

State of the market
Just look at some of the recent reports into the state of the smartphone market. ABI Research has predicted that by 2013 as many as one
in every three mobile phones sold will be a smartphone. Meanwhile, Gartner, IDC and Nokia have estimated that PC growth will be around 25% between 2006 and 2009, seeing 106 million units sold.
Yet in the same period, sales of
Wi-Fi-enabled smartphones are expected to exceed 150 million, which is eight times as many as in 2006. The very fact that smartphones are likely to overtake laptops in terms of global sales this year, according to Gartner, presents a huge opportunity for the reseller.
So there is a strong argument to suggest the iPhone has been, and will continue to be, more of a help than a hindrance to the reseller looking to turn a profit in the smartphone sector. For a start, it has raised the bar as to what features and functionality can be found on a mobile phone these days, and it has certainly raised awareness of the smartphone as both a lifestyle and fashion item as well as a serious tool for the mobile worker.
Of course, the sheer expense of the iPhone, despite the handset subsidies from the operator networks, means it is out of reach to vast swathes of would-be smartphone users. That is another favour that Apple has done the reseller, leaving the door wide open for boosting the value proposition of cheaper smartphones through value added services.

Adding value to the proposition
It has always been the same as far as mobile phones have been concerned: the smart reseller money has been in adding value through the services they can sell to their customers. Nothing has changed now that the market is moving into the more technologically accomplished realm of the smartphone.
“Resellers can build and sell a complete mobile software offering to sell to their customers, which covers everything from the device to the software their customers need in order to run their mobile workforce” says Antti Nevalainen, vice-president of sales and marketing at Capricode.  
Typically, this kind of package will include mobile device management software to enable the customer, or indeed the reseller, to manage a fleet of devices.  

Mobile device management
ABI Research predicts that mobile device management services will grow from $583m in 2007 to over $20bn by 2013, for a compound annual growth rate of 80%. Those are the kind of figures that should prick up any savvy resellers’ ears.
It could well be thought of as the 1990s all over again, but instead of laptop sales going through the roof it will be smartphones. And with this flood of products into the corporate realm comes a need for device management to avoid potentially costly chaos. Luckily this can be thought of as a complementary
sales offering alongside mobile encryption, mobile email and mobile firewalling and anti-virus software solutions that have already penetrated the marketplace.
The opportunities for the channel are as breathtaking as they are obvious. “I think we’re all familiar with the terms data loss and data leakage, largely thanks to the actions of HMRC,” Nevailanen adds.
“You only have to consider how we’re using smartphones these days to recognise the potential security risk. Managing a fleet of devices using a mobile device management solution can be up to 50% cheaper than using manual updates. And mobile device management’s ability to update devices over the air results in a more effective use of the IT administrator’s time.”

A restrictive marketplace?
But how easy is it for UK resellers to get aboard the smartphone money train? Some have suggested that, when compared with other markets in terms of working with the networks at least, the UK could be
seen as restrictive rather than a free technology economy. This is not
an argument that Hales has much time for.
“The UK is an interesting marketplace” he admits. “Most companies buy from operators that provide hardware, software and services.”
However, as Hales points out, there is nothing stopping the reseller from offering remote device management, security, email synchronisation and any number of other services.
“This will transform a reseller into a trusted advisor who is close to the customer,” Hales insists.
“The fact that a reseller can comment on integration with existing infrastructure will make a compelling argument for engagement at this level.”
The hardware challenge
Hardware has always been a pretty challenging area for the channel to operate in, but software and services “hold the key to a wealth of opportunity” according to Hales. Not least because – somewhat ironically, given its recent record on mobile data loss – the government has become rather insistent that security be a core focus with all mobile devices.
“This concern is reflected in IT managers who understandably are worried that these devices are safe and don’t provide a free access port to the company network,” says Hales.
“Small businesses in particular are keen to pay a premium for safety and support that resellers can offer.
“Over the next few months a number of bundled services, including security and mobile email, will be released. And without a doubt, resellers interested in security sales as part of their portfolio should not underestimate mobile.”

Smartphone security sales
Lee Sharrocks, vice-president for Norton Consumer Sales with Symantec, knows a thing or two about the mobile security market. Although for a long time the concept of mobile phone anti-virus was seen as a self-invented cash cow for security vendors – with very little real world evidence of any actual threat to handsets, networks or data – times have changed and that customer perception is also changing.
“At present, there are approximately 300 malicious software programs that target smartphones” Sharrocks says. “Trojans are becoming the most common type of attack.”
There should be no doubt that as smartphones continue to increase in popularity, so will the number of malicious attacks targeted at them.
“We are already seeing malicious activity on mobile devices becoming increasingly sophisticated, such as the INfoJack Trojan in February, which was a sophisticated piece of malware that attacked the Windows Mobile platform” Sharrocks explains.
So, like PCs and notebooks, security software will increasingly be seen as the first and also the most important line of defence against cyber criminals and essential in order to protect data from compromise.
“Resellers can now offer security software designed specifically to protect smartphones at all possible attacking entry points as they come with virus scanners, anti-spam for SMS and firewalls, which ensure protection when the user is surfing the net or checking emails and their attachments. In particular, anti-virus protection is essential when the mobile phone is being synchronised with a PC,” says Sharrocks.

Managing tariffs
Resellers should not overlook the obvious, even when it comes to smartphone sales: tariff management. If you want to get involved in the hardware side of the smartphone equation, shifting units that can do more than an Apple iPhone and at a much more attractive price for the average business user, then you need to understand tariff management.
After all, the margin is not really in the hardware, it is in the contract price for one, and the data tariff for a very important second. A smartphone is pretty dumb without internet connectivity, and a reseller is pretty dumb without taking into account the profits that can be made as a result.
Flat rate data tariffs are now offered by all the major network operators, and resellers can take advantage of the sales opportunity they provide by signing up to one of the channel initiative programmes the networks operate. T-Mobile, for example, reports in excess of 450 UK resellers signing up with its initiative.
Resellers looking to make money from tariffs can take comfort in the fact that both consumers and corporate customers are hanging on to their handsets for longer. By reducing the amount of handset churn, the reseller can reap the benefits of selling longer term tariffs and enjoy a longer term relationship with the customer as a result. Keep a customer for two years instead of one and you have two years during which to make those incremental service sales and add value by way of software. ●