Identity as a Service:Bringing Your Individual Identities to Your Handset

A Frost & Sullivan White Paper

Ronald Gruia Director, Emerging Telecoms

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contents

Introduction ................................................................................................................................... 3

Market Trends ................................................................................................................................ 4

BYOD and Its Related Costs ....................................................................................................... 4

Temporary Numbers & Privacy .................................................................................................. 4

Work-Life Balance ....................................................................................................................... 4

Social Communications .............................................................................................................. 5

Separating Personal and Work Data ......................................................................................... 5

Device Overload .......................................................................................................................... 5

Bridging the Gap between Personal and Work Communications ........................................... 6

Addressing the Market Gap ......................................................................................................... 7

Evaluating the Total Addressable Market (TAM) ....................................................................... 7

Conclusions .................................................................................................................................... 9

Appendix ........................................................................................................................................ 11

About the Author ......................................................................................................................... 12

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Identity as a Service: Bringing a User’s Persona to His Corporate Handset

INTRODUCTION

Carriers have been facing an increasingly challenging environment in the Value-Added Services (VAS) marketplace, facing tremendous traffic growth, eroding service revenues, and growing competition from nimbler Over-the-Top (OTT) players such as Apple, Google, Skype, WhatsApp and others. Under such an environment, operators are struggling to find new revenue streams, create subscriber stickiness and offer new compelling services that enable them to combat the OTT threat.

The growing gap between exponential traffic increase and logarithmic revenue growth has become more exacerbated over the past three years due to a host of factors, including the proliferation of smartphones, the uptake of video, and the increased penetration of mobile broadband.

Figure 1: Revenue/Traffic Disconnect

TIME

QU

AN

TIT

Y

Voice Dominant

Traffic

Data Dominant

Revenues

Cellular operatorrevenue & traffic

decoupled

Source: Broadband Forum

In this white paper, we will examine current market trends in the VAS space, including the advent of dual persona models in response to bridging the gap between personal and work communications. We will also examine solutions that are currently tackling this issue and discuss their benefits and drawbacks. And to that point, we will examine some solutions addressing key pain points from service providers, enterprises and subscribers. Finally, we will peg the TAM (Total Addressable Market) opportunity for dual persona solutions and conclude with our impressions of who we believe is uniquely positioned to capture mindshare and be a trusted and reliable VAS partner.

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MARKET TRENDSBYOD and Its Related Costs

Bring your own device (BYOD) is an increasingly popular trend in the enterprise in which employees connect their own personal device, such as a smartphone, laptop or tablet, to the enterprise’s network. This is a trend that began with top-level management and made its way down the enterprise, instead of originating at the IT department. There are three main alternatives to implement BYOD: desktop virtualization, encapsulation, and mobile device management (MDM). Each has its own advantages and drawbacks, but the common theme to all is that IT departments worry about issues such as security, data ownership and troubleshooting complexity.

Figure 2: BYOD Trend within North American Enterprises (Frost & Sullivan survey)

18%

26%

27%

16%

10%

4%

71% allow

Use of Personal and/or Consumer Services within the Organization, North America, 2013

Allowed and all supported by ITAllowed and some supported by ITAllowed but not supported by ITNot allowed but usedNot allowed and not usedDon’t know

Source: Frost & Sullivan

Albeit few surveyed businesses provide full IT support, the majority does allow personal services and devices within their organizations, confirming the prevalence of the BYOD trend.

Temporary Numbers & Privacy

Another important trend is the need for anonymity and privacy when conducting certain types of communication (business or social) with strangers in cases such as classifieds in specific private listing sites like eBay, Kajiji and Craigslist. These portals actively block people from posting phone numbers on their sites in order to protect their visitor’s privacy. This, in turn, leads to slower sales cycles and lower margins.

Work-Life Balance

Concomitantly with BYOD, employees need to increase productivity, while also striking a proper balance between their work and personal lives. Therefore, they are seeking solutions that allow them to be productive from anywhere and enable them to use some “downtime” effectively to answer e-mails, send scheduling requests, set up and participate in meetings, and work collaboratively with other members of the team.

A number of pilot projects undertaken by enterprises in North America and Europe have indicated that when teams of interdependent workers (such as customer service reps) are allowed to create their own plans for how and when to get their work done, productivity improves considerably.

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Identity as a Service: Bringing a User’s Persona to His Corporate Handset

There is another dynamic that is worth mentioning here, namely, how “Gen Y-ers” are treating work-life balance more as a work-life blend. The shift also stems from the observation that Gen X is more tech-savvy, while Gen Y is tech-dependent, and as such, can flip back and forth between their personal and work lives quite frequently. In order to achieve such a work-life blend lifestyle for their employees, enterprises need to be able to supply access to their corporate data from any device, anytime, anywhere.

Social Communications

Companies such as Google, Facebook, Skype and LinkedIn have realized that there is more revenue for them on mobile than desktop alone. In addition, the lion’s share of the next billion Internet users will be accessing the network via wireless rather than fixed access. Given these facts, they have decided to build technology around the strengths of smart devices. Environments like Google+, Facebook Home and Skype Mobile enable customers to consume more of their services using the wireless operator’s data connectivity.

Separating Personal and Work Data

The notion of separating personal and work data resonates well with IT decision-makers concerned about the security issues arising from embracing the BYOD model. Hence, it is not surprising to observe the proliferation of solutions geared toward helping employees seamlessly utilize their smartphones and tablets for work tasks without compromising their privacy.

The idea is to assist enterprises in lowering security risks while saving money on hardware and device management. These dual identity offerings are able to separate personal and work data. Moreover, they can also allow businesses to delete work-related data from phones remotely when an employee is let go, for instance. At the same time, they restrict the companies’ ability to access employees’ personal information (such as social networking sessions, photos, etc.).

Employees are typically satisfied with such solutions, as they allow them to use cutting-edge devices without having to wait for the typically morose upgrade cycles in the enterprise. In addition, device ownership typically translates into better care (i.e., employees will take better care of their devices than ones issued by a company). On the other hand, employees do not want to pay out of pocket, and should their devices break at work, they would need to pay, unless their companies have a repair or replacement policy in place.

Device Overload

From both a business and a consumer standpoint, end users are increasingly overwhelmed with the sheer number of devices that need to be managed these days.

A study conducted by Juniper Networks1 indicated that the average user roughly owns five devices between work and home. In addition, the average mobile employee owns at least three Internet-connected devices.

As a result, business persons are already trimming down the number of devices they take with them on business trips. In addition, the market is undergoing some level of device convergence, with the advent of hybrid tablet/laptops (notebooks) and smartphones/tablets (“phablets”).

In the mobile communications market, there is an increasing number of end users owning more than one SIM card, despite the fact that dual SIM card handsets are more expensive. Demand for unlocked phones is also rising, as some end users choose to simply swap SIM cards on their “jail-broken” devices.

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BRIDGING THE GAP BETWEEN PERSONAL AND WORK COMMUNICATIONS

A few players within the VAS arena have attempted a variety of different approaches in offering carriers products that can help subscribers achieve a good balance between their personal and work communication experience. A market survey can readily identify a host of solutions, including:

• Offerings that create temporary numbers: e.g., Burner (Ad Hoc Labs), Hushed App (AffinityClick Inc.), Movius myIdentities

• Enterprise VoIP clients that come with alternative phone numbers: e.g., Line2, Onebox, RingCentral, Movius myIdentities

• Offering a new phone number for long distance (LD) arbitrage: e.g., Truphone, tt.one (Tyntec), Movius myIdentities

• Desktop virtualization solutions: e.g., VMware’s Horizon Mobile, Red Bend Software’s TRUE

• Proliferation of multiple BYOD dual persona workplace solutions: e.g., BlackBerry Balance, Samsung Knox, AT&T Toggle, Comverse ONE, Movius myIdentities

Each one of these solutions has a few pros and cons:

• Temporary number solutions can be a bit cumbersome from a usability perspective (akin to buying a SIM card all the time; calling party must know the user’s new number every time).

• Enterprise VoIP clients coming with alternative phone numbers only gives access to specific apps, restricting productivity.

• LD arbitrage is too simple a solution and does not offer a comprehensive service set.

• Desktop virtualization entails hypervisor support, is typically not as scalable, creates issues with the need for offline computing and is more power-intensive.

• MDM solutions, while secure and manageable by IT, usually restrict personal apps.

• Dual persona solutions seem to be more interesting and fit a wider set of IT department requirements, but have quite a variance in feature sets and pricing.

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Identity as a Service: Bringing a User’s Persona to His Corporate Handset

ADDRESSING THE MARKET GAP

In order to address this market personal and work gap, we need a different approach to the problem, namely a solution that is capable of achieving the following needs:

• Integrated/enabling mobility

• Can support home line extension/replacement

• Doesn’t require an extra SIM card (i.e., for dual-SIM card device) or SIM replace (like while traveling)

• Provides the multi-persona/workspace service

• Enables split billing to help the carrier generate extra revenue streams, simplify enterprise auditing and provide employee privacy

• Does not rely only on VoIP

• Enables Wi-Fi on/offloading

• Does not require a smartphone for emerging markets; a solution that relies on portable code (e.g., USSD and SMS support in the future) is highly desirable, so operators can increase their addressable market (i.e., feature phones can also be used)

In addition, from a BSS (Business Support System) and OSS (Operations Support System) point of view, the ideal solution should be able to handle the dual persona aspect of the solution. Neither auditing an employee’s bill nor stipends represents an effective strategy in dealing with the issue:

• Auditing affects employee privacy and is time-consuming

• Stipends don’t measure well real consumption (does not cover overachievers well and slackers pocket the money)

• How does one fundamentally separate data usage between personal and work apps?

EVALUATING THE TOTAL ADDRESSABLE MARKET (TAM)

Frost & Sullivan created a model to assess the global potential of the Identity-as-a-Service market. For each of the four regions –North America (NA); Europe, Middle East and Africa (EMEA); Asia/Pacific (APAC); and Caribbean and Latin America (CALA – we evaluated the potential uptake of this service for a variety of subscriber segmentations.

The following customer segments were considered:

• Single/multi-line subs

• Smartphone/feature phone subs

• Pre/post-paid subs

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Each of these subscriber groups has an associated interest potential for a dual identity solution on a single handset. From these numbers and the total user bases, the potential demand (in terms of total number of interested subscribers) was derived. The model also took into account the extra demand associated with enterprise versus consumer subscribers (i.e., enterprise users have a higher preference for features such as second line appearance). Then, the monthly service fees below were used for each region, resulting in the following ARPU uplift2:

Table 1: Monthly regional subscriber fees for Identity-as-a-Service offering

Identity-as-a-Service (IDaaS) Monthly Regional PricingRegion Price/mo. US$ Mthly. ARPU $ ARPU uplift %

NA (North America) $4.00 $52.75 8%

EMEA (Europe, Middle East & Africa) $1.67 $16.27 10%

APAC (Asia/Pacific) $1.00 $13.10 8%

CALA (Caribbean & Latin America) $1.00 $11.29 9%

Source: Frost & Sullivan

The resulting TAMs were calculated for each region. The total subscriber and TAM potential are depicted in the following figures:

Figure 3: Global Demand of Identity-as-a-Service (Second-Line Service) by Region

0

100

200

300

400

500

600

700

NA EMEA APAC CALA

Num

ber

of S

ubs

(mill

ion)

Global Demand for 2nd - Line Service

Single/Multi-Line Smart/Feature Phone Prep./Postp. Subs

Source: Frost & Sullivan

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Identity as a Service: Bringing a User’s Persona to His Corporate Handset

Figure 4: Global TAM for Identity-as-a-Service (Second-Line Service) by Region

4.9

6.97.2

1.3

NA EMEA APAC CALA

Ann

ual R

even

ue P

ote

ntia

l (U

S$

B)

2nd -Line Service Global Rev. Potential

0

1

2

3

4

5

6

7

8

Source: Frost & Sullivan

The global demand for the Identity-as-a-Service offering is quite robust, with more than 1.1 billion subscribers worldwide interested in the service, being led by the Asia-Pacific region with 600.8 million users demonstrating intent to sign up. On the revenue side, the regional TAMs are also strong, with the global market potential reaching annual service revenues over the $20 billion mark. For more details on some of the forecast assumptions, please consult the Appendix.

CONCLUSIONS

Austrian economist Joseph Schumpeter (1883-1950) greatly influenced the economic development theory and coined the famous term “creative destruction.” Innovation cycles are disruptive in nature: new firms and existing ones that can adopt the new technologies can thrive under such a “creative destruction” environment, whereas others eventually vanish because they cannot make the necessary adjustments.

The VAS industry is undergoing a transformation that is evolutionary rather than revolutionary in nature. Operators are increasingly faced with newer threats from OTT players that are nimbler and more agile, enabling them to identify a niche market and move to address it before carriers can even begin to reconfigure their networks to deliver the service in the traditional modus operandi. Therefore, service providers need a partner that can provide innovative solutions that can deliver OTT services in an agile fashion. Of all the vendors analyzed for Identity as a Service, the only one that meets all the requirements is Movius with its myIdentities solution.

Ongoing trends such as BYOD, establishing the right work/life balance and being able to establish a dual persona approach for a plethora of handsets (including both smart and feature phones) suggest that the market is ripe for adopting such a solution. Movius’s myIdentities brings several benefits to operators, enterprises and end users, namely:

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Operators:

• Can be deployed as either Circuit Switched or VoIP, allowing the operator to choose the quality and utilization of their network

• New revenue generation –allows carriers to charge a premium for extra lines on a phone

• Eliminates the need of a subsidized phone to offer a new line to a subscriber

• Cost-effective prepaid engine/integration with existing voucher management system

• Supports a large installed base of subscribers owning smartphones (via application download) and feature phones

• Split billing for voice/data for each identity

Enterprises:

• Multiple voice lines supported on VoIP or TDM with each line having voice, data and messaging capabilities without the need to own a multi-SIM phone

• Simple to deploy, so MIS staff can spend its time on other activities

• Security/anonymity/privacy for each identity (i.e., using a different number than the primary mobile number)

• Multi-person/MDM agnostic allows for container management and/or security as an “overlay” to existing MDM and security offerings

End Users:

• Ease of use: easy to use and deploy

• No need to own a multi-SIM phone

• Mobility (for subscribers on the go wishing to remain connected)

• Virtual presence in different cities (for SOHOs, SMBs)

In conclusion, Frost & Sullivan believes that Movius myIdentities allows operators to gain a better footing against the OTT players, while generating enterprise and subscriber stickiness by tackling key current pain points. The above-mentioned key differentiators should position myIdentities well in the dual persona solution arena, enabling Movius to gain good mindshare in this key emerging VAS segment.

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Identity as a Service: Bringing a User’s Persona to His Corporate Handset

APPENDIX

Here we share a few more of the assumptions used in our model. For the baseline numbers, we used the following set of parameters:

Table 2: Frost & Sullivan Model – Input Parameters

Region Total Subs (m)

Wireless Pen.%

% Smart Phones Prepaid% Multi%

NA (North America) 354.6 101.6% 48.7% 25.2% 35.0%

EMEA (Europe, Middle East & Africa)

1,370.7 128.1% 23.4% 72.2% 28.0%

APAC (Asia/Pacific) 3,038.1 87.9% 14.7% 76.3% 17.0%

CALA (Caribbean & Latin America)

533.5 123.6% 14.8% 77.9% 30.0%

Source: Frost & Sullivan

For each region, the table shows the total number of mobile subs, wireless penetration (as a percentage of the population), percentage of smartphones, percentage of prepaid users, and percentage of multi-line subscribers (the last three parameters as a percentage of the overall user base).

The model also assumes the following Take Rates (TRs) or percentage of the base interested in having dual persona services for each user group (single-line, multi-line, smartphone, feature phone, prepaid, postpaid).

Table 3: Frost & Sullivan Model – Take Rates for Dual Persona Services

Region Single Line%

Multi Line%

Smart Phone%

Feature Phone% Prepaid% Postpaid%

NA (North America) 25.0% 30 .0% 55.0% 10.0% 15.0% 31.0%

EMEA (Europe, Middle East & Africa)

16.5% 42.5% 70.0% 9.0% 20.0% 35.0%

APAC (Asia/Pacific) 12.5% 50.0% 80.0% 8.0% 12.5% 40.0%

CALA (Caribbean & Latin America)

7.0% 45.0% 77.5% 7.5% 10.0% 45.0%

Source: Frost & Sullivan

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ABOUT THE AUTHOR

Ronald Gruia is the director for Emerging Telecoms at Frost & Sullivan, where he covers topics such as NGN transitional technologies, 4G/LTE, IMS (IP Multimedia Subsystems), FMC, VoIP, SDN (Software-Defined Networking), NFV (Network Function Virtualization), Carrier Messaging/Value-Added Services Platforms, IPTV, IP Centrex, Triple-Play Services, Enterprise Communications Systems, Unified Communications, and Video Conferencing, among others. He has spoken at conferences such as Supercomm, VON, 3GSM, MWC, CTIA, Futurecom, VMA, TMIA, IMS Expo, IPComm, Fierce IPTV, Intel Communications Summit, VON Canada, IP World Canada and Comdex Canada.

He is a columnist for TheStreet.com and also writes articles for various publications (such as NGN/IMS Magazine, VoIP Magazine, Telecommunications Magazine and Telemanagement), has appeared on CNBC (US), BNN (Business News

Network), Report on Business Television and TechTV (Canada), Decision TV (Brazil) and Telecom TV, and is often quoted in publications including Business Week, Forbes, Wired, API, MarketWatch, Reuters, The Street, Network World, IT Business, IT World, San Jose Mercury News, National Post, Globe&Mail and Yahoo! Canada Finance.

Gruia is an MIT graduate in Electrical Engineering and has accumulated years of experience in the telecom industry, having held several roles at Nortel Networks’ Enterprise Division, where he earned a US patent.

This paper is part of the ongoing coverage of worldwide information and communications technologies markets by Frost & Sullivan (www.frost.com), an international growth consulting company. Working closely with our clients, we use advanced market research methods to identify and analyze the critical market challenges they must address to become successful competitors in their industry.

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ENDNOTES

1. First Trusted Mobility Index Benchmarks Consumer Confidence in Mobile Devices and Services, issued May 2012. For more information, please consult: http://www.juniper.net/us/en/local/pdf/additional-resources/7100155-en.pdf

2. ARPU uplift is for subscription-based pricing scheme only. Potential incremental voice/data revenue uplift is not included.

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