451 Research: Sprint's managed collaboration play: Google Apps for the SMB masses

InsightaaS perspective: 451 Research is one of the world’s leading sources of insight into cutting edge technologies — including areas that are important to InsightaaS and our principals, such as cloud, communications, analytics, and sustainable IT. As regular visitors to this site are aware, InsightaaS.com works with 451 Research to bring occasional thought leadership pieces to our readers. In fact, we featured a post on ‘Zombie accounts and ‘freemium’ business models’ last month, and interest was so high that we thought introduce this piece on an area of ICT that is often neglected, but critical to businesses in our increasing wired world — telecommunications.

Communications service providers have been under siege for some time now, as the consumer wireline business shriveled in face of the mobile onslaught. And while many telcos have found ample opportunity in mobile networking, another tactic has been to build products and service aimed at enterprise markets. Question is, which product in what business market holds the key to profitability in what has become an increasingly crowed space? The delivery of cloud services that can take advantage of the CSP’s massive technology infrastructure while driving network traffic is a familiar approach — but again, one that has been adopted many times over with subtle variation to target specific submarkets. In the 451 Research report presented below, authors Rich Karpinski and Chris Hazelton reinforce the firm’s well-deserved reputation for competitive analysis with a look at Sprint’s Google Apps play, assessing the potential for partnership with Google to provide the entre to the SBM community that Sprint needs to hold its own against Verizon and AT&T heavyweights. The authors conclude that resale of Google Apps is unlikely to provide the “mass-scale disruption” or wedge that Sprint is hoping for due to the broad availability of Google productivity tools through other channels — unless Sprint can differentiate with competitive service support, a capability that should have broad appeal to the SMB.

Report by analysts Rich Karpinski, principal analyst, mobile operator strategies  and Chris Hazelton, research director, enterprise mobility, 451 Research

Challenged to compete with larger operators in enterprise mobility, Sprint — in a move pulled straight from new parent SoftBank’s playbook — will soon offer Google Apps for Business as a managed service, backed by full service and support and powered (where appropriate) by its 4G network. With a simpler service offering, low pricing, available mobile service integration and a healthy dose of customer support handholding, Sprint believes its offering can disrupt the traditional office productivity and communications market.

Sprint is positioning the offering, which was announced in late July and is set to be launched in August, as a mobile-centric version of Google Apps for Business. It will provide an array of deployment and support services to help businesses get started, as well as related offerings such as single sign-on, domain setup and integrated mobile service/Google Apps billing. Using the apps alongside Sprint’s 4G mobile services is optional, though obviously this will be pushed by the operator. The service comes weeks after Sprint updated its Sprint Fusion business services pricing, which like the Google Apps move is designed to differentiate the company from its larger rivals.

The 451 Take

Sprint is in restart mode across the business — lighting a fire under its network with Network Vision and Spark; reinventing its consumer business with a focus on Framily, new prepaid pricing and device bundles; and now on the SMB enterprise front with a collaboration/mobile productivity push centered on Google Apps for Business. The opportunity to leapfrog competitors with a disruptive SMB cloud play — while also sidestepping them in the big-ticket enterprise cloud market — is there, but may take some time to execute.

SoftBank chairman Masayoshi Son is famous for his 300-year planning horizon, in essence championing a long-term strategic vision versus short-term, next-quarter-driven tactics. But his patience will be tested if Sprint’s enterprise team can show quick progress with its new solution, as well as aggressive follow-through in turning a Google Apps for Business win into a broader platform play that can even further disrupt the enterprise IT and telecom markets.

Centering that strategy on a platform that is available via many other channels and banking on Sprint’s good name and value-added services likely won’t be the mass-scale disruption it hopes. But the solution — and the philosophy behind it — does have Sprint headed back in the right direction and with a solid path forward on the enterprise front. For now, getting the ship righted and headed in a viable direction is a good first step.

Enterprise mobile focus

For Sprint, the Google Apps play isn’t just another IT solutions partnership but a fundamental rethinking of the enterprise side of its mobility business, including what customers to serve, what those customers need from a solutions partner, and how to scale that business profitably. Sprint’s last big bet on business mobility was its acquisition of Nextel and that vendor’s push-to-talk service, which was popular among business (more blue-collar than white-collar) customers. But as mobile data and smartphone apps superseded voice service among business users, Sprint struggled to keep up and Nextel became more of a financial and operational burden than a vehicle to serve and attract new business-sector customers.

Subsequent Sprint B2B offerings such as mobile VoIP and UC cloud services, among other moves, failed to fully click with business customers. Meanwhile, the company also provided wireline services — such as MPLS data connections — to enterprise customers, but again was challenged to compete with larger-scale rivals or find growth in that mature, relatively commoditized sector. At the same time, larger rivals AT&T and Verizon began to dominate the high end of the mobile enterprise services sector, while also — via M&A and major investment — becoming major cloud and hosting players as well, leaving Sprint with little enterprise room to breathe.

Bet on mobile cloud computing

Repositioning itself amid such enterprise market challenges is the clear driver behind Sprint’s Google Apps play. At the center of the vendor’s new collaboration solution is the full cloud-based Google Apps platform including Gmail, Google Calendar, Google Drive, Google Docs and Google Sites, providing businesses with a full communications and office productivity suite. As Sprint is looking to expand its support for enterprise CIOs, it wants to help IT drive the core of their business. Sprint Business also wants to take on IT and telecom management, in this way freeing up time for CIOs and IT to focus on delivering mobile productivity tools to lines of business.

This is where Google Apps for Business comes in. Built for mobile, Google Apps allows employees to connect and work with corporate data from any connected device. In a BYOD world, this provides ultimate choice for the users regarding the type of device they want to buy. Ultimately, Sprint would like that to be a device running on its wireless network.

Regardless of whether it is a Sprint device, competitor or LAN limited device, the mobile operator will derive revenue from support services. Sprint’s 24/7 support and online training provides a point of contact that is missing when buying Google Apps directly. In a similar vein to the IBM and Apple partnership, it is these support services that bring greater enterprise chops to Google Apps for Business.

The integration of Google Apps for Business and Sprint’s managed connectivity looks to shift IT’s focus from legacy connectivity to mobile apps that empower employees. Google Apps for Business provides a scalable, low-cost alternative to traditional productivity apps. Sold alongside Google’s collaboration tools, Sprint will offer Microsoft Lync messaging. While this does not integrate with Google’s services, it does offer more robust services than Google Hangouts, and Sprint has experience internally with Lync.

Sprint isn’t hosting the cloud service, but partnering with Google as any other reseller would. That’s important. It keeps Sprint’s capex costs low, allows unlimited scalability, and essentially outsources service management and new product development to Google. Sprint already offers managed collaboration services from Microsoft and Cisco, which are suitable for businesses seeking a more traditionally enterprise IT-centric solution, and likely tied to wireline voice and data services as well. Sprint executives repeatedly mentioned ‘millenials’ as a customer target for the company’s Google solution, noting that younger office workers are more than comfortable getting their office apps from their cloud — alongside other app store offerings they find useful — while ‘BYODing’ their own device to boot.

A company fitting such a profile might not have an IT or telecom department at all, making a willing and hands-on services and support partner like Sprint all the more attractive. For all that Google does, customer support isn’t a strength, leaving a real opening for reseller partners. The support services that Sprint plans to offer include implementation help, either via self-service templates or more hands-on support; cloud deployment, migration and change management support for employee adds and moves; and back-end support, including setting up a private domain, managing user authentication and sign-on, and providing integrated billing and other back-end support. Sprint also aims to change the ‘conversation’ that it has with enterprise customers, moving from talk of speeds and protocols to better understanding a customer’s business — and how Sprint can help them not just manage telecom costs but grow revenue, better serve customers and even innovate in their market.

Pricing for Sprint’s Google solution will start at Google standard pricing of $5 per month ($50 per year), with unlimited storage adding $10 per month or $120 per year (more customized IT services will be priced on a per-contract basis). For now, Sprint will not focus on hardware bundles but could ultimately offer phones, tablets and even laptops in a bundled offering. We would expect Sprint to move quickly on an enterprise device/services bundle, following a path it has already taken on the consumer side.

For instance, in recent months the company has rolled out music (with Spotify and Harmon Kardon) and e-fitness (with Under Armour and Samsung) hardware and service bundles that come together on the device via interfaces built using its Sprint Live platform. Those deals combine unique service discounts — such as family-priced Spotify — and device hardware with a customized UI experience. Building similar Sprint Live bundles for enterprise users — such as a communications suite bringing together HD voice, Wi-Fi calling and offload, and a well-integrated Google Apps experience on business-focused hardware — would be a no-brainer and potentially a big win.

Meanwhile, for Google Apps customers that today choose Sprint for their devices and mobile network services, Sprint will set up their devices with Google Apps and can even preload other apps, such as mobile device management clients or other enterprise cloud apps. While that part of the solution is nascent for now, layering additional apps and services on top of the core Google Apps solution gives Sprint a platform to grow its managed services business.

Differentiating a commodity

For now, Sprint is just one partner — albeit a high-profile one — among thousands of other Google Apps resellers. Most recently, Apple and IBM announced a deep collaboration combining Apple’s iOS devices, enterprise collaboration apps from both vendors, and IBM’s strong solution and support infrastructure. Even Sprint itself offers competitive solutions, delivering cloud collaboration, communications and productivity services in partnership with Microsoft and Cisco.

If there’s a model that Sprint is hoping to emulate with its Google deal, it’s of its own parent company, SoftBank, which is one of Google’s largest apps resellers (Google’s chief business officer Nikesh Arora was even named SoftBank’s vice chairman earlier this month). SoftBank has been a very aggressive ‘challenger’ operator in the Japanese market, leveraging an early LTE network deployment, a focus on cloud services and aggressive pricing to close the gap on larger rivals.

Since buying Sprint earlier this year, SoftBank executives have been encouraging Sprint to follow some of its successes. Some — such as a mobile phone targeted at children, a hit in Japan — haven’t worked. In other areas, such as teaming with SoftBank to jointly bid on smartphones or build the 2.5GHz LTE ecosystem, the pairing has yielded quick results. Clearly, SoftBank and Sprint are hoping to secure a quick, disruptive win with Google in the US.

Competition

As noted, Sprint is just one partner among thousands of other Google Apps resellers. Most of those resellers are small or local players, though cloud provider Rackspace is building a growing Google Apps business at the higher end of the market. Verizon has been reselling Google Apps since 2011, but without the major push that Sprint is making. Sprint also faces an array of rivals — both on-premises and cloud.

Microsoft Office 365 and Cisco Hosted Collaboration Solution (HCS) are the major competitors on the hosted services front — and Sprint has reseller relationships with both of these vendors, as well. Microsoft in particular is making a big push with its cloud-based Office, bundling its latest offerings with a variety of hardware ranging from Windows Phone and Tablets to new two-in-one devices such as Microsoft Surface that clearly target a new approach to office productivity.

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