Samsung is learning the hard way that building a thriving smartphone and tablet business serving corporate and government clients isn't easy, particularly when your roots are in the consumer market.
The big challenge is to build a support organization and to develop security that will satisfy network and IT administrators whose jobs are on the line if the vendor stumbles. So far, Samsung isn't winning any fans.
The company's security centerpiece for its Android smartphones and tablets is the Knox platform that creates containers for corporate data, so it can't be moved to unauthorized apps. While Knox was suppose to make Samsung's Galaxy devices the must-have for business and government agencies, The Wall Street Journal reports that delays and bugs have frustrated clients instead, including the U.S. Defense Department.
What's at stake are the many businesses looking for alternatives to the BlackBerry, arguably the most secure smartphone in the market. Unfortunately for BlackBerry fans, missteps and strong competition from Apple and Android vendors has left BlackBerry a shadow of its former self. Demand for BlackBerry smartphones are so dismal that Verizon is willing to toss one in at no charge with a two-year contract and AT&T will sell you one for 49 cents.
Three years ago, BlackBerry accounted for 68% of new smartphone sales to enterprise users, according to the Journal. Since then, its market share has plummeted to just over 5 percent.
With that kind of gap in the market, Samsung, the top Android seller, would be doing a disservice to investors if it didn't go after the ex-crackberry users forced to look elsewhere for a smartphone.
Not Fort Knox
Knox performing well is critical because Samsung has to convince enterprises that Android can be as secure as the BlackBerry. While Android fanboys can argue their loved one is as secure as its rivals, Samsung has to soothe customer jitters brought on by endless reports of malware aimed at the platform.
Without a rock-solid Knox, Samsung is going to find it hard to convince businesses to buy its smartphones. Also, Knox isn't free and enterprises are unlikely to pay for junk, which is what Knox is starting to look like.
People familiar with the technology's problems told the Journal that Samsung has struggled in meeting key deadlines and shipped buggy beta versions that should have stayed on developers' workstations.
Samsung claims its making progress in fixing the problems and promises that everything will be right with the security platform next year, when the company expects businesses to start buying Knox-outfitted smartphones in droves.
DoD goes back to Blackberry
Meanwhile, the Defense Department has gone back to its trusted BlackBerry, at least temporarily.
The Pentagon has ordered all military personnel to switch from Apple and Android devices to an older model BlackBerry. The official reason is to give the Defense Department time to install a $16 million mobile device management system. Until then, the only technology the Pentagon can trust is the BlackBerry 9930 on an existing BlackBerry Enterprise Server.
There's no doubt the BlackBerry remains the gold standard in enterprise security. To make sales in business and government, Samsung will have to prove its technology is BlackBerry's equal.
So far, that hasn't happened. Samsung has a shot with Knox, but it's going to require the company to learn a whole new business. Sometimes, making the changes necessary to serve a new customer group is harder than building the technology.