Samsung XCover Pro Targets Underserved Market in SMB and Enterprise

[Originally published January 16, 2020. updated April 20, 2020 with availability and additional analysis]

Bottom Line

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Samsung’s mobile enterprise division has been targeting an under-served sweet spot in the SMB/enterprise market with purpose-built devices that are fairly priced and just rugged enough. Samsung’s Galaxy XCover Pro is a slim, rugged smartphone aimed at improving productivity for front-line workers while keeping their IT managers and accountants happy.

[Added April 20, 2020: The XCover Pro is now generally available in the U.S., and the affordable price point and target markets — which are heavy on essential sectors like logistics — makes sense in a Covid-19 world. Samsung’s press release is linked here.]

Analysis

The XCover Pro and Tab Active line offer more protection and business features than a consumer product in a case, but deliberately does not over-deliver on protection, as not everyone wants or can use huge, bulky devices. Samsung’s enterprise devices build on employees’ existing comfort with Samsung’s phones and One UI. Samsung is the only vendor that can do this; Apple is unlikely to add purpose-built rugged business devices to its product line. (The name “XCover Pro” may throw off some U.S. customers, as this is a ruggedized phone, not a cover. The branding makes more sense in Europe, where XCover was used for other Samsung B2B devices.)

Pricing is set high enough to be profitable, but the XCover Pro costs a lot less than fully ruggedized purpose-built alternatives, which encourages mass deployment across an enterprise. Samsung can highlight its investments in Knox, not just for data and device security, but also for deployment and software customization. Finally, Samsung wisely surrounds the XCover Pro (like Tab Actives before it) with third party software and accessories that ISVs can use to build customized solutions. This includes charging, scanning, and mounting hardware, and POS, inventory management, and other software, along with integrated Microsoft Teams support.

Samsung will be selling the XCover Pro in 1H20 through direct (unlocked) and Verizon VAR and retail channels. [Updated

Key Features

The XCover Pro is thin and light with a 6.3" AMOLED display. We have gotten hands-on with a pre-production unit, and it really feels like an update to Samsung’s Galaxy S Active consumer smartphone line that was a staple at AT&T until 2018. In addition, the XCover Pro:

  • MIL-STD-810G certified, IP68 water resistance, and tested to withstand 1.5 meter drops. The screen has enhanced touch capability for use with gloves on.

  • Android 10, One UI, and Samsung Knox for security, device customization, and deployment. Face recognition can be used for convenience, and a fingerprint reader on the side power button provides biometric security.

  • Samsung Exynos 9611 octa-core processor. While not a flagship or ideal for mobile gaming, this is a modern 10nm chip which should provide strong performance for any business application

  • Two external programmable buttons for quick launching apps or PTT (Push to Talk, with built-in integration with Microsoft Teams).

  • 4G with bands for consumer and private LTE networks. The XCover Pro features dual SIM slots even in U.S. which makes it easier to deploy when both public and private LTE environments are needed.

  • microSD slot for storage expansion

  • Large, removable 4050 mAh battery with fast charging. The XCover Pro has pogo-pins as well for drop-and-go charging with compatible charging sleds.

  • Wide and telephoto rear cameras. Many scanning apps can use the cameras alone, but for high volume scanning applications like inventory management, a choice of two third-party laser scanners that attach to the back of the XCover Pro are available.

  • mPOS ready (EMV-level 1), so no additional hardware is required for accepting credit cards and many forms of tap-to-pay.

  • $499, unlocked

Samsung has also built a third party hardware and ISV ecosystem that complements the XCover Pro with accessories, software, and deployment services.

Recommendations

Samsung

  • Verizon is a good start, but Samsung should be working with additional carriers to sell the XCover Pro through their enterprise sales divisions, and also aim to have them on display at select carrier retail locations to reach SMB managers who shop at retail.

  • A removable battery is useful, but still requires the device to be shut down before swapping batteries and continuing your shift. Samsung should consider adding hot swap capabilities. A modular, hot-swappable battery pack system would be even more attractive to some verticals.

Competitors

  • Apple targets this space with the iPad mini and iPod touch, both of which were updated in 2019 with slightly updated processors. However, the iPad mini is oversized for front line workers – it tends to get built into retail POS systems – and the iPod touch is tiny. While Apple is unlikely to make a purpose-built ruggedized device, it should target business users with a larger iPod touch with smart connector for less-bulky scanning, battery, and payment accessories. It can position the new, larger device as an Apple Arcade machine for kids as well.

  • Someone at LG is bound to see Samsung’s XCover Pro and imagine that an LG G-series smartphone is a reasonable alternative. LG certainly needs to move more G8 inventory, and the G8X is already MIL-STD-810 and IP68 rated! However, to sell into this market, LG would first need to reinvest in GATE (LG’s Knox equivalent), build out an enterprise sales force, and create new third party relationships with software, accessory, and solution providers. LG’s enterprise mobility website does not even list the G8 or G8x as compatible.

  • TCL does have some of this structure in place for BlackBerry. Why isn’t TCL making a BlackBerry targeting this segment? [Update April 20, 2020: TCL has exited the BlackBerry business. This is the correct call for the prosumer and knowledge worker segment, which has moved almost entirely to Apple over the past decade. However, there was definitely a missed opportunity for workers outside the office.]

  • [Added April 20, 2020: Samsung’s main competition in purpose-built, ruggedized devices in the U.S. are from Kyocera (Duraforce Pro 2 $449 at AT&T, $444 at Verizon) and Sonim (XP8 $699 at AT&T, $649 at AT&T). Samsung’s XCover Pro outperforms both competitors, is slimmer, and offers more flexibility and security with Knox. Sonim is more ruggedized, potentially justifying its higher cost for a more limited market. Kyocera will have to compete on price - and the fact that it looks more rugged than Samsung.

  • [Added April 20, 2020: T-Mobile does not offer a product in this category, but it is pushing service plans to SMB. Business owners can certainly purchase the XCover Pro unlocked and bring it to T-Mobile’s network, but T-Mobile ought to offer the phone directly with financing.

Conclusion

There's a huge portion of the business market that Samsung is addressing with the XCover Pro that is either under-served by standard consumer iOS/Android devices placed in cases, or over-served by expensive, custom apocalypse-proof Android and Windows devices. Samsung has some branding and distribution hurdles to overcome, but the price is right and no other vendor is targeting this space as well.

To discuss the implications of this report on your business, product, or investment strategies, contact Avi at avi@techsponential.com or +1 (201) 677-8284.

Avi Greengart