Wednesday, October 24, 2012

Is it Already "Too Late" for Mobile Service Providers in Mobile Payments?

Brand new markets are chaotic, and especially most new markets that involve the Internet, applications and mobile in a broad sense. That generally works out in practice to contestants trying to innovate "at Internet speed," a problem for telecom service providers. 

That might lead observers to suggest that it is possible mobile service providers already have fallen far behind the strides made by payment networks, retailers, banks and application providers in the mobile wallet or mobile payment space. 

"Not many ventures have demonstrated good success so far," says Sandy Shen, research director at Gartner. But the market, and the contestants, continues to get traction. 

For Western Europe as a whole, Gartner forecasts that in 2012 the number of near field communications users will be 22.8 million and the transaction value for mobile payments including text messaging, WAP and NFC will be $20.3 billion (€15.7 billion) in 2012.

One might argue from history that it is unreasonable to expect telcos to "lead" any big new market, at first. That does not mean telcos will, or will not, ultimately carve out a role, or even a significant role, in the business

It does mean that expectations of "immediate" success do not correspond to the way telcos historically have achieved success in any of their leading markets or product segments. 

Telcos tend to wait for emerging markets to clarify, typically only after others have shown a revenue opportunity of some size exists. Then they move. Nor do telcos always move "organically." Very often, they "buy their way into new markets" by acquiring other firms in the emerging markets. 

One would be on rather firm ground in suggesting telcos might wind up as major participants in mobile commerce, mobile wallets or mobile payments in ways they have not yet revealed or decided to embrace. 

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