Will Apple Disrupt Payments?

One can make an argument that any Apple mobile payment system, even if it remains largely aimed at iTunes users and products, will disrupt the existing payments business. Apple does have a base of 160 million iTunes users, said Avivah Litan an analyst at Gartner.

That base gives Apple the ability to operate largely as a "closed payment system" with minimal need to interface with credit card companies and banks, she said. "They can largely shut out credit card companies if they choose to,"and operate in much the same way that PayPal has done in the virtual world, she said.

Some will argue that this approach actually is rather credit card issuer "friendly." Users of iTunes will probably need to continue using their credit cards and bank accounts to replenish the funds in their iTunes accounts, which would make any Apple mobile payments system a distributor for card companies in much the same way that PayPal is. The main issue is the loss of analytics for the card issuers.

Apple could disrupt mobile payment industry, analysts say

Hulu to Become an Over-the-Top Cable Operator?

Hulu management has discussed recasting Hulu as an online cable operator that would use the Web to send live TV channels and video-on-demand content to subscribers, the Wall Street Journal reports.

The new service, which is still under discussion, would mimic the bundles of channels now sold by cable and satellite operators. In other words, Hulu might wind up being an online way of getting linear TV content. Some people might see that as some sort of failure. Others might see it as something else. Much will depend on how the partners structure the end user deal.

If Hulu is tied to existing linear subscriptions, one set of revenue models and value will be offered. It will be useful to watch one's paid-for linear content on devices other than the at-home TV, but beyond that Hulu will simply represent another "TV Everywhere" sort of initiative.

If Hulu acts like an over-the-top cable subscription, there are other possibilities, depending on whether users have more, or less, control over which "channels" they want access to. Hulu might then offer a bit more discrete control over packages, compared to standard multichannel video packaging into a few broad tiers.

It might be asking too much for the new approach to deviate too much from the typical cable approach. But an over-the-top approach, largely disconnected from a "geographic" requirement (where you have to buy a fixed network service to get the mobile content), would still be interesting.

Hulu Reworks Its Script as Digital Change Hits TV - WSJ.com (subscription required)

Cord-Cutting is Too Difficult For Average Families

Here’s evidence that regular people have zero time for things like Google TV, Boxee, and Roku, if only because they’re too complicated.

Hill Holiday, an ad agency,” asked five Boston-area families to participate in a cord-cutting experiment. For one week each family was asked to forgo traditional cable TV in favor of one of the following devices: Apple TV, Google TV, Boxee Box, Xbox 360, and Roku.

As it turns out, TV watching still is a "lean back" activity, and the new Internet delivery systems changed that into an undesirable "lean forward" experience, to some extent. That isn't to say that some company, sometime, will "Apple-ize" the experience and make it elegant. But we aren't there yet.

Video: Experiment Shows Cord-Cutting Simply Too Difficult For Average Families To Grasp

Card Issuers Face Huge Revenue Challenge

"From a bank perspective, here is why we care about mobile payments: debit, prepaid and credit products are predominantly dependent on interchange revenues that could become less profitable, with a huge negative impact on earnings,” says Philip Philliou, partner at the firm of Philliou Selwanes.

In part because of new regulatory changes and pressures card issuers may find card economics getting worse. “It is inevitable that the revenue side of the business will change downward, so profitability will be affected massively,” he says.

How massive? He expects “more than half the profit for debit and credit businesses” will be affected. Right now, a card issuer can typically expect revenue of perhaps $85 and about $40 of expense, per customer, per month. But the industry expects the economics might fall to something like average revenue of $38 and $40 in expense, so the typical card issuer is “under water,” says Philliou.

Mobile Marketing and Technology

Will Isis Attempt to Replace, or Work With, Existing Payment Processors?

You could get a good debate, almost any day, over the potential impact new players in mobile payments might have. Isis, the joint venture between AT&T Verizon Wireless, T-Mobile USA, Barclays and Discover Networks might be seen as a case of a venture that aims to displace some of the current players.

Others argue that will be very difficult (it will) and that the more-logical route is some sort of grand partnership, that focuses less on shifting market share in the “payments” business and focuses more on creating new forms of value that have more to do with eliminating overhead, improving customer service and creating more convenient ways to advertise, deliver coupons and promotions, or create loyalty.

David Schropfer, a partner at the Luciano Group, says it is not clear what will happen. But there is some logic to the notion that the current “four-party system involving a merchant, a consumer, and the banks that the user and retailer use, was created long ago, and could be redesigned for an Internet-connected, mobile world, operating more efficiently at the same time it creates more value-added platforms.

Mobile Marketing and Technology

Apple Mobile Payments: What Should Banks Do?

Apple's rumored plans to get into mobile payments can be seen in several ways. If Apple decides to disrupt the "four-party" existing retail payments model, the company might be a threat. If it decides it wants to do something else, it could be a banking partner.

The natural instinct for some is to put Apple in the same camp that many have put PayPal Inc. and Wal-Mart Stores Inc., that of the enemy. But banks that look for ways to work with Apple might find themselves getting a new distribution channel.

"If we as a banking industry don't get our head around payments, we risk the chance of an Apple or Google or anybody else being a disrupter in the space and taking some of the volume, very similar to the way PayPal has become a disrupter in the industry," said Jeff Dennes, the director of online and mobile services at Huntington Bancshares Inc.

The big issue is how, and where, Apple decides to play within the ecosystem. Right now, the retail payments business is anchored around a four-party model that includes merchants, consumers, acquiring and the banks used by the consumers and retailers. Everything else basically revolves around those four key actors.

But Apple might try to invent something new, possibly linking existing customer accounts to iTunes, a setup similar to what eBay Inc.'s PayPal does. This could cause banks to lose some of the revenue they would normally gain through card transactions, as Apple would insert itself into the ecosystem.

Apple's iTunes Store, which could serve as the mobile wallet used to store payment information on a consumer's payment-enabled device, generated net sales of $1.16 billion in its 2011 fiscal first quarter ending Dec. 25, according to Apple.

In Apple Mobile Pay Plans, a Possible Opening for Banks - American Banker

Netflix on CLEAR 4G: Wireless Issues are Clear

When Netflix recently released data on Netflix high-definition video performance on a number of networks, it included Clearwire's 4G wireless network among all the other fixed networks. That a 4G wireless network would rank behind wired DSL, cable, and fiber optic networks in terms of experience, when the content being streamed is high-definition video, would not surprise anybody who follows such things.

Larry Dignan at ZDNet notes that "looking at the Netflix data you’d think Clearwire was a dog." He argues the opposite is true. Clearwire’s 4G service is fast enough for consumers to stream Netflix, and he sees that as a plus.

Still, the study, which might be criticized on some grounds, suggests the issues wireless service providers will have as video becomes a more-important application on all networks.

See http://www.techzone360.com/topics/techzone/articles/139170-ranking-isp-performance-no-simple-matter.htm, for example.

Netflix Streaming on CLEAR 4G

AT&T Earnings

LinkedIn Ad Revenues $18 Million a Quarter

LinkedIn has 90 million members. They are a little bit older, professional, and wealthy than average, which makes them an interesting demographic for at least some advertisers.

So far, LinkedIn has not been able to convert its audience into ad revenue at a high rate. In the three months ending September 30, 2010, LinkedIn generated just $18 million in advertising revenue.

Advertising might be the key, or most important, revenue source for some sites. But it is harder than you might think to create a big ad revenue stream even for popular social media sites.

LinkedIn Revenues Prove Social Media Advertising Is Still A Lousy Business

Verizon Buys Terremark to Support Cloud Services

Verizon’s $1.4 billion acquisition of cloud and hosting company Terremark has some analysts putting a bevy of Internet infrastructure companies on the “to be acquired list.

The bet seems to be that large incumbents like AT&T may have to go shopping to beef up their enterprise units.

In a research note, Oppenheimer analyst Tim Horan argued that "the transaction highlights the attractive fundamentals of the Internet infrastructure space driven by the ongoing migration to cloud computing."

"Other providers in this space that represent potential targets include Savvis, Rackspace, Cogent Communications Group, Level 3 and Limelight Networks. Potential suitors include the incumbents AT&T, Verizon, CenturyLink, Windstream and foreign carriers."

Verizon's Terremark purchase puts Rackspace, Savvis on shopping list

Is the Era of Webmail Over?

Globally, total minutes spent on web-based email (not including PC web applications such as Outlook) was down two percent in November 2010 compared to November 2009, with time spent in the Asia-Pacific region showing even more dramatic decline dropping 10 percent, according to comScore.

Within the region, markets showed varying levels of engagement trends. The largest decline in time spent was seen in Malaysia (down 22 percent), India (down 19 percent) and South Korea (down 15 percent). Taiwan, Hong Kong and New Zealand on the other hand actually showed increases in overall minutes spent in the category.

Is the Era of Webmail Over? (comScore Voices)

Zong And Boku Launch Carrier Billing with BilltoMobile on Verizon Wireless Network

Zong and Boku, providers of online payments, now are working with Verizon Wireless, using a relationship with BilltoMobile. The move might help both firms leverage BilltoMobile's cost advantages with Verizon.

Historically, wireless carriers have charged roughly 30 percent to 40 percent to process transactions made on the carrier billing systems.

That obviously limits the range of goods, and types of goods, that sellers might be willing to transact using a carrier billing method. Perhaps the biggest potential change is that both firms could move beyond digital goods, at some point, though clearly the immediate incentive is to support mobile digital goods sales.

Mobile Payments Startups Zong And Boku Launch Billing Partnerships With Verizon

Mobile Payment Service Jumio Gearing Up

Jumio, a new online and mobile payment solution, is headed by Jajah founder Daniel Mattes.

Internet pioneers Zain Khan (former Google executive), Mark Britto (former Amazon executive) and Maarten Linthorst (former NASA partner) have jointed the Jumio advisory board.

Internet Pioneers Join Forces to Launch Online and Mobile Payment Service Jumio

IP Carrier: Android In-App Payments Coming "Soon"

Eric Chu, a group manager at Google for the Android platform, says the in-app payment system for Android originally was set to launch last quarter, but it was delayed because of developer distraction (the Christmas and holiday season). The payment function will be available soon, Chu says.

IP Carrier: Android In-App Payments Coming "Soon"

Everything Everywhere To Launch Mobile Payments

Everything Everywhere, the marketing venture between U.K. mobile operators Orange and T-Mobile, has unveiled plans to roll out a mobile payments service by the second quarter of 2011, and is powered by Barclaycard.

The new service will allow consumers to use their mobiles to make purchases at over 40,000 stores.

The platform uses SIM cards and bill build on Everything Everywhere and Barclaycard’s ongoing partnership, which has already produced a co-branded contactless credit card and the forthcoming Orange Cash pre-paid contactless card.

Users will initially be able to purchase items up to the value of £15 by simply swiping their mobile phones across an electronic reader.

The phone uses “Near-Field Communication” technology in addition to the SIM modules.

http://everythingeverywhere.com/2011/01/27/the-uk%E2%80%99s-first-commercial-launch-of-contactless-mobile-payments-by-everything-everywhere-and-barclaycard-set-to-revolutionise-buying-on-the-high-street/

Everything Everywhere To Launch Mobile Payments