Starbucks Canada Gets Mobile Payments

The official iPhone application from Starbucks now is available for Starbucks customers in Canada. In the U.S. market, Starbucks has gotten about 20 million transactions in less than a year.


Most contenders in the mobile payments or mobile wallet business are hoping to create large-scale platforms used by lots of retailers. Starbucks. on the other hand, has reasons of its own for creating a proprietary system that already has processed more than 20 million mobile payment transactions.


The approach shows one way even "targeted" mobile payment applications and systems can add business value. For starters, the Starbucks approach does not require inventing anything new. It uses existing tools to quickly reach critical mass.



mobile payments forecast


Starbucks also has clear business drivers, mostly related to enhancing loyalty.


Since each mobile payment account is tied to a Starbucks card, Starbucks increases the value and usage of its prepaid cards.

Starbucks Canada gets mobile payments

AT&T, Intuit Launch "GoPayment" Mobile Payments for AT&T Smart Phones

Mobile payments forecast source

Intuit and network operator AT&T have launched "Intuit GoPayment for AT&T," a mobile application and credit card reader that helps small and mid-size businesses process credit or debit card payments using their smartphone or tablet.


GoPayment for AT&T comes with automatic signup and pre-approval for the majority of AT&T customers and is available from AT&T's nationwide small business sales force and call centers.


The basic GoPayment service has no monthly, transaction or cancellation fees, and offers a 2.7 percent discount rate for swiped transactions. For small businesses with higher volume processing needs, a paid version of GoPayment also is available for $12.95 a month and provides a lower discount rate of 1.7 percent for swiped transactions.


That plan is recommended for businesses that process more than $1,000 a month and want multiple employees to process payments using one GoPayment account. The monthly fee for the paid version of GoPayment is rolled into customers' existing monthly AT&T bill.

AT&T, Intuit Partner on GoPayment Mobile Payment Platform

Google Won't Favor Motorola, Says Schmidt

Eric Schmidt, the chairman of Google, yesterday reiterated that Google has no plans to charge for Android in the future, and that it does not intend to change its strategy for Android after it completes its acquisition of Motorola.

For some the latter point was the more important item. Android Will Remain Free, And So Will Motorola

The worry in the Android community, especially among licensees of Android, is that despite Google saying otherwise, it might favor its own "in-house" devices, made by Motorola, and thereby damage the businesses of other Android device manufacturers.

Schmidt's most-recent comments are consistent with earlier Google assurances that it would not do so, reinforcing the contention that the primary reason for acquiring Motorola was to buy Motorola's patent trove. That has become more important for Google and other Android licensees as patent litigation has heated up.

AT&T Adds Mobile VoIP App

IP Carrier source

AT&T smart phone customers now will be able to make international calls from their mobile devices using a VoIP app developed in conjunction with 8x8. AT&T "Call International" is a free mobile VoIP app providing international long distance calling at low, competitive rates.

Developed with and operated by 8x8, AT&T smart phone customers can use the app to make calls from the U.S. to international numbers; and when abroad, customers will benefit from the same low rates using the app over Wi-Fi . 


A list of countries and rates are available at www.att.com/callinternational.



The app provides simple, step-by-step instructions to establish an AT&T Call International account. Once established, customers can immediately make international calls through the app by either dialing directly or by accessing their existing contacts list. All calls are billed directly to the customer's credit card.


The AT&T Call International app is available now as a free download in Android Market, BlackBerry AppWorld and more. AT&T Mobile Adds VoIP-Based International Calling

Amex Launches $100 Million VC Fund

On the heels of the creation of a venture capital fund by France Telecom and Publicis, and Telefonica's recent restructuring that created a new digital business unit, American Express has also created a $100 million fund to “identify and develop innovative technologies that will help accelerate the company’s digital transformation.” 


The company, which was founded in 1849, is now establishing a Silicon Valley office to stay on top of the latest developments in mobile and finance technologies. 


The new office and fund will be led by Harshul Sanghi, the former head of Motorola Mobility Ventures. Amex launches VC fund All of those initiatives point to the growing strategic importance of mobile, mobile commerce, payment, mobile wallet and mobile content and transaction applications and services. 

France Telecom and Publicis SA are setting up a venture-capital fund focused on European technology startups. Initially capitalized at about $139 million (100 million euros), the companies will seek additional investors to raise a fund of perhaps 300 million euros ($411.5 million). 

As you might guess, the sorts of companies that might receive funding are of interest to both a mobile service provider and an advertising firm.

Likely sectors include online marketing, e-commerce, mobile content and services, online gaming and social networks, as well as their associated technologies and infrastructures such as middleware, cloud computing, security, and online payments. Likely investment areas

The venture, and the likely investment themes, illustrate the perceived importance of mobile advertising to both France Telecom and Publicis. 

According to Ofcom, the U.K. communications regulator, over the last decade, average monthly household spend on communications has increased by just 12.8 percent in real terms, to £93.10 (£83.01 in 2000) and has fallen consistently year on year since 2005 (£106.50).

Total operator-reported telecoms revenues fell by two percent in 2010. Retail revenues from mobile services increased slightly (up one percent, having fallen for the first time in 2009), but those from fixed voice and fixed Internet services continued to decline, down by three percent and six percent respectively.

Total annual communications industry revenue in 2010 was £53.4 billion. On an inflation-adjusted basis, industry revenues were £54.3 billion in 2000. Read more from Ofcom here.

BT’s share of voice call volumes fell to under 20 percent during 2010. BT’s share of total fixed and mobile voice call volumes fell to 19.4 percent in 2010. BT’s share of fixed voice call volumes also fell to under 40% for the first time during the year. 

In that regard, the most-significant action by a tier-one provider in the past several weeks has been the application by Rogers Communications to become a bank under the Canadian federal Bank Act. If approved, the proposed "Rogers Bank" will focus mainly on credit, payment and charge card services. There is an obvious relevance for Rogers as a provider of mobile payments, but that might not be the immediate application. Banking, advertising, M2M

Some of you should have the logical reaction of “I thought telecom companies were in the communications business?” And that would be a good question. But some might have wondered why telcos were in the video entertainment or advertising businesses as well, and both those businesses now are seen as logical for large telcos. 

It might now be more accurate to say that telecom companies are in a growing variety of businesses that use networks. Rogers to become a bank.

The move by Rogers is highly significant, as it illustrates an important point about where large tier-one providers must look for revenue growth. For an organization such as Rogers, which might book $12 billion in 2011 revenue, even interesting new lines of business that produce scores of millions to hundreds of millions worth of new revenue are too small to "move the needle" overall.

The problem is even worse for organizations such as AT&T or Verizon that book $30 billion to $40 billion a year in revenue. Simply put, there are few realistic new lines of business large enough to matter. That is why you hear so much about machine-to-machine communications, mobile advertising, mobile banking and enterprise-oriented cloud services. Each of those businesses could, in principle, produce $1 billion a year in incremental revenue for any single contestant in a national market.

Keep in mind the scale requirements. A business has to be big enough to produce $1 billion in incremental revenue for each contestant that wishes to compete in the business. By definition, any new line of business must be capable of generating global revenue in the scores of billions of dollars.

To repeat, Rogers will become a bank. It will do so because "banking" is a business big enough to be interesting, and Rogers has customer and other assets that will help it compete. 

There is another important observation, however. Many service providers are looking at ways to build a mobile payments or mobile wallet or mobile commerce business in some way. Rogers seems to be signaling that even "mobile payments," with a transaction revenue stream, might not produce enough incremental revenue to be interesting. In other words, a percentage of a transaction fee shared with other issuing banks might not produce enough revenue to be worth the effort. Rogers is signaling that it has to capture the full transaction fee, and cannot afford to share that fee with other issuing banks with which it might partner. 

At some point, even Isis might have to consider whether it must become a bank, or that its partners separately might have to become banks. That would still leave them as partners with Visa and MasterCard. The point is that the payments ecosystem might not be robust enough to "feed more mouths." Though it might be strategically wise to contemplate a "partner" approach rather than a "displacement" approach, telcos might not ultimately have a choice. 

Telcos might have to displace one or more participants in the payments business, rather than adding one more link in the chain, to create an attractive, or at least reasonable, revenue stream. 

Many service providers outside the United States probably are "running the numbers" and coming to similar conclusions. "Why does Rogers want to be a bank?" is a good question. The fact that it is a serious, practical question tells you quite a lot about where telecom is headed.

Republic Wireless Launches, What are Implications?

Republic Wireless has launched a limited beta program of its $19-a-month hybrid wireless service using, to start, the LG Optimus smartphone running Android 2.3. 

Aside from the low price, Republic Wireless is going to test consumer demand for a "Wi-Fi-first" mobile service that defaults to any available Wi-Fi network first, then switches to the mobile network only when that is not possible. 

"Republic is a Wi-Fi network," the company says. "Anything cellular can do, Wi-Fi can do better (and for less)." Wi-Fi better? 

The immediate logical question is the degree of traction Republic Wireless can get in the wireless market. But perhaps a more-important question is whether Republic Wireless will affect the thinking of fixed-network VoIP providers. 

There is, to be sure, a market for fixed-line VoIP services. But it is hard to ignore the broader shift to use of wireless devices as the "default" mode for consumers globally. To be sure, wireless service providers someday will embrace mobile VoIP in a more-active way. In the meantime, there remains a market opportunity for providers who can enable a shift "now."

In this case, given the limitation of service to domestic calling, Republic Wireless won't be a competitive substitute for Vonage, for example, as used by people who mostly need to call internationally. But lots of people do not need to make many international calls, and might now evaluate Republic Wireless as a substitute for a fixed voice line. 

And that makes the competition as much fixed voice line service as much as "mobile service."

Sprint will be Republic's first cellular partner, but other partners might be added as well. 

The cost of the phone and the first month of service will be $199, with unlimited voice, data and texting costing $19 a month thereafter. Other phone models will be announced later, the company says. No contracts are required. 

Device Usage Profiles: "Tethering" is a Big Deal

If you want to know why “tethering” of mobile devices is such a big issue for mobile service providers, consider that mobile PCs, including those which might be tethered to a Mi-Fi device or use a smart phone’s Wi-Fi hotspot feature, can use between 1 GByte and 7 Gbytes worth of data each month, according to new data provided by Ericsson.



A smart phone, by way of contrast, might use about 500 Mbytes a month. So demand-sensitive mobile networks might well be leery of encouraging use of the network by devices that create an order of magnitude greater demand than a typical smart phone.



At some level, even though mobile service providers might like to have the additional revenue and accounts mobile PC connections represent, it is inherently more difficult to maintain a user experience free of cap overage fees, which irritate users.



You might argue that service providers can simply offer bigger buckets of usage, but some might argue that will confuse many users.



Mobile PCs have the highest average monthly traffic volume per subscription over 3G networks (global average at 1 Gbyte to 2 GBytes), followed by tablets at 250 Mbytes to 800 MBytes. Smart phones typically use only 80 Mbytes to  600 MBytes.



The point is that a 4-Gbyte or 5-Gbyte data plan so outstrips typical usage of smart phone and tablet users that there is little chance most people would ever be faced with an unpleasant overage charge. That clearly is not the case for PCs connected to mobile networks, which rather easily can consume all of a 4-Gbyte or 5-Gbyte data plan.



Average monthly data traffic varies significantly between different types of devices, according to a new Ericsson report on mobile bandwidth and trends.



Another observation might be that “overage” and “breakage” are significant contributors to mobile broadband service profit margins. Ericsson reports that “breakage” (paid for, but unused megabytes in a data plan) ranges from a low of about 15 percent for users of 1-gigabyte plans up to about 60 percent for data plans of 15 Gbytes to 20 Gbytes.



Also, “overage” (use of more data than a user has paid for as part of the device data plan) ranges from about 30 percent for users of 1-Gbyte plans to about 12 percent for users of the the 15-Gbyte to 20-Gbyte plans.

Economic Bloggers More Pessimistic

Optimism is out; pessimism is in among the country's top economics bloggers as they look to 2012 and beyond, particularly regarding jobs. 


A new Ewing Marion Kauffman Foundation survey released today shows that only 50 percent of respondents anticipate employment growth, a decrease of 20 percent from second quarter.


Fully 95 percent of respondents view current economic conditions as "mixed" or "facing recession," an increase of 10 percent from second quarter, and a third predict a double-dip recession during 2012. 


"Uncertain" is once again the top adjective economics bloggers use to describe the economy, and respondents shared expectations of higher annual deficits and the top marginal tax rate. Kauffman Economic Outlook

Barnes & Noble Launches New "Nooks"

Barnes & Noble has announced the latest generation of its “Nook” e-reader and tablet line. New Nook

The new Nook Tablet costs $249 and features several hardware upgrades over its predecessor including a dual-core processor, 1 GB of RAM, and 16 GB of internal storage. It's on sale now for pre-order and will be available in stores the week of Nov. 14th, 2011.

Barnes & Noble says the Nook Tablet is the company’s fastest and lightest tablet, and also offers access to popular movies, TV shows and music from Netflix, Hulu Plus, Pandora and others, plus a collection of high-quality apps, fast Web browsing and email. New Nooks

The Nook Tablet is now available for pre-order at www.nook.com and at Barnes & Noble stores.

The Nook “Color” e-reader now is priced at $199. The new Nook “Simple” is priced at $99, without ads.

Next Amazon Kindle Fire to Feature 9-Inch Display?

Proponents disagree about the "right" screen size for a tablet or e-reader device. Apple has in public insisted only 10-inch screens are "right" for tablets. E-readers of course are another matter, but even there proponents might disagree about the "right" form factors. Best form factor?

Digitimes reports that Amazon is likely to change its product roadmap by shifting the display size of its next-generation Kindle Fire to 8.9-inch instead of 10.1-inch as originally planned, according to sources in Amazon's supply chain. 


Amazon's current 7-inch panel suppliers Chunghwa Picture Tubes (CPT) and LG Display (LGD) reportedly have begun to prepare production capacities for 8.9-inch displays, Digitimes reports. Amazon Kindle Fire 8.9-inch display


Following the launch of the 8.9-inch tablets, Amazon may also release 9.7- to 10.1-inch models in 2012.

Google Not Dominant in Search?

Some will dismiss assertions by Eric Schmidt, Google executive chairman, that Google is not dominant in the search business, something Google Chairman Eric Schmidt recently told U.S. regulators.


Schmidt argued that Google is not “overwhelmingly dominant” in the online search market, and competes with the likes of Facebook, Apple, Yahoo and Microsoft. Google not dominant


Some will scoff at that notion, but there is a reality, namely that in the mobile domain, people do not "search" in the old way. Put one way, where traditional search is a relationship between "pages," in the mobile domain, search is more of a "relationship between persons," while the reason for "searching" changes.


In the desktop domain, search is often about information related to ideas and facts. In the mobile domain, search is more often about "things I want to buy." Google argues that leadership in desktop search does not ensure leadership in mobile search.


That has been a growing trend since the mid-2000s, one might argue. Mobile search is different


The mobile search market generated revenues of $901 million in 2010, equivalent to around three percent of total search revenues.  In 2015,  mobile search revenue is expected to  reach $8 billion, equivalent to around 11 percent of total search revenues and representing a compound annual growth rate of 55 percent. Mobile Search Challenges Google


Mobile search makes up around a quarter of total mobile advertising revenue, but this will increase rapidly and is forecast to exceed 40 percent in 2015.


Although Google already has a strong position in the mobile advertising market, a range of established and new players are challenging its dominance. Voice and local search are important trends, providing opportunities for new and established players. Operators and handset vendors have a strong position in the value chain to influence the success of mobile services.

In fact, many observers would note that Google is challenged by social networking generally, as social networks supplant search engines as the place and the way people look for things, find out about things and link to things.


So far, the historical record suggests that no firm dominant in one era of computing actually retains that same leading role in the following era.


As IBM was dominant in the era of mainframes, but DEC and others lead in the mini-computer era, while Microsoft and Intel lead in the era of personal computing, it is reasonable to expect that none of those firms will be dominant in the next era, however we come to describe it.


Some might argue that Schimdt's comments are merely a reflection of an understanding Google has that it will not, in the next era, have the market leadership it arguably enjoys today.


The issue, some might argue, is to avoid regulating based on the past, and act only when future problems actually have arisen. It might not be precisely true to argue that Google "does not" have a commanding position in desktop search.


But it already is clear that such leadership has not yet conferred on Google any ability to dominate the emerging "search" business, which is based on social networking and mobile mechanisms that increasingly are different from desktop search. Over time, in other words, Google's leadership in desktop search will be effectively challenged by other ways of using "discovery" mechanisms in the mobile and social realms.

What Would Double-Dip Recession Do To Telecom?

It isn’t yet clear whether Europe, or other regions, will enter a double dip recession in 2012 or not. Analysts at Gartner already are predicting that the next recession in enterprise information technology spending has virtually begun, and that spending will slow through 2015.

The impact of the Great Recession beginning in 2008 is easy enough to describe. According to TeleGeography Research, revenue growth  slipped from about seven percent annually to one percent in 2009, returning to about three percent globally in 2011.

The Economic Cycle Research Institute says the U.S. economy is either just beginning to dip, or is about to do so, says Lakshman Achuthan, the managing director of ECRI. "The critical news is there's no turning back,” he says. “We are going to have a new recession." U.S. Double Dip?

If that turns out to be correct, service providers probably will encounter revenue pressure much as was seen in the last recession. The issue will not be so much that “lines” or “accounts” are abandoned, as that users will consume less. So “line loss” will not be the issue so much as “average revenue per user.”

Some believe that, even in the absence of a new recession, there will be no quick post-recession recovery for Western European telecom revenue, according to new forecasts published by Analysys Mason. End-user spend was down by 4.4 percent in 2009, and will decline at a compound annual growth rate (CAGR) of –1.8 percent until 2012, the firm predicted.  No quick return to growth

What was expected in the last recession was a greater degree of product substitution. "The more flexible cost structure of mobile networks means that mobile operators are winning more of the lower usage end of the fixed services customer base," the International Telecommunications Union says. "This has happened in voice, and 2008 has demonstrated that mobile broadband can substitute for light-usage DSL." Recession impact on telecom

Also, more consumers are likely to opt for prepaid and flat-rate packages for telecom services to try and control their spending.

Point Topic does not believe any recession would affect “line growth.” The total number of broadband lines in these countries will grow from 393 million by the end of 2008 to 635 million by 2013.

Adding in estimates for the remaining smaller countries suggests that the world will add a further 48 million broadband lines to reach 683 million in total over the period. Point Topic forecast

This represents a 10.8 percent per year compound growth rate, well down from 27.7 percent per year in the 2004 to 2008 period, but still substantial, Point Topic argues.

One major reason for the slowdown in growth is that most of the richer countries are approaching saturation with broadband; new customers are becoming harder to find and sign up. At the same time poorer countries such as China and India have gone through the initial phase of rapid growth and are now growing steadily rather than exponentially.

Whatever else one might say, the number of accounts or lines in service seemed relatively unfazed by the recent “Great Recession.”  Fixed voice subscriptions will continue a downward trend, as users increasingly switch to mobile and VoIP substitutions. The recession impact is likely to be on average revenue per user, not abandonment of service, as such. Line growth

For its part, Gartner believes enterprise IT spending in Europe, the Middle East and Africa (EMEA), which will be €604 billion in 2011, a 1.4 percent decline from 2010, will face headwinds through 2015.

Euro-based enterprise IT spending in the region will grow by 2.3 percent in 2012. Western Europe will continue to slow EMEA growth through 2015, according to Peter Sondergaard, senior vice president and global head of Research at Gartner. IT to Hit Double Dip

“The second recession is about to hit and CIOs must decide which way to turn,” said Mr. Sondergaard. “The continued global economic uncertainty and the eurozone crisis will impact your IT budget in 2012, and your business will face difficult budgetary questions,” says Sondergaard.

Sharply lower economic growth in the mature economies of Western Europe is the reason for the tight IT budgets.  Austerity measures brought in to deal with the sovereign debt crisis will curtail government spending on IT in particular and hinder economic growth, which will result in lower demand for IT products and services from businesses.

Western Europe, which accounts for 80 percent of EMEA enterprise IT spending, will see enterprise IT spending in euros decline by 1.8 percent in 2011 and grow by only 1.5 percent in 2012, Gartner predicts.

Government (including education) IT spending will account for the largest share of Western Europe enterprise IT spending in 2011, at 20 percent of the total. Gartner predicts that this sector will decline by 4.8 percent in 2011 and 1.7 percent in 2012, and that it will not recover to the level seen in 2010 until 2015.

Starbucks has Processed 20 Million Mobile Payments

Most contenders in the mobile payments or mobile wallet business are hoping to create large-scale platforms used by lots of retailers. Starbucks. on the other hand, has reasons of its own for creating a proprietary system that already has processed more than 20 million mobile payment transactions. 


The approach shows one way even "targeted" mobile payment applications and systems can add business value. For starters, the Starbucks approach does not require inventing anything new. It uses existing tools to quickly reach critical mass.

mobile payments forecast

Starbucks also has clear business drivers, mostly related to enhancing loyalty. 


Since each mobile payment account is tied to a Starbucks card, Starbucks increases the value and usage of its prepaid cards. 


That also means Starbucks benefits from the float on payment instruments that are pre-funded. Starbucks gets paid before products are delivered. There also is some amount of "breakage" as well, the small amounts that might be left on pre-paid cards, and never used.


Starbucks Mobile Pay, the company’s pay-by-mobile application and in-store scanner system, was rolled out nationwide in January 2011. The system, available at roughly 9,000 locations, lets iPhone, Android and BlackBerry users with the Starbucks or Starbucks Card Mobile applications pay with their phones by scanning 2D barcodes on the screen at store registers. Starbucks has processed 20 million mobile payments

Bill Me Later: Change Your Mind about Payment Method

Consumers assume they will have a choice of payment formats when checking out at a retail location, ranging from cash to debit to credit, prepaid or postpaid instruments.

Mobile wallet systems likely will attempt to make that process easier. PayPal's "Bill Me Later" enables users to decide on their payment method up to five days after a purchase.


Bill Me Later provides credit for individual purchases by performing risk analysis during the checkout process, based on little more information than what a customer regularly provides to merchants. By weaving this technology into a mobile wallet, PayPal can issue customer credit and provide a five-day float for each purchase. The customer can change the funding option for each transaction within that time.

It isn't so clear that this will become a major attraction, but it suggests the many nuances of mobile payment that could potentially change the user experience or retail advantage.

PayPal Lets Users Change Their Minds about Payment

Will Mobile Commerce Will Be Driven by Better Experience and Increased Control?

Despite the fact that mobile commerce will include payment and transaction mechanisms, mobile commerce, and a good deal of retail commerce, will not be primarily about the change in payment mechanism, argue analysts at mobileYouth.

In fact, control and access to information will be more important for users, mobileYouth predicts. Payments may be important for the generation without credit cards but it’s their fear of losing control, and avoiding surprises, that will drive adoption.

Mobile commerce also will be about sharing and reclaiming the social experience, mobileYouth predicts. Mobile commerce is not just about making the purchase more informed, or easier, but making it more social.

Providers need to think less about the payment and more about the shared experiences and activities made possible by mobile payment systems. In other words, replicating the value of "hanging out together at malls" is more important than providing a new way to pay for things.

Mobile commerce: information and experience