PayPal, Google, Facebook And Apple Are Fighting For This New Multibillion Dollar Market

"AT&T challenges Visa, MasterCard" is an irresistible and compelling headline. So is "PayPal, Google, Facebook, Apple fighting for dominance in mobile payments." Whether the implied competition is direct, indirect or largely fictional is hard to address at the moment. Six months ago it seemed as though AT&T and Verizon Wireless were on a collision course with Visa and MasterCard. That no longer seems to be the case, and it has taken just six months for matters to change.

Nor is it likely that PayPal and Google are interested in the same parts of the ecosystem. Google cares about advertising potential. PayPal, on the other hand, clearly cares about transaction revenue and the "float" on prepaid accounts. Apple might be more concerned about boosting the value of iTunes in ways more directly related to content. Facebook almost certainly is more interested in online forms of social commerce.

There is but one unifying theme: Every company, or just about every company, thinks people are going to be using their mobile devices more often for commerce activities. In some cases that might mean using the mobile device as a substitute for a credit card or debit card swipe. In other cases the loyalty application will be the driver. In yet other cases the business model will hinge on promotion, advertising and marketing potential.

In yet other cases, the attraction will be mobiles used to make micropayment purchases for games. In most cases the headline potential won't be as dramatic, though the concrete revenue models will be. Some players will enter the market targeting one segment, then shift course and wind up targeting other segments. Isis originally launched as a "payment" competitor, but has switched to the "wallet" or "credentials" part of the ecosystem.

Square established itself as a payment terminal provider, but now seems to be adding on "wallet" functions as well. Similar shifts can be expected each step of the way as the "mobile money" business gets going on a larger scale. PayPal already is a major player in online transactions, and the issue is how it might try to leverage its position to become a bigger player in real-world retail transactions as well.

PayPal, Google, Facebook And Apple Are Fighting For This New Multibillion Dollar Market

Location-Based Ads Will Hit $6 Billion By 2015

"Location-based service" advertising will grow to over one-third of all mobile advertising in four years, according to Pyramid Research. But navigation services will be important, likely much more important, for mobile service providers, as most of the advertising will be earned by third parties.

By 2015, location-based advertising will be $6.2 billion,Pyramid Research says. In 2010, location-based advertising was $588 million, representing about 18.5 percent of all mobile advertising. Location-based advertising will generate 60 percent of all location-based revenue in four years. See MediaPost Publications Location-Based Ads Hit $6B By 2015 06/28/2011.

“Following many years of high expectations, the location-based services market is finally coming of age," says Jan ten Sythoff, Pyramid Research analyst.

Overall location-based revenue is expected to reach US$10.3 billion in 2015, up from $2.8 billion in 2010, ten Sythoff says. “There are a number of different factors driving market growth, including increasing GPS and smartphone adoption, success of new business models, continued growth of mobile advertising and the wider coverage and higher speeds of mobile networks,” adds ten Sythoff. See http://www.pyramidresearch.com/pr_prlist/WPR053111_RPLBS.htm.

Growing adoption of GPS devices is the key driver, helping a whole host of different applications and services to grow. “For mobile operators, this is an opportunity to drive new revenue streams, but it is also a threat because it means access to location information is no longer their monopoly.

In 2008 operators gained around 80 percent of all location-based service revenue. This has fallen to around half, but the total market has grown more than fivefold,” he says.

How Long Before NFC Payments are Used by 10% to 20% of Consumers?

Consumer adoption of new technologies often can take a while, even when the application or product is deemed to have clear value. It might take an application, service or device to reach 10 percent penetration of U.S. households, for example.

There are some caveats. Not every innovation succeeds. But a Wall Street Journal illustration of past adoption rates for new and popular consumer electronics products shows how long mass adoption can take, even if rates of adoption for newer products and technologies have grown significantly shorter than in the past. 

A panel I was recently on was asked how long it might take for near field communications technology to be adopted by a significant number of U.S. consumers. My response, based on past work studying consumer electronics adoption rates, was that it can take quite a significant amount of time, between three and 10 years, to reach the crucial 10-percent-of-homes threshold, which seems to be the point at which any innovation really begins to accelerate, in terms of adoption.



Also, the more complicated the ecosystem, the longer it will take. Apple iPhones and iPads did not take long to reach the 10-percent penetration mark, because they operate in a fully-developed ecosystem where all that is required is purchase of a product, to obtain the value.

Mobile payments will likely take longer, as will NFC adoption, because lots of other things must be done, on the business infrastructure level, before 10 percent of U.S. consumers will easily be able to use NFC, on a large scale.

We often hear that it will be year X when some percentage of phones shipped will include NFC capabilities, or year Y when X percent of phones in use will have NFC. That's an important metric, but only one metric among many that has to be substantial before NFC-based payments are ubiquitous enough, valuable enough and easy enough to use. It isn't as though the credit card and debit card payment system is broken.

Despite the legitimate excitement, it might take some time before NFC-based mobile payments are a widely-used payment mechanism in the U.S. market.

LTE Advanced: 954 Mbps in 60 MHz

Ericsson has demonstrated Long Term Evolution "Advanced," running at 964 Mbps, in 60 MHz of spectrum, to the Swedish Post and Telecom Agency. The demonstration, held in Kista, Sweden, featured speeds more than 10 times faster than those currently experienced by LTE consumers in Sweden.

If you have enough bandwidth, you can go fast!

LTE Advanced: mobile broadband up to 10 times faster - Ericsson

10 Airline "Location" Apps

Location-based services are supposed to offer value to businesses and end users. It isn't so clear, yet, that they always do so. But here are 10 applications airlines have created to target and "track" their customers, speed customers through unfamiliar airports, entertain or provide messaging.

Top 10 Location Based Service Initiatives by Airlines

France Telecom Debuts Data "Family Plan"

Executives at AT&T have been saying for some time that the firm expected ultimately to introduce data plans that are shaped as many mobile family plans now are, allowing devices on a single account to share a single bucket of usage.

For a couple of months now, France Telecom’s Orange unit has been allowing iPad owners in Austria to share one allotment of data with a phone, while other shared data plans were recently launched in France, the United Kingdom and Spain.

Although the plans vary somewhat by country, the basic premise is the same. Users pay an extra couple of dollars a month for each additional device that shares data, similar to the way families and businesses here have long been able to share minutes between multiple phones.

“We believe that’s really a way for the future,” said Olaf Swantee, senior executive vice president for France Telecom’s Orange unit.

France Telecom Debuts the Data Plan of the Future - Ina Fried - Mobile - AllThingsD

Square Moves into Wallet Functions

Some of us would argue that there is an intimate connection between mobile payments and mobile wallet functions and business opportunities. Now Square, the mobile credit card acceptance system for iPhones and iPads, has moved into the credentials or wallet function as well.



https://squareup.com/cardcase

How Telcos Can Play in Apps

Neustar’s “Intelligent Cloud” is one answer to questions many will have about how applications can take advantage of mobile network features such as location, messaging and other features, without lots of grief. Instead of negotiating separate business deals with AT&T, Verizon Wireless, Sprint and T-Mobile USA, a developer can simply work with Neustar’s Intelligent Cloud, which itself handles all the details, and presents the developer with a simple API.

Another example is “BlueVia,” a developer platform offered by Telefonica. The whole idea is to offer an application programming interface (API) that essentially makes it easy for an application developer to incorporate mobile network features into a third party application.

How Telcos Can Play in Apps | Mobile Marketing and Technology

Google NFC Partner ViVOtech Raises $24 million

ViVOtech, the near field communication software and systems company, has raised $24 million in Series C funding from Singapore’s EDBI, SingTel Innov8, Motorola Solutions Venture Capital, Alloy Ventures, Citi Ventures (the venture arm of Citigroup), Draper Fisher Jurveston, DFJ Gotham, First Data Corporation, Miven Ventures, Motorola Mobility, Nokia Growth Partners and NCR. This brings ViVOtech’s total funding to $80 million.

ViVOtech has installed more than 800,000 NFC systems in 35 countries. The company’s readers are found in big-name retailers and stores such as McDonalds, Home Depot and Whole Foods as well is in taxi cabs.

Google NFC Partner ViVOtech Raises $24M

Access is the Biggest Digital Product

Of the $2 trillion consumers spent globally in 2010 on digital information and entertainment products and services, the largest spending segment (62 percent) was for communications subscription-based access and usage services, say analysts at Gartner.

The $1.2 trillion included mobile and wired voice services; mobile data services, such as testing and broadband; fixed broadband services; video services, such as subscriptions to pay TV; and online gaming.

The second-largest spending segment (28 percent) was for devices. The $600 billion is made up of consumer electronic devices, such as mobile/handheld devices, PCs and related devices, and stationary entertainment equipment, such as television sets and game consoles.

The smallest spending segment (10 percent) was for content and software for a total of $200 billion.

That is one perspective on digital goods. As significant as content and software sales might be, 90 percent of the money spent by consumers each year is on the appliances to get and use the content, and access to network services to deliver content.

Some people worry about (low margin) "dumb pipe" business models. The worry is genuine, but collectively, access services and device sales represent most of the economic activity.

Gartner Says Consumers On Track to Spend $2.1 Trillion Globally on Digital Information and Entertainment Products and Services in 2011

Hulu Has to Decide Whether to Sell

Hulu's owners are scrambling to figure out how to make money from a new generation of TV viewers who want to do some of their viewing online or on mobile devices, and also must now decide whether to sell the company, as Yahoo apparently has submitted a bid to buy Hulu. The decision will carry important strategic implications.

Right now, Hulu is a supplemental, "catch up" service that allows users to view recent TV episodes. But Hulu could also be the foundation for building a rival distribution platform that competes more directly with existing multi-channel video subscription services.

Sooner or later, that is likely to happen in any case, the fundamental issue being one of timing. But timing is everything when an industry faces changing end user demand in ways that will cannibalize the sizable existing business.

Hulu's Owners Weigh Cons of Possible Sale of the Site - WSJ.com (subscription required)

DoCoMo Begins Phone to Phone Payments Internationally

NTT DoCoMo announced the ability to make direct payments from a DoCoMo mobile phone to the numbers of foreign operators. The service will be available on i-mode compliant phones through the service "SMART Money," and the first foreign operator to act as a partner, will be the Philippine mobile operator PLDT (Philippine Long Distance Telephone Company).

MasterCard also is working with Smart Communications, the wireless arm of PLDT, to support mobile payments and transfers.

Just Another Mobile Phone Blog: DOCOMO began international mobile payments from phone to phone

Government, Individual Debt is a Worse Problem Than We Might Have Thought

Sometimes you have to admit you were wrong. I originally thought the past recession would unwind, leading to a new round of growth, on the pattern we almost always have seen in past recessions, whic is to say that, by now, we should be seeing much more robust job and gross domestic product growth.

I was wrong. This one is different. See this  or this. 

Of course, some will point to the 1970s "stagflation" as the model, where we have both higher inflation and stagnant economic growth. What might be different this time is the stunning role debt seems to be playing.

"Today, U.S. consumers have more mortgage and credit-card debt than they did five years ago, and the U.S. budget deficit is worsening," says the Wall Street Journal. "At the same time, European governments are having to throw billions more euros at Greece to keep it afloat."

One of the changes I notice is that I am, possibly for the first time, seeing acknowledgement across the political spectrum that the debt and deficits do really matter. True, there is some skepticism about public willingness to make the needed sacrifices. But possibly for the first time there is a common recognition that Greek style unrest could happen in the United States, and probably will, if one assumes that "spending less, much less" is a key part of what is required to remove the debt problem.

"The fundamental problem is that reversing the trend of piling on the debt requires some combination of cutting spending, growing income or the economy, and inflation," the Journal notes. On the job creation front, businesses aren't hiring or investing because they know consumers are unable to respond to the supply.

Some economists would argue that recovery from a specifically financial crisis takes about seven years, on average. Roughly half of the time, a financial crisis leads to a "double dip recession." Economist Gary Shilling says the next recession won't be a double dip; it will be a new recession. That comes in 2012. See this.

Government, Individual Debt Hamstrings Recovery - WSJ.com: (subscription required)

Public Wi-Fi Has Changed Over the Last Year

Over the last year, more consumers have begun using public Wi-Fi networks  to connect their smart phones, tablets and iPod Touch devices, compared to last year, when more users were connecting PCs. 


In part, that might be a result of more smart phones, tablets and iPod Touch devices in the user population.  


Meraki, a supplier of Wi-Fi networks to enterprises and other larger organizations, anonymously surveyed over 100,000 randomly-selected devices accessing general use, public, and educational Wi-Fi networks across the United States. 


The survey looked at bandwidth usage and operating system popularity over selected periods in 2010 and 2011.


http://meraki.com/press-releases/2011/06/22/meraki-reveals-ipads-use-400-more-wi-fi-data-than-the-average-mobile-device/

U.S. Smart Phone Preferences

A recent survey of smart phone buying intentions in the U.S. market by the Yankee Group shows 36 percent planning an Android purchase, while 33 percent of respondents said they'd buy an Apple device.

About 15 percent said BlackBerry would be their choice, while nine percent indicated a preference for a Windows device.

As has always been the case, Nokia does not register, scoring one percent interest, on a par with Palm.

Whether Nokia's switch to Windows for its operating system will have a positive impact on OS share remains to be seen, but many believe Windows will be the clear winner, overtaking BlackBerry.

Some Implications of the "Social" Web

Online video consumption and social networking are growth areas in terms of end user engagement, it is clear. When you exclude just Facebook from the rest of the Web, consumption in terms of minutes of use shrank by nearly nine percent between March 2010 and March 2011, according to data from comScore.

And, even when you include Facebook usage, total non-mobile Internet consumption still dropped three percent over the same period.

The important news is that Facebook usage does not seem to be adding to Internet engagement time. Facebook is displacing time spent with other Web apps.

As many will note, social media and Facebook in particular, are emerging as a powerful news referring source. At five of the top 25 consumer news sites studied by the Pew Research Center’s Project for Excellence in Journalism, Facebook is the second or third most important driver of traffic.

Twitter barely registerd as a referring source. In the same vein, when users leave a site, “share” tools that appear alongside most news stories rank among the most clicked-on links. See http://www.journalism.org/analysis_report/navigating_news_online. That doesn’t necessarily mean the same trends will hold for business-to-business content. One suspects search engines will still drive half or more of delivered visitors.

The Pew data on consumer news sites shows 60 percent to 65 percent of traffic is “direct.” In my experience that is not true of B2B traffic, where it can easily be the case that half or more of traffic comes from search engines.

Still, the overall comScore data suggests that people have changed the way they use Internet apps.

At a high level, one might say that the legacy “searchable Web” is either being replaced by, or augmented by, “the social Web.”  What’s the difference? Maybe something as simple as connections between pages being replaced by connections between people.

The implications for content publishers could be important. Up to this point, one of the requirements for online content has been its ability to be found. So digital media publishers create lots of content around top keywords, engineer for search engine optimization (SEO) and expand the surface area in search engines to reach more users.

Some might argue that SEO’s strategic value is quickly fading as Google’s growth slows and its prominence in distribution slides away. Some of us might argue that is a good thing. Too often, SEO techniques are applied in ways that actually make content less useful. Writing for an algorithm is not the same thing as writing for a person.

Links embedded as an SEO technique often do not add much, if any, value. And the need to repeat “keywords” in body copy runs counter to traditional good writing techniques, which call for varying terms so no one word is used too frequently. But SEO calls for repeating keywords often in body copy. So less emphasis on SEO would strike some of us as a welcome change.

Still, the point, some would argue, is that Facebook has become the hub of the connected Web, a new “home base” that might have been anchored by Google’s home page over the last decade.

Facebook began receiving as many visits as Google in March 2010, and already garners more than three times as many minutes as Google each month from users, according to comScore.

Looking ahead, the best projections of U.S. online reach indicate that Facebook will surpass Google on that metric in less than a year, too.

And with this change, the nature of the relationship between users and publishers is being altered. Search offers a utility relationship, connecting users to content for the briefest of transactions; typically, it provokes users to just one page view so they can find a piece of information, and then they move on.

Social discovery arguably can build a relationship. By definition, a bit of content or a site found using a social mechanism already has some “connection” operating, between one user and another, or between one user and a community.

At least in principle, social discovery had enhance a relationship more than a “search” function can. At least, that’s the theory. See http://allthingsd.com/20110623/the-web-is-shrinking-now-what/?refcat=voices.


Facebook’s new popularity doesn’t mean brands can dispense with content published on their own sites. Facebook, after all, is used as a way to point to the original source. But there is clear logic to create ways to automatically create Facebook posts when a new bit of content is published.

Mobile Money in Uganda: Several Use Cases

Domestic money transfers are the dominant application people make of mobile money services, with the mobile money services mainly used to support immediate family members, a study has found. That isn't all people do, though.

The respondents also used mobile money to buy airtime, pay television bills, school fees or tuition. While some of these services are new, they are perceived to offer important benefits to the users: speed (for 78 percent of the respondents), practicality (69 percent), and an affordable price (68 percent).

However, a few concerns were raised regarding agents’ liquidity (35 percent), the risk of losing a mobile phone and any mobile money associated with the device (31 percent) and long queues at agents’ location (29 percent).

In addition, while transferring domestic money is the most widely used service, the respondents highlighted three other services which they perceive to be more important: 1) airtime purchase or top-up 2) paying for transportation 3) Settling of hospital bills.

Exploring Usage of Mobile Money in Uganda Mobile Money for the Unbanked

"Send Money Home" Worked, "Banking" Did Not

Mobile payment and banking services are not different from other businesses in one important respect: sometimes a company has to refine its product and pitch when its original "go to market" strategy fails to resonate, and consumers say they want something else.

M-PESA launched in Kenya in 2007 and thought its customers would want the ability to transfer money to make loan payments. The company found out that what people wanted most was to "send money home." So M-PESA started emphasizing "Send Money Home" and found success.

Business Line : Features News : It's Africa calling for mobile operators

U.S. Consumer Spending: The Mobile Payments Opporunity

U.S. consumer spending is about $10 trillion to $11 trillion a year.

Food is about 13 percent of that spending. Apparel is about 3.5 percent.

Transportation is about 15.6 percent. Entertainment is about 5.5 percent.

Health care is about 6.4 percent. "Other" purchases are about 10.5 percent.

What that means is that some 48 percent or more of monthly retail spending involves "buying things" other than paying a mortgage or rent (assume for that analysis that zero percent of the health care spending is out of pocket by the consumer).

That means upwards of $4.8 trillion a year is spent by consumers buying things that require some sort of payment. Most of that is spent at retail locations.

And that's why many are intrigued by mobile payments.

$4 Billion in U./S. Mobile Ad Spending in 2015

Total U.S. mobile ad spending will grow from $790 million in 2010 to $4 billion in 2015. During the same period, BIA/Kelsey projects the local portion of that total to increase from $404 million to $2.8 billion. This makes locally targeted mobile ads 51 percent of overall U.S. mobile ad spending, growing to 70 percent by 2015. See http://www.biakelsey.com/Company/Press-Releases/110623-U.S.-Mobile-Local-Ad-Revenues-to-Grow-From-$404-Million-in-2010-to-$2.8-Billion-in-2015.asp.

There's a very good reason why Google is interested in what mobile devices can enable, in terms of advertising and promotion. There is a big, and growing local advertising business that typically has been dominated by phone book ads, direct mail and local media advertising. But mobile devices are widely seen as providing a better channel, in part because they are sensors, able to interact with other devices and servers, and in part because they can be used to deliver highly targeted messages, with instant interaction, in real time, in a way that other existing media simply cannot.