Google Wallet to Launch Sept. 19, 201?

Will Google Wallet launch this month, perhaps even on Sept. 19, 2011?

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Google Wallet

Much Google+ Activity is Hidden

It's hard to remember that Google+ is still in "private beta." It hasn't even gotten to "public beta" yet. Nor is it really possible to determine how much engagement Google+ is getting.

Private posts will not show up in any third party statistic reports and so it instantly skews the results. According to ManageFlitter’s statistics, Google public posts have dropped by 41 percent in the past two months. While it could indicate a decrease in Google usage, it could just as easily indicate a choice to have more control over who sees your posts.

Also, my subjective use of Google+ does not revolve around public posts, or even posts. I use it every day, typically multiple times a day, for content consumption. None of that will tend to show up in posting activity. That might not be what most people do, or what Google intended. But my activity has grown over time. Only Google knows what is happening across the breath of its user base.

Google+ activity is hiddenGoogle:

Consumers Are Not Tired of Deals

A survey of nearly 1,000 U.S. online users by Utpal Dholakia, professor of management at Rice University finds that they are not yet tired of daily deals. Quite the opposite: Shoppers who tend to purchase the most daily deals continue to remain enthusiastic about them.

Only 13 percent of experienced and heavy daily-deal users agreed with the statement: "I buy daily deals less often than I used to," according to the study, published in conjunction with Cornell University. Only eight percent agreed with the statement: "I have lost interest in daily deals over time."

BAI/Kelsey, a local media and ad research firm, also has raised its forecast for daily deal revenue. U.S. consumer spending on deals, including daily deals, instant deals and flash sales, will grow to $4.2 billion in 2015 from $873 million in 2010. While the bump in its 2015 projection is only up slightly, the projection for 2011 revenue was revised to $2 billion, up 66% since the March estimate.

Think Consumers Are Tired of Deals?

Social Media Conversion Rates Low, But Worth It?

Marketers continue to believe that Twitter and Facebook are worth the effort. A new report from RichRelevance states that online retail shoppers who click through from Facebook only convert 1.2 percent of the time. If you think that’s bad, Twitter’s number is only 0.5 percent.

But Twitter shoppers actually spend more money when they do order.


Online conversion rates—the ratio of purchase sessions to shopping sessions—has remained relatively unchanged between 2010 and 2011, based on a year-on-year comparison of mass merchants. This rate was 2.1 percent in August 2010 and remained 2.13 percent in August 2011.


Overall online average order value has dropped from $128.27 to $116.58 in this period. The decline may be attributed to several factors, including increased cost consciousness and increased shipping efficiencies that encourage smaller purchases.


Shoppers behave very differently depending on how they arrive at the retail site. For example, while fewer shoppers come from Twitter than anywhere else, they spend more per order once they are on the site.

Twitter Conversions, Spending

A Look at Mobile Commerce

If you take a look at all the things that are happening in the mobile space, it should be clear that a developing "mobile commerce" ecosystem is developing that is bigger than advertising, promotion, payments, loyalty, credentials, gaming, shopping and mobile applications.

What Apple Knows, and Why "Choice" is an Issue

"Too much choice" can be as bad as "not enough choice." Ironically, having some choices generally is viewed as a positive by most consumers. But overwhelming choice is paralyzing. Those of you familiar with the Class 5 switch, and the modern business phone system, know something of the matter. Both types of switches offer hundreds to thousands of discrete features. But most end users, business or consumer, use only a handful of features.

You might wonder why suppliers both to add all those generally unused features. The reason is that a few key customers say they "need them." See Choice can be a problem or choice can paralyze

Apple always has taken one approach to features, while Microsoft and the "open source" communities generally have taken a different approach. For decades, developers have argued for and against unlimited choice or "openness." At the moment, it appears Apple's choices might be winning the argument.

When Google Android developers complain of "fragmentation," that's a downside, or problem, with "open" approaches. Apple always has taken the other view. It limits openness, limits choices, in order to enhance user experience. Where an open source or Microsoft approach is "you can do that," Apple essentially asks "why do you need to do that?" 

With so many projects, if the customer is willing to go without a small subset of the functionality they think they need, it can save a massive amount of effort, cost, and complexity and result in a much more elegant, hassle-free solution that makes them much happier in the long run, some would now argue.

Apple’s customers are often the sort of people willing to make these tradeoffs, because that’s how most of Apple’s products are designed: if you can compromise on some of the features and capabilities you think you need, you can get a product that works better and makes you happier with far less aggravation. And for most people, the benefits will outweigh the missing features.

Granted, there are trade-offs, as there always are in all engineering projects. “We know what’s best for you," Apple essentially says.

People who aren’t willing or able to compromise on their needs regularly are much more likely to be Windows customers. The Windows message is much more palatable to corporate buyers, committees, middlemen, and people who don’t like to be told what’s best for them.

But the world seems to be moving a bit more in Apple's direction. 

Apple might have it right

No Matter What Happens with AT&T Bid, Consolidation Continues

The issue at hand for antitrust regulators at the Department of Justice, when evaluating the consumer impact of an AT&T acquisition of T-Mobile USA, is whether the deal would exceed a rule of thumb about market concentration. Some would argue that, no matter what happens with this particular deal, that concentration in the mobile business will continue. See DoJ guideline or more on the algorithm.

“The gap between the haves — AT&T and Verizon — and the have-nots, which is essentially everybody else, is only getting wider,” said Kevin Smithen, an analyst for Macquarie Securities.

Craig Moffett, an analyst at Sanford C. Bernstein, agreed, saying: “This market is going to consolidate one way or another.”

Will Consumers Benefit if T-Mobile Stands Alone?

Netflix Lowers Subscriber Estimates

In the consumer markets, price increases virtually always have the effect of reducing demand, as economists predict will happen. When Netflix decided to "entice" customers to shift from DVD rental to streaming, a significant price increase for some consumers, particularly those that wanted both unlimited DVD rentals and unlimited streaming, was part of the strategy. Consumers who only wanted unlimited streaming or DVD rentals, but not both, actually saw bills drop. Plan changes to cost one million customers

Netflix now says it expects to lose about one million customers because of the pricing plan changes. The company, which split its streaming and DVD-by-mail services two months ago, now expects a total of 24 million subscribers in the third quarter, down from the 25 million it forecast in July 2011.

Netflix expects 21.8 million people to subscribe to its streaming service, either with or without also getting DVDs in the mail. That's down from an expected 22 million it forecast earlier. And Netflix expects 14.2 million people to subscribe to mail-order DVD rental service, with or without streaming. That's down from its July forecast of 15 million.

Some will fault Netflix for making a risky move. Others might say the move is a bold signal that Netflix is about to get into a new business, not simply based on streaming instead of DVDs, but a change of business from "movie rentals" to "television."

That is the big change, not the pricing shift. Netflix is betting it can primarily become a provider of streamed TV content, instead of a provider of movie content. Some might say the difference is that where Netflix used to compete with Blockbuster Video, in the future it will compete with Hulu. At a secondary level, where Netflix used to compete with premium cable TV networks such as HBO, in the future it might start to compete with cable TV.

Netflix chief content officer Ted Sarandos says the company ran into trouble with its forecasts for streaming video and DVD rental subscriptions because it’s still adjusting to the decision in July to turn them into separate products. “Being able to precisely forecast and predict the behavior of that many people on a fairly radical change is something we’ll get better at all the time.” Forecast miss

The key point is that Netflix is about to embark on a business model change much more substantial than simply "how" movie content gets delivered to its customers. Netflix now will try to become a substantial provider of TV content. Some would argue that is the real challenge.

Although “the DVD business has a long life in middle America,” Sarandos says “it’s just not part of our future.” That's a clear signal.

Metaswitch "Perimeta" is a Classic Business Case Study

The entry by Metaswitch Networks into the session border control business has been described by some as a move “into a crowded market.” "Crowded" market

Metaswitch would describe it as a move into a rapidly-growing market where customers are asking for choices. According to Infonetics Research, service providers are spending $350 million a year buying SBCs. By 2015 (just four years) they will be buying $1 billion a year worth of SBCs.



Acme Packet furthermore reports gross margins of about 82 percent. Huge gross margins

“Candidly, service providers are asking for alternatives,” says Patrick Fitzgerald, Metaswitch Networks VP.



Acme Packet has for years pointed to its dominant market share. Infonetics estimated that Acme Packet had 52 percent of the SBC market in 2009,  almost four times that of any competitor. Dominant market share Dell’Oro Group in 2010 estimated hat Acme Packet had 55 percent of the SBC market.



Metaswitch says Acme Packet has 65 percent to 70 percent share of the service provider and enterprise markets for SBCs.



Some 38 Metaswitch customers already have placed orders for “Perimeta” devices, says Fitzgerald. Perimeta



In many ways, the move into the SBC market illustrates some enduring issues in business strategy. In recent days, as intellectual property lawsuits have escalated in the mobile handset business, we have gotten a reminder of the potential importance of patents and intellectual property ownership. Patent lawsuits proliferate


In fact, some believe the older pattern, where many device manufacturers simply licensed operating systems, might be changing. Some believe it is possible that the dominant pattern will be “essentially proprietary” strategies where each major platform consists of bundled OS and device, on the Apple model.



Keep in mind that Metaswitch Networks has, for many years, been a supplier of the underlying original equipment manufacturer software at the heart of an SBC. In other words, as Microsoft powers many PCs, and Android powers many smart phones, Metaswitch already powers many SBCs.



That isn’t to say the smart phone or PC OS model will develop in the SBC market, but only to suggest that intellectual property ownership confers strategic advantages that are not always immediately obvious in the earlier stages of some markets, but can emerge as strategic advantages later.



Some might note that the move into SBCs illustrates another enduring business issue, namely “channel conflict.” There are many instances in the telecommunications business where a supplier has to make difficult choices. Where a supplier operates in both the wholesale and retail parts of a business, there always is some potential for conflict between a firm’s wholesale partners and the supplier’s own retail efforts. Channel conflict


The analogy is the growing suggestion that device manufacturers ranging from HTC to Samsung might have to develop or acquire their own operating systems as other significant portions of the market evolve.



Android now has a “special” relationship with Motorola Mobility. Microsoft has a favored relationship with Nokia. Apple is Apple. Research in Motion always has used its own proprietary OS.



Some would note that Metaswitch now faces channel conflict in a way it has not, in the past. But that’s part of the enduring business strategy discussion. What should any firm do when it is an OEM supplier, and end users start asking it to develop its own retail products based on the underlying intellectual property?



It is easy to say a firm should avoid channel conflict. But there often are cases where end users (the market) asks or demands that an OEM supplier also supply retail products. There might be other cases where an OEM simply sees strategic value of such scope that some amount of channel conflict is the price to be paid for some important strategic step.



In fact, Microsoft and Google both face some degree of risk in developing favored relationships with a particular contestant in the smart phone market, even as the advantages also are clear. The point is that Metaswitch faces classic business issues of the case study sort.



The analogy is that Metaswitch supplies an operating system the way that Google or Microsoft do. Both those firms have important business models built on supplying “open” software to many partners. But both those firms also have significant relationships with a single retail brand in the end user market. Metaswitch now will have that same sort of relationship in its OEM business and as a supplier of the “Perimeta” line of SBCs.



No firm would casually risk such channel conflict were the potential rewards not large enough to offset the risk. In this case, Metaswitch is making strategic moves on a number of fronts to reposition its business. Virtually all of those moves carry some degree of risk.



But it is hard to ignore 82 percent profit margins in a retail business where the firm already supplies the intellectual property, nor a business where Metaswitch routinely has sold and installed SBCs on behalf of its retail customers for quite some time, giving it a view of the real world deployment issues and perspectives of its retail customers, in the SBC space.



It is hard to ignore a product whose value is such that sales volumes could triple in four years. And it is hard to ignore getting into a business when a firm’s customers say they want the firm to do so. Channel conflict is one sort of issue. Ignoring the clear requests of a firm’s customers is another sort of danger.



It’s a classic business case study.

New Verizon Policy on Heavy Users, Congested Towers

Verizon Wireless has instituted a new network management policy that some will call “throttling,” while others might say simply represents a more-nuanced way of managing network congestion.

The new plan affects what Verizon says is about five percent of Verizon’s user base, specifically those users of 3G services that use 2 Gbytes of more of data each month, from congested cell sites. The rules do not apply to users of the new 4G network, though. The easiest solution is simply to use 4G. It’s a better experience anyway. New Verizon usage scheme

One suspects that users are capable of making rational choices about their services, and also will rapidly adopt the “default to Wi-Fi strategy.” Most people already seem capable of quickly grasping the advantages.

Some 64 percent of smart phone consumers surveyed by Devicescape use Wi-Fi hotspots at least once a day. Most smart phone owners who use Wi-Fi also use it on the road.  The study showed 90 percent of those users report accessing Wi-Fi both at home and on the road. Smart phone users use Wi-Fi often

Of those who use Wi-Fi outside their home or office, most (24 percent) connect at a cafe or coffee shop, 17.3 percent at a hotel, and 15 percent at a school campus. See Facing data caps, consumers keep turning to Wi-Fi.

Historically, mobiles haven’t been used excessively for data connections. Average mobile data consumption increased from about 90 MBytes per month during the first quarter of 2009 to 298 MBytes per month during the first quarter of 2010, according to Nielsen.

This represents a year-over-year increase of approximately 230 percent, though.  While this increase is substantial, in the first quarter of 2009 more than a third of smart phone subscribers used less than 1 MByte of data per month and usage has dropped to a quarter in the first quarter of 2010.

About 20 million current smart phone users are hardly using any data.

But there is a reason frameworks for managing bandwidth use are important. As mobile data consumption continues to grow, the usage pattern is starting to resemble fixed-line patterns, and that is a problem for all mobile service providers, as there is not now, and never will be any way for mobile providers to match the bandwidth, or cost of bandwidth, that a fixed network provider can offer.

There is a telling statistic in Cisco's Visual Networking Index, namely that as mobile broadband users have rapidly grown, their usage pattern rapidly has assumed the familiar pattern seen in the fixed-line part of the business.

Consider heavy usage patterns. The top one percent of mobile data subscribers generate over 20 percent of mobile data traffic, down from 30 percent just a year ago. That 29-point swing in just 12 months suggests that as more "typical" users adopt mobile broadband, they bring behaviors much different from those of early mobile broadband adopters, namely less-intensive consumption.

Cisco also reports that mobile data traffic over the last year also now matches the 1:20 ratio that has been true of fixed networks for several years (one percent of users generate or consume 20 percent of total transferred bytes). Visual networking index

Similarly, the top 10 percent of mobile data subscribers now generate approximately 60 percent of mobile data traffic, down from 70 percent at the beginning of the year.

All of those instances of "reversion toward the mean" are driven by the broader adoption by "typical" users of smart phone service. That noted, average smart phone usage doubled in 2010. The average amount of traffic per smart phone in 2010 was 79 Mbytes per month, up from 35 Mbytes per month in 2009.

PayPal Outlines Mobile Payment, Wallet Plans

  PayPal plans

IHS Screen Digest Does Think People are Substituting Online Video for Cable TV

The number of multichannel subscription TV households in the United States declined by nearly 380,000 in the second quarter of 2011 as traditional cable and satellite video providers continued to lose subscribers because of economic factors and lower-priced Internet video solutions, according to new IHS Screen Digest findings from information and analysis provider IHS.

The noteworthy angle here is that IHS does believe over-the-top online video is having an impact. Most observers say customers are "cutting the cord" to save money, or because they are not so interested in TV, but not specifically to watch online alternatives. IHS thinks the substitution is happening.

Total U.S. TV subscriptions in the second quarter—the latest time in which full figures are available— decreased to 100.9 million, down from 101.4 million in the first quarter.

Overall, the loss of approximately 378,000 households during the period was much greater than the increase of 345,000 seen in the fourth quarter of 2010. The decline also reversed much of the gains that occurred in the first quarter this year when some 461,000 subscriber households had signed on to new services. The last time a loss of this magnitude took place was a year ago in the second quarter of 2010, when the industry dropped approximately 249,000 subscribers.

US Pay-TV Subscriptions Decline by 380,000 in Q2

How Much Effort Should Some Service Providers Put into Voice Innovation?

Voice services represent a troublesome issue these days, in most developed markets, for service providers. In the landline segment of the business, subscribers are abandoning their subscriptions and relying on mobile service for voice. Users also are talking less and per-unit prices are falling.

In the mobile segment, users in markets with high costs are figuring out ways to use alternate subscriber information modules to spend less, are switching to less-costly VoIP services or substituting text and instant messages where a voice call is another way to accomplish a task.

The troublesome issue is what to do, and how much to do, to innovate in voice. You might think those are easy questions, but they require investment, so the issue is “how much” a service provider ought to spend on a service that many would argue already is well past the peak of its product life cycle.

The typical advice for firms is to launch new products that will replace lost revenues as older products begin to decline. Some might argue that mobile service is that replacement product.

But there is an investment corollary to the product life cycle. At some point, a rational provider should stop investing in a declining product. Some people argue that innovation will extend the life of voice, or even create new markets for voice.

Others might bluntly argue that it isn't really worth the effort, though few might say so in public. The argument that "not much can be done" is weakest for business voice products, strongest for consumer voice products. In the consumer space, it might be tough to compete with Skype, Google Voice, MSN and others.

Consider "videoconferencing." Up to this point, appliance-based approaches have not made inroads, compared to use of Skype. That doesn't mean change is not possible; simply that in the consumer segment, Skype is hard to beat as a platform for consumer videoconferencing.

Innovation opportunities are strongest for IP telephony in the enterprise and business markets, many would say.

Another big issue is whether VoIP and IP telephony are replacement products for legacy voice, or only the latest version of the voice product. The earlier analogies would have included each generation of voice provided by a new generation of switches.

In other words, was voice provided by an analog switch a different product than voice provided by a digital switch? Or was the use of digital switches “merely” the next generation of an existing service? Your answer will determine whether you think of IP telephony as a “new product” or simply the “latest version of voice.”

Your decisions on investment might vary accordingly. To be sure, at some point, a complete transition to IP telephony and VoIP will be necessary. But there still is room for strategic choices that are "minimalist" in terms of investment, and other strategies that are "maximalist." 

Every voice provider will supply IP-based voice, it is clear. What is discretionary is the amount of effort a service provider wants to put into creating new applications around IP voice, in the context of pressing needs for investment in other areas such as mobility, broadband, video, machine-to-machine apps, mobile banking and payments, mobile advertising and vertical market applications for some key business segments. 

The decision will be easier for contestants that do not have realistic prospects of creating brand new businesses too far afield from basic data access, video entertainment and voice services, and primarily compete in the land-line segment of the business.

The point is that it is one thing to say "innovation is good." It is. But innovation is required across every product category, and resources will be limited, so choices have to be made. Different actors will choose different levels of commitment.

But some level of commitment is necessary. Consider the matter of “turning off the public switched telephone network.” At some point, as fewer and fewer customers are using the legacy voice network, the costs of supporting the network will grow to the point that it simply makes no sense to keep using it. At that point, we’ll have to shut down the PSTN, as mobile operators in the past have had to shut down analog mobile networks. The only issue is when it will be needed, and when to get started, much as set a date for turning off the analog TV network.

In fact, at its June 29, 2011 meeting, the Federal Communications Commission’s Technology Advisory Council ("TAC") received a report from its "Critical Legacy Transition Working Group" projecting that by 2018 only six percent of U.S. households will still retain a traditional copper wireline local exchange access line as their primary voice service, not having "cut the cord" and replaced their wireline phone with wireless or some other "new" technology.

By 2014, the United States will have fewer than 42 million voice access lines in service, the TAC predicts. By 2014,  U.S. consumers will use 31.6 million VoIP lines accounting for 42.5 percent of all U.S. voice access lines. TAC report highlights

Based on that projection, the Working Group proposed that the TAC call on the FCC to "target 2018 as the end of the PSTN."PSTN sunset

This will be a politically sensitive issue, as lots of participants in the ecosystem will be hurt by such a move. Some service providers and some suppliers whose business depends on the existence of the legacy PSTN will be harmed. Suppliers of gateway products, for example, explicitly assume the existence of the PSTN and the need to launder traffic and messages between IP and PSTN domains.

For some, the issue is whether 2018 should be the date. But no matter when the full transition happens, the practical issue will remain: how much effort should particular firms put into their voice innovation efforts?

The answer will depend on how much revenue a provider thinks that investment will yield.

Bad News: Your Company Name and "Scandal" in the Headlines

Lightsquared executives might be right that there is nothing untoward about its relationship to White House officials. Lightsquared might be right about not receiving any special treatment. But it has a bigger problem that GPS interference now. The words "scandal," "Solyndra" and "LightSquared" now are being mentioned in the same headlines and sentences.

It no longer matters why. It no longer matters whether it is "fair." It is becoming a political reality that bodes ill for LightSquared.

Words you never want to hear

LightSquared is "Disappointed," It Might Wind Up Very Disappointed

LightSquared is "disappointed" that it now is embroiled in a political mess, but it is a growing problem that seemingly now overshadows the technical issues about interference with GPS that it had been fighting.

“It’s just very disappointing that people are not seeing the facts here, and [that] this has become a real political issue,” said PhilFalcone, a senior executive at the hedge fund firm Harbinger Capital, LightSquared's chief backer.

Technology executives in the past have not understood the powerful role the Federal Communications Commission and other regulatory influencers have in the communications business. That's one level of issues. What now has happened is that LightSquared has become embroiled in a larger story including Solyndra. Once these sorts of things get started, they tend to grow.

Objections from the GPS and military interests were big enough problems. Now there is a larger problem, namely a potential political scandal of some scale.

"I kinda scratch my head every single day and say I can’t believe this is happening,” said Falcone.

LightSquared "disappointed"

LightSquared Hints at Interference Fix

The Federal Communications Commission said LightSquared's plans for terrestrial dominance need more tests. Seems their signals, even after they've been switched to a different part of the wave spectrum, may still interfere with GPS systems.

But LightSquared said it has new equipment that will make everything work. But they're not saying what the equipment is or who created it or what it does or even where it's located.

LightSquared has enough problems. It shouldn't seem to be hiding anything, from anybody. Perception is really important when a firm suddenly finds itself in the middle of a growing political mess.

LightSquared Hints at Secret Technology

Seven States Join Suit Against AT&T - T-Mobile Deal

The Justice Department says seven states have joined its antitrust lawsuit seeking to block AT&T Inc.'s proposed $39 billion acquisition of rival T-Mobile USA. Joining are state attorneys general from New York, Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania.

U.S. Household Worth Declines by $149 Billion

Household wealth in the United States dropped in the second quarter of 2011 for the first time in a year, hurt by falling share prices and declining home values.

Net worth for households and non-profit groups decreased by $149 billion, a 1 percent drop at an annual pace, to $58.5 trillion, the Federal Reserve said today in its flow of funds report from Washington.

U.S. Household Worth Declines by $149 Billion

The Top 20 U.S. Android Apps

The top 20 Android apps

Visa, Mastercard to dominate mobile money?

In developed markets, their moves into the mobile payments space have been defensive, in an effort to prevent newcomers from eroding their market share.

In the emerging markets matters might be different. Even in these early days of industry fragmentation, it isn’t difficult to foresee a time when the card payments companies such as Visa and MasterCard will dominate.

In developing markets, Visa and MasterCard are taking different approaches. Visa and MasterCard have taken slightly different approaches thus far.

MasterCard has been busy setting up bilateral partnerships and joint ventures in different markets, such as The Philippines (Smart Hub) and Latin America (Telefónica/ Movistar). Its JV with Smart Hub will power the technical payments platform for its partnerships.

It has also launched a virtual debit card linked to a mobile wallet in Kenya (Airtel). The JV with Telefónica is particularly interesting given that no one has yet made serious inroads into the Latin American market.

Visa has gone a different route in purchasing Fundamo outright. Fundamo is the market leader in mobile payment platforms by deployments.

Visa, Mastercard to dominate mobile money?