Who Wins Wallet Wars?

The existence of mobile wallet services operated by Google, PayPal and Isis raises an obvious question: which contestants will “win” the battle to become the dominant or leading wallet services? In principle, one might argue that over-the-top application providers, mobile service providers, clearinghouse networks such as Visa or MasterCard, banks or other payment specialists could emerge as the leading providers of such services.

Researchers at ABI Research say it is the likes of Google and Apple that ultimately will lead the market, though mobile service providers are highly likely to claim the most share initially.

While mobile service providers will havethe majority of NFC-based mobile wallet users early on, their market share will erode between 2012 and 2016 as Google and Apple assume greater share.

“By the end of 2012, Google will prove that Google Wallet is a hit with consumers,” says Mark Beccue, ABI Research senior analyst. “By 2014, we will see Google Wallets supported alongside competing MNO offerings globally.”

Mobile service providers might have 75 percent mobile wallet share in 2012, shrinking to 63 percent in 2016.  Over the top providers will win wallet war

Google Wallet also will succeed in markets where mobile service providers prefer not to spend capital to develop and support mobile wallet infrastructure. In such cases, application providers such as Google, Apple and others will have an advantage.

Though Apple is not yet in the market, ABI Research believes Apple will enter the market. “Apple will launch a mobile wallet product in 2012,” Beccue argues.

ABI Research also predicts that near field communications will support 594 million users in 2016.

That is not to say banks, payment providers or merchants will fail to attempt their own offerings. Starbucks, for example, operates one of the most-successful mobile wallet and payment programs in 2011.

In most cases, such efforts will have suffered in the face of successful programs offered by the likes of Google, Apple and the mobile service providers, ABI Research believes. Who wins wallet war?

Apple has yet to launch a mobile payment service, though it is widely believed from patents and whispers in the corners of the industry that the company will equip its iPhones with payment-enabling NFC sensors and software in 2012.

As with Google and its carrier partners, AT&T and Verizon will allow Apple to offer its mobile wallet to consumers who have iPhones, regardless of whether or not the carrier has a competing mobile wallet, Beccue noted.

Still, most observers believe PayPal says 2016 will be the year when some industry executives believe U.K. shoppers will be able to use their mobile phones to shop, instead of using cash, checks or credit and debit cards.

PayPal’s conclusions are based on a Forrester Consulting survey of 10 senior executives from major U.K. retailers and other businesses.

Some 49 percent of mobile buyers surveyed by Forrester Consulting use their mobile phones to purchase products at least once every three months.

“By 2016, you’ll be able to leave your wallet at home and use your mobile as the 21st century digital wallet,” says Carl Scheible, Managing Director of PayPal UK.

“We’re not saying cash will disappear entirely, but we’ll increasingly use our phones and other devices rather than our wallets to pay in-store as well as online,” argues Scheible. 2016 key for U.K. mobile payments

Some might even argue  that mobile wallet functions will have more substantial impact on the retail shopping experience, however. “Payment” using a mobile device might be the least-important new reason people use new mobile commerce applications.

In fact, some might argue, consumers will be using mobile payment apps because the value of the mobile wallet offers clear value.

“PayPal’s vision is a one-stop shop for retailers to engage their customers directly during every part of the shopping lifecycle, generating demand from consumers through location-based offers, making payments accessible from any device, not just from the mobile phone, and offering more flexibility to customers even after they’ve checked out,” Scheible says.

“As well as paying for goods without having to queue, the report reveals shoppers can look forward to being able to carry digital loyalty cards, promotional offers and receipts on their phones – keeping everything in one place creating a virtual shopping hub,” PayPal says.

Isis Signs JPMorgan Chase, Capital One, Barclaycard

Isis, the mobile wallet venture owned by AT&T, Verizon Wireless and T-Mobile USA, says it has gotten deals with JPMorgan Chase, Capital One and Barclaycard that would allow the bank customers to purchase goods by making payments using Isis-capable mobile phones. Isis Signs Three Banks


The deal means that Chase, Capital One and Barclaycard credit, debit and prepaid cards can be placed into the Isis Mobile Wallet. Starting in mid-2012, consumers then will be able to shop at participating merchants in Salt Lake City and Austin, Texas, where Isis is running trials. Isis deal

Device Subsidies Do Matter

A recurrent complaint in some quarters is that mobile phone subsidies, tied to service contracts that recoup the cost of the subsidies, inhibits consumer freedom to change service providers, and there is some logic to the thinking.


But it also is true that without such device subsidies, consumer adoption of the latest devices, and therefore the pace of innovation in the mobile apps space, would be less. 


One clear example are buy rates for Android and Apple iPhone devices in countries where users generally buy subsidized devices, compared to markets where users generally pay the full retail price of handsets. 


As this chart from the Wall Street Journal illustrates, subsidies have a big and positive impact on consumer willingness to buy and use either Android smart phones or Apple iPhone devices. 


 

AT&T to Intro Data Equivalent of Toll-Free Calls

Consumers and businesses used to the idea of toll-free calling will get the bandwidth equivalent under a new plan AT&T Inc. is developing for content providers and developers of mobile applications.

Under the new plan, the app provider would be able to pay AT&T for bandwidth consumed by app customers, instead of the app users having the usage billed against their service plans.

In some ways the plan is analogous to the way Amazon.com has been paying the bandwidth charges to deliver content to Kindle e-readers. When users buy a book, newspaper or magazine, the delivery cost (bandwidth) is part of the retail cost of buying the product.

Some app providers will be leery, since the practice is one more way app and content providers could wind up paying delivery networks when consumers use their apps or services.

That might be quite a valuable feature for consumers who want to purchase mobile video content, for example.

AT&T to enable toll-free bandwidth

Android, Microsoft Have to Sell Ecosystem, Apple Doesn't

Apple, Microsoft and Android are recognizable and recognized brands. But Apple has one advantage Microsoft and Android do not. Apple can promote its brand without worrying about promoting an ecosystem. Android and Microsoft, to some extent, must do so. 


That's the challenge Google will have if it really wants to double the number of Android tablets it can sell in the coming year. Android is, in part, a choice to embrace an application ecosystem, not just a specific tablet or device implementation. 

Mozilla Bets on New Mobile Operating System

Can another new operating system get traction in the global mobile service provider market? Mozilla and some service providers hope so.

Mozilla’s “Boot to Gecko” project aims to create devices that can "boot to the web," running an HTML-based platform that works as well as other operating systems, at much-less cost, allowing production of lower-cost smart phones.

Those of you familar with Google’s Chromebooks will understand the idea. Some would say the “Open Web Devices” initiative uses the Android kernel but has an entirely new layer on top based on HTML5. 

Others might prefer to say B2G uses some of the same low-level building blocks used in Android (Linux kernel, libusb), but is not based on Android, and will not be compatible with the Android stack (in particular B2G will not run Android applications).


It’s essentially a complete phone system run on web technologies that gives the on-board software access to core APIs through an embedded version of Firefox. That, in turn, means all apps on the phone essentially run in the browser.

Carriers looking for new ways to inject themselves back into the revenue stream, since Apple’s iOS and Android have created independent roles within the value chain, creating a situation where end users buy based on the thrid party device first, with the choice of a service provider being a secondary consideration.

The issue is whether a brutally-competitive operating system market has room for a major new player. One might also ask whether Boot to Gecko is really as "carrier friendly" as some carriers might hope.

Boot to Gecko, based on HTML5, by definition will rely on cloud-based access to work. That means it is going to put more demand on mobile network bandwidth; it has to. Telefonica now is supporting G2G, but Mozilla is going to have to convince the major hardware manufacturers to support it. Who is going to do that do that?

Also, manufacturers and carriers have been arguing there are too many mobile operating systems to support. Even with the decline of Symbian, WebOS and potentially RIM, Mozilla will find it hard to overcome those objections. 

Boot to Gecko essentially is a thin client that will require good Infernet connectivity. Want to guess how many end users are going to trust any service provider in that regard? 

HTC to Brand New Smart Phones Using "One"

HTC has had a bit of a branding issue since deciding it did not want to be a contract manufacturer, but rather a retail brand in its own right. Some would argue "HTC" hasn't quite got the zing. 


Now HTC seems to have settled on "One" as its retail brand. 


Some would argue HTC has more pressing problems, though. The company’s sales for the month of January 2012 were down by more than 50 percent compared to the same month of 2011, and revenues have been lower than anticipated. 


HTC says it had revenues of $564 million ($16,615 million Taiwan dollars) in the month of January 2012, compared to $1.2 billion (NT$35014) in January 2011. 

In 2010, by some estimates, the company was making four out of the top-five best-selling Android handsets in the U.S. market.