Explaining "Klout" can be a Humorous Undertaking

It can  be hard to explain what "Klout" is.

Mobile Payments Business is Starting Over, Says Schropfer

The mobile payments business is starting over, says David W. Schropfer, a partner at Luciano Group. Ironically, as both Isis and the Google Wallet systems now essentially disclaim any interest in revenue from the transaction process, seeking instead to build new businesses based on advertising and loyalty, the “wallet” part of the mobile commerce business now seems to have “substantially slowed mobile commerce development in the rest of the developed world.”

To a large, though not complete extent, “payments” now are taking a back seat to “wallets,” which probably means we are headed for a period where “mobile commerce” becomes the headline phrase, not necessarily “mobile payments.”

The new direction, at least for many significant players, seems to be a recognition that “significant revenue is available from the advertising, retention and rewards programs,” says Schropfer. That’s the upside.

The other recognition is that the payments ecosystem cannot easily afford to support many new “mouths to feed” in the revenue chain. Complicated ecosystem That being the case, the incumbent participants have every incentive to use their considerable resources to thwart entry by a new category of participants, says Schropfer.

Make no mistake, there still remains  a potential disruption here. But it is a disruption of the broader commerce process, not the “payments” process in a narrow sense.

One might also argue that the “commerce” angle, aiming to reinvent the shopping experience, almost automatically answers the question of “what’s in it for retailers” in a way that “payments” systems have not. Merchants care about loyalty, customer retention and promoting customer traffic. The “Wallet” approach addresses all three of those concerns, in addition to providing value for consumers.

Loyalty programs and systems generally refer to programs intended to bring a consumer into a specific merchant with incentives such as coupons, discounts, and other incentives, says Schropfer. The advantages for consumers and merchants therefore are pretty clear.

“Remarkably, there are over 2.1 billion loyalty and rewards programs currently
issued to customers in the United States,” Schropfer says. “With only 300 million total
population, this equates to almost seven accounts for every individual in the United States.”

Just as important, retailers are willing to spend money to acquire new customers. “In a study by international consultancy Deloitte, the company estimated that merchants  are willing to pay between seven percent and nine percent of a transaction amount to acquire a new sale,” Schropfer says. 

That’s important because it suggests where a wallet revenue model lies: getting paid by a merchant to deliver a customer.

“Starting over” is a bold statement. But it is hard to deny that, with some exceptions, much of the activity in what used to be the “mobile payments” business now has shifted in the direction of “mobile wallet,” with a revenue model based on loyalty, offers, advertising, marketing, promotion and other elements of the commerce system.

One might argue that there are some areas, such as enabling use of a smart phone as a credit card reader, or integration of PayPal as a retail payments method, various forms of social and virtual currency or overseas or person-to-person remittances continue to be important for some segments of the “payments” business. 

Still, for the moment, “wallet” seems to have emerged as the more-important aspect of change in the mobile commerce arena, eclipsing “payments” for the moment, even though “wallet” value is sometimes harder to describe. “Starting over” is an important phrase, whether one agrees or not.

Verizon to use small cells to supplement LTE

Verizon Wireless will deploy small cell technology to supplement its Long Term Evolution coverage and help manage its network capacity. "Small cells are one way we will keep up with the growth," said Verizon Wireless' executive vice president of network planning, Bill Stone. Verizon to use small cells to supplement LTE


That has obvious implications for mobile backhaul, including the likely need for more-affordable access circuits than are used to support macro cells. Up to this point, femtocells have been seen as tools to give consumers better in-home voice coverage. In an increasing number of cases, though, small cells will be used by carriers to beef up bandwidth in congested urban areas. 

Sprint Says It Needs to Raise Up to $7 Billion in Capital as Loss Narrows - Bloomberg

Sprint Nextel Corp., the third- largest U.S. wireless carrier, said it needs as much as $7 billion in capital to pay for new handsets and a network upgrade.

Sprint plans to refinance $4 billion of its debt and seek $1 billion to $3 billion in financing from suppliers, elaborating on capital plans Sprint first talked about earlier in October 2011.

Separately, Sprint also says it is working with Clearwire on ways to ensure that Clearwire Long Term Evolution facilities can be made seamless for users of Sprint's new Long Term Evolution network. Sprint CEO Dan Hesse says "you're right to think of 2013 as the period of time that Clearwire LTE capacity would begin to come along, that we would use Clearwire's LTE capacity to augment our own network capacity going forward."

Clearwire clearly could use help from Sprint to build out a new LTE network in markets where it also provides WiMAX services, while Sprint could benefit from the additional LTE bandwidth, whether or not LightSquared actually gets clearance to launch and raises additional funding.

Sprint Says It Needs to Raise Up to $7 Billion

Commonwealth Bank Launches Kaching: P2P, Facebook, NFC Payments

Australia's Commonwealth Bank is launching Commbank "Kaching," a mobile payments service supporting both
peer-to-peer payments using the mobile phone’s contacts and email addresses, and social payments to a user’s Facebook friends, along retail payments using near field communications.

The new service will simplify day-to-day payments to anyone, including friends, family, mainstream retailers and small businesses, says David Lindberg, Commonwealth Bank executive general manager. "Now, for the first time, Australian consumers will no longer have to rely on cash or cards to make payments to family, friends or even businesses."

Kaching works with the 42,000 MasterCard-enabled PayPass terminals across Australia.

Kaching launches in Australia

Netflix Stock Slammed Unfairly?

Earlier in 2011, Netflix was a $300 stock and a hit with investors. In October 2011 it is a $77 stock and hated by almost “everybody.” It is possible Netflix finally has met a challenge it cannot surmount. But it might also be worth noting that Amazon equity also is being slammed as it clearly is making investments in its future that investors don’t like.

There are, to be sure, reasons to be concerned about Netflix. Some would argue the 75 percent loss of value in less than six months is the result of three mistakes, many will say. Among the  key events were raising fees, trying to create separate streaming and DVD-by-mail businesses and shocking investors by warning that Netflix might not make money for all of 2012 as the company ramps up international expansiion plans.

The decline follows Netflix's quarterly earnings report, in which profit and revenue were up sharply but the video-rental company was haunted by its decision to raise prices and its admittedly botched effort to divorce rentals of DVDs from streaming video services. Those moves caused more than 800,000 subscribers to flee in the third quarter and spoiled a lot of goodwill with investors. But revenue is up sharply


But some might note that a significant slide in net customer additions happened months before any of those events, in the quarter ended in June 2011. 

Investor Whitney Tilson has been buying Netflix, though. “It’s been frustrating to see our original investment thesis validated, yet not profit from it.  It certainly highlights the importance of getting the timing right and maintaining your conviction even when the market moves against you.  The core of our short thesis was always Netflix’s high valuation.  In light of the stock’s collapse, we now think it’s cheap and today established a small long position.  We hope it gets cheaper so we can add to it.” Some are buying.

And some think the panic is overdone. Watch the video.

Some might argue Netflix now is a buying opportunity. Netflix's streaming business, its future, is already at a about a $2 billion revenue run-rate, with 21 million subscribers paying $8 a month. Some might compare that to cable TV, satellite TV or telco TV, but the better analogy for the moment is HBO. The issue then is what HBO, as a stand-alone business, might be worth.

At $75 a share, Netflix's market cap is $4 billion, or two time the revenue of its product of the future. Assuming one values the DVD business at zero, the market is valuing Netflix's streaming business at two times run-rate revenue. Some would argue that is low for any company whose future revenue is expected to grow sharply. Netflix bullish case

Only 5% of U.S. Homes Do Not Buy At Least 1 Broadband Service

There’s an interesting bit of data in the most-recent Nielsen “Cross Platform” report on media behavior of U.S. consumers. The study shows that 72 percent of households buy both broadband access and a video subscription service. Broadband drives consumer spending


About 18 percent of households buy video service but no broadband, while five percent buy broadband but not video service. About five percent of households do not buy either video service or broadband.



Add it all up and just five percent of U.S. households do not buy at least one broadband service, with the dominant pattern being “video plus broadband access.”



That doesn’t mean narrowband services are unimportant, either in terms of gross revenue or profit margin. It does mean that when forecasters say the telecom business will in the future be built on broadband services, “tomorrow” already has arrived.