Apple’s Mobile Payment Pieces are in Place

Apple acquired mobile security firm AuthenTec for $356 Million last week. AuthenTec offers a fingerprint recognition technology which works with the swipe of the screen. This will allow Apple to move forward in the mobile payment space in a big way. Apple can build an ecosystem around retail shopping the way they did with the app store. In addition this mobile payment service can ramp up very quickly using stored credit card information on iTunes. Apple can put a complete and workable mobile payment system in place for the following reasons:

• Doing a swipe allows the shopper to make payments over the Internet (like PayPal) rather than use a tap solution (This avoids the availability issue of tap solution POS terminals)
• Fingerprinting is going to make the shopper easy to authenticate, no pin numbers to punch in.
• Fingerprinting is going to make the shopper feel more secure (One of the main concerns of shopper with mobile payment systems.)
• This will be a software based solution so that it will work on all older iPhones with a software upgrade.  

This kills four birds with one stone.

 

In addition:

• If this is the way people pay, then they will also likely use the Apple Wallet called Passport. 
• Apple will gain additional payment information which will allow them to offer more targeted ads and promotions.  

Apple will not release a product unless they believe it is beneficial to iPhone users. Some of the potential advantages to shoppers include:

• Avoiding lines if shopping for a few items and/or if users want to input store items using the phone barcode reader  
• Storing all card information in one place 
• Not having to carry a wallet
• Storing coupons all in one place 
• Getting better deals with Passport.

 

Apple has a history of putting together various technologies to create a service and customer experience that is a game changer, and all the pieces are in place to do this for mobile payments. However, this cannot be a Beta solution like Siri, one of the reasons they have waited patiently for the right time to roll out.

360 Fun

For those people interested in making cool 360 videos check out GoPano, http://www.gopano.com/ . The GoPano gadget is essentially a mirror that takes video on a circle to allow for a 360 picture. The more pixels the camera has, the better the clarity on the video. The gadget can attach to a camera or an iphone 4.

It works better with the iPhone 4s than the 4 because the 4s has more pixel density. The product should also benefit from the expected popularity of the iPhone 5. The 360 video has a number of use cases because it is truly interactive video. Included is an example: www.gopano.com/video/5232.






The user has to react to move around the video and get a different view. It can be used potentially in a number ways:


• In commercials where Easter eggs or other promotions can be found

• In a video story or game were the user can go in a different plot line or area depending on the direction  the user moves around the video.

• To view sports on TV or in the stadium from a different view.  A certain player or area of the field can be focused on.  In addtion, it can create video replays from any angle for a referee.

• To view bands or other types of live entertainment where the user can focus on any place or performer on the video.

The really great aspect of this gadget is that it costs $80 so it is very affordable. People and businesses can experiment on how to best use this type of video for fun or to promote a brand or both. A number of consumer product brands have purchased and given out to product managers and marketing executives to try out and come up with ideas.

Meeting People with Common Interests

Interact is a geo social application which is designed to do just that, interact based on location. To participate with the application the user needs the latest version of the iPhone Facebook application and to allow the application to link with Facebook.   The application uses your Facebook information such as connections and likes to determine mutual connections and interests between people.

The application is designed for people to meet other people who are in close proximity and have common interests. The screen shows all of the people who have common interests by rank within a given location. The radius of the person can be determined by a dimmer like switch which goes from a radius of 25 feet to the entire universe of most compatible users. The pictures of the people are large enough to that you get a clear idea of who they are. The app has the feel of who can I talk to today, and gives the user the opportunity to open up a SMS chat conversation. In addition the user can filter based on the type of interaction they want: any, dating, social or professional.

Interact is good for meeting people in social situations. Some people have mentioned that it can be good for remembering people names if you see them in a particular location. One drawback in creating an audience is the lack of Android support which encompasses a huge demographic who would find this application useful. Android support will be needed to give this application its full potential.

The other potential use case for this application is business situations and the company is planning to offer LinkedIn support. Right now growth in the application is via word of mouth. The app might not be for everyone.  To make the application more privacy friendly the  app designer interviewed women who are more particular in types of interactions they have and in displaying location. One of the incorporated feedbacks was to not include a map, which is a nice feature and allows for a degree of anonymity.

If you want to find out more about the thoughts on building a mobile geo social application by the founder Anthony Combs, it can be found at http://www.geosocialradar.com/blog/84/a-guide-to-building-location-based-social-networks-philly-tech-week.html.  Try out the app you may meet someone that you enjoy interacting with.

Enjoy Your Time App

If you are looking for something fun to do in your current vicinity and you are out and about, at work, or sitting in front of the TV, try the TimetoEnjoy application on your iPhone or iPad. The app seems to be geared to the 20 to 35 crowd, but has lots of suggestions around sports, theater, music, movies, entertainment, product demonstrations, cruises, classes, exhibits, tours. Basically a variety of activities that people are going to be interested in.

The site allows the viewer to look at activities on a certain day and time in a city. The interface is clean and simple. Clicking on the event allows the user to see a description, find directions, purchase tickets, and learn more via Google. The viewer can put the event in a calendar or communicate the event to friends. It allows the viewer to send these activity listings to friends via email, SMS, Facebook, and Twitter. The database for the activities comes from Eventful.

The app could be improved by offering more option for families with kids as they are always looking for something to do. There are filters which allow the user to avoid categories of activities in their search. Later versions of the application will have a learning function like Amazon and provide suggestions. These types of recommendations would be good for alerts. The positive aspect about a suggestion engine is that it tailors events to the viewer’s tastes; the bad part is that viewer may want to try something new that he/she had not had a previous interest in.

As it is now, the application is good for answering the common question, what do we do tonight? And getting an answer that will allow you to enjoy your time. For that reasons it is worth having on your phone.

Banking Services for the Under Banked

The under banked are not a traditionally a good target for banks. They do not typically have large bank accounts for the banks to make money off of savings accounts. They typically do not have large incomes to support high value loans. They may also not be a good credit risk for the bank’s credit card business. But wireless carrier economics are different. Carriers can leverage a service that nominally increases a customer's charge over a large customer base to increase revenues substantially. Carriers also are looking for services that reduces churn, especially for prepaid customers where churn is high. Banking services create stickiness as people tend to have long relationships with their financial institution. Prepaid wireless carriers are in a position to offer banking services to the under banked population as there is a high correlation between prepaid customers and the unbanked.

Making a Solution Possible

A company Vesta (www.trustvesta.com) has been in the prepaid top up business for years offering a turnkey prepaid top up solutions for a number of carriers around the world including Verizon, AT&T, Boost, Telcel, China Mobile, Vodafone and Telefonica. Vesta is offering a new turn- key financial solution that allows customers to pay their bills and make electronic payments. The customer puts money into a mobile wallet account run by the carrier, Vesta, and a program manager like Fiserv for example. These funds can come from a Green Dot Card, a prepaid card from Visa, MasterCard or others, cash at a retail store, or via direct deposit. The customer is charged $3 for inputting cash into the mobile wallet account. The customer is given an application on their smartphone which they can use to pay bills or transfer money from the phone; and a card which they can use like any prepaid card. The carrier, Vesta and the program manager share in the transaction fee from the merchant or electronic bill pay. The program manager is an accredited financial institution, takes care of the storage of funds, and makes money off of the float.

What has really changed the equation and made this opportunity possible is smartphones, which are getting cheaper and growing in popularity with prepaid customers; along with application stores and easy downloads. A small computer and usable applications are in the hands of people who did not have this access before.






Vesta Smartphone Application

Benefits to the Customer

The benefits to the customer are the convenience of electronic bill payment, electronic money transferring, lower cost money remittance (Vesta works with various money remittance companies in various parts of the world), as well as and maybe more importantly, a good record of income and spending.

Limitation and Potential Opportunities

Currently this is only being offered on Android phones 2.2 and 2.3, and will be offered on the 4.0 Ice Cream Sandwich version of Android 30 days after launch. Android is where the main intersection of smartphones users and prepaid users exist.

At this point in time, creating interest bearing is a small factor because the rates are low. But this could be a good way for people feel good about this service. The unbanked do not typically get interest on their money and would see this as being very attractive especially as interest rates go up.

Other opportunities in the space include:

• Cash back on purchase like PerkStreet Financial (www.perkstreet.com) offers. People in the under banked group will see that as a highly attractive feature.
• Tax preparation with automatic rebates: The under banked typically have simple returns that can be done by imputing the W-2 by the camera on a smartphone. The carrier can advise clients on how to save money on taxes via an easy to use application.
• Offering discounted coupons to merchant stores.


Win Win Scenario

This is a service which will be most attractive to carriers that focus on prepaid services in the US and international carriers everywhere else because of their high % of prepaid customers. This service is not a standard telecom service so carriers will have to promote and put their trusted brand name behind this product. The service has the hallmarks of a good product in that economically it adds revenues for carriers with the additional benefits of increased loyalty. For customer’s it saves time, creates more control around their finances, and offers potential cost savings. This can be a win-win for both parties, the hallmark of any good business transaction.

Geo Social: No longer at a loss for words

Geo Social is now starting to become mainstream. Many companies are popping up to allow people to make connections with who they know in their town (www.foound.com) and when they travel (www.ajungo.com). This is due primarily to three main factors: the penetration of smartphones to the mass market so the majority of the people in the market have a geo-sensing device that provides a rich experience; the overall popularity of Facebook so that many people with smartphones can be connected; and the ability of linking to Facebook to applications thus having readymade content at any application developers disposal.

Geo Social will take the next step in allowing people to know each other in the room via a wireless network connection and a social networking connection. This capability will probably be used in certain situations like business conferences and in dating situations where people do not know each other and will want to make some type of connection. This will move Geo Social from a community communications tool to a personal identifier and information source.

Geo Social will perform the function of knowing people's interests and characteristics before you actually meet them. It will a good conversation starter in a business situation when people are looking to make small talk and build a bond, in a dating situation where it is always more interesting to talk about something in common, or simply a way for people to exchange ideas about a topic they are passionate about. This evolution of making social interaction more efficient started with Facebook and will continue with geo social because it has value in creating more efficient conversation and it makes people more comfortable as they are able break the ice and start a meaningful conversation.

Privacy concerns do exist, and they become more impactful because the geo targeted person is at a physical location. Geo Social connecting needs to done in certain situation and should be turned off when the person leaves the particular area. In addition the same rules apply in providing content on social networks in terms of how you want to be perceived and known about. This may differ depending on the situation. LinkedIn for business situations and Facebook for social situations. People do in fact have different personas in different situations.

Some small companies are working on these types of solutions, but the larger social networks like Facebook and LinkedIn can use this to understand how people connect based on location, who people are interested in connecting with in a face to face meeting, and what common interests’ people have. Geo Social makes social networking more valuable to the user and provides a way to provide more targeted and higher CPA advertisements simply because it can help start a conversation.

Mobile Devices from Investors and Innovators Viewpoints

Connolly Bove Lodge & Hutz, a nationwide law firm which specializes in corporate development and intellectual property (www.cblh.com) put together a very informative mobile device forum which consisted of two panels on mobile device investment and mobile device innovation. The panels were made up of investors, executives from start ups, leaders from successful mobile applications companies, an IP executive from RIM. The panelists included:

Bob Moul, Philly Startup Leaders, President
Philip Moyer, Safeguard Scientific, Technology Group Managing Director
Saul Richter, Emerald Stage 2 Ventures, Managing Partner
Chuck Sacco, Mobile Monday Mid-Atlantic, President
Jonathan Darcy, RIM, Director of Licensing
Scott Snyder, Ph.D., Mobiquity, President, Chief Strategy Office and Co-Founder
Scott Wasserman, appRenaissance, Founder and President

The discussion revolved around what is shaping the mobile market, and where to put investment dollars and build businesses. The exchange of ideas took many interesting turns but revolved around the user experience, and the flood of data that comes from ubiquitous computing. The general takeaway is that companies need to fundamentally rethink the way they are interacting with customers, and be able to effectively manage and profit from the size and speed of data.

The two shoulders of tablet demographics will make tablets mainstream:

The panelist in the Investment Panel exposed the idea that there are three generations using electronics: the younger generation, the PC generation, and the older generation. The younger generation is likely to use a tablet for content creation and viewing, the PC generation feels most comfortable creating content on a PC, and the older generation which had not really taken to the PC is in love with the tablet. The tablet’s appeal for non-technical people is very strong and that group includes Doctors. One panelist stated that 70% of doctors use iPads.

The appeal of the tablet to younger generations and to people who were disinterested in the PC will also bleed over to the PC generation in different degrees. I believe the tablet will be a near universal device because of its ease of use, intimacy, universal application capability, and mobility. In the US we have a TV in every room, well in less than 10 years we will have a tablet in everyone’s hands.

There are still hurdles to overcome with the universal use of tablets. The same study from Spyglass Consulting Group that found 70% of Doctors own iPads stated that very few use them at their practice. One of the main reasons is that applications are not transferrable to the iPad. The full utilization of this tremendous user experience via mobile devices (Tablets and Smartphones) is being held back by the lack of integration to and responsiveness from mature backend systems and databases. These two worlds are going to have coalesce and the panelist believed standardization and efficiency between these two worlds needs to happen.


HTML 5 Tug of War:

The panelist brought up that there are two competing groups in the mobile space. One group is the browser based companies like Google, Facebook, and Amazon who are promoting the use of HTML 5 because it allows for the universality of service across devices and allows them to be the center of the user experience as they are in the PC world. One of the examples given was that the Kindle Fire is primarily a browser based device.

Then there are the device centric companies that introduce interfaces that make the device both more usable and more relevant. These newer interfaces and capabilities only work with the native application. Device companies need to continue to innovate and bring useful and enjoyable interfaces to the customer. One of the panelist believed that for the time being the device will be the most relevant piece of the consumer experience. This is certainly proving out in Apple’s explosive growth.

The carriers were discussed in passing do not have a major stake these ecosystems, which was a far cry from what the discussion may have been 5 years ago. The carriers are a pipe and the customer appeal characteristics have to do with quality of service, and customer service. However the carriers, I believe are more likely to support the device centric view of the world because it allows them product differentiation.

The panelist from the innovations panel believe that HTML 5 in its current state was good for brochure wear but companies that needed to provide a better user experience should look to native applications. As businesses evaluate different mobile options, it really depends how the company wants to engage with customers and the customer wants to engage with a company. Both HMTL 5 and native applications may be needed to engage the customer on their terms.

Big Data is a Game Changer:

To the panelist data is paramount trend and doing predictive analytics is an area that will highly impact business. The precision that some companies like Target can use information is astounding and in one case the panelist stated Target knew a girl was pregnant before her Father did. www.nytimes.com/2012/02/19/magazine/shopping-habits.htm?_r=1&scp=3&sq=Target%20Shopping&st=cse

This can provide tremendous marketing advantages. In addition the number of devices is growing and can throw off 200 or more indicators of the person’s interaction with the device and the user’s environment. The current need for data analytics to remain competitive, the explosion of the devices, and the capability of those devices are driving cloud economics. The current data flood has already outgrown existing database capabilities according to one panelist. We live in a world of high data capacity and traffic demands will only grow. Cisco predicts that by 2013 the annual traffic on the Internet will be 667 exabytes.

Cloud computing with its scalability of storage and processing power, and flexibility via virtualization are the back office systems of this century. The panelists believe that providing the connectors between the devices and cloud are a key area of opportunity. These connectors will allow legacy databases to react with devices users that are expecting instantaneous feedback.

Other key points on mobile devices:

Human Interaction:

Human interaction changes with mobile devices. This can lead to both better customer responsiveness in stores, and in our personal lives less direct personal interaction. One panelist stated that each generation must deal with the predominate technology of their generation.

We live in an App World:

The moderator for the Mobile Device Innovation panel stated that they choose a dog kennel company because they could watch their dog on their iPad while they were vacation. Use of a smartphone and tablet are clearly differentiators for business and this trend will only get stronger.

Privacy is lurking as a defining issue:

People do not have full control over the data that is being collected on them, and this data may impact their lives and how companies want to interact with you. One of the attendees brought up if people had control over their data, they might be able to use it for sale or barter. This is essentially what Facebook is doing via advertising, and users are getting community and engagement in return.

Is Social the new .Com?

One of the panelists brought up this point in reference to articles that question Facebook’s revenue capability. This point was in contrast to some member of the innovation panel that highlighted the value of Facebook in developing applications and the power that Facebook had in creating interest in applications. Clearly social networks have value. Monetizing that value is the challenge. Giving social network users the needed benefits will keep the personal information exchange open provided the user feels they have appropriate control of the information. The monetizing of social networks is likely to be around allowing businesses to foster better, more comprehensive and efficient relationships with their customers.

I wanted to thank Connolly Bove Lodge and Hutz LLP and the panelists for putting on this informative event. It gave a great overview of the mobile and data markets.

T-Mobile: Back to the Future with a Twist

T-Mobile announced its 4th quarter earnings and it plans to make adjustments after the AT&T merger failed. Needless to say they have their work cut out for them, but they did make some positive adjustments and will have to think creatively about how they are going to succeed without the iPhone.

T-Mobile did what they had to do on the network side:

They announced a plan to adopt LTE in the AWS bands in 2013 in order to be competitive with the other players in terms of throughput and customer experience. They will have 50% of the covered POPs with 20 MHz and will likely need more spectrum in the future. T-Mobile may benefit as they have in the past by rolling out technology late when the prices have come down and the technology is more efficient due to lessons learned or advancements.

T-Mobile is also shifting some of its HSPA+ capacity to its PCS spectrum to gain more international traffic. The company also plans to work with various worldwide alliances to offer attractive worldwide roaming plans to customers.

The good news about the break up was that T-Mobile is receiving a break- up fee from AT&T of which they are using part of for a $4 Billion to upgrade their networks. If they are able to hold their position and grow their business additional funding is likely to be required for network capacity and additional spectrum.

No iPhone Issues Still Exists

The iPhone continues to be a halo product which carriers can use to create excitement among customers. Despite its high price the iPhone has penetrated the mid- tier market which is T-Mobile’s bread and butter. One of the reasons T-Mobile has had flat to declining subscriber numbers in 2011 is that they do not have an iPhone. They will have to deal with this issue in creative ways. One of the ways is to promote the Windows 7/Nokia phone as an attractive alternative to the iPhone. This can be done via better integration with mobile web services and the phone for consumers, and better integration, control and faster application development using .Net for the enterprise. T-Mobile will need to be a primary distribution channel for Windows 7; and on the flip side Microsoft and Nokia need a supportive distribution outlet for their product in the US.

Still Squeezed in the Value Play:

T-Mobile is still squeezed between a rock and hard place in terms of value from companies like Metro PCS, Leap, and Tracfone who offering attractive deals which are often better than T-Mobile’s. On the higher end they face competition from companies like Verizon for better network coverage and all three of its larger competitors who have the iPhone. T-Mobile continues to offer service at a competitive rate and tries to out advertise its lower end competitors. They also provide value at the fringes for people whose iPhone contract has run out or to international carriers looking for better rates than AT&T.

Business Market is Needed but Not Gotten.

T-Mobile has always lagged the other carriers in enterprise adoption. T-Mobile competed by offering lower service charges and better customer relationships than their competitors. This focus on the business market was put on hold during the AT&T merger negotiations because of the service uncertainty and the need to continue to maintain a subscriber base as the merger approval process continued. It was a much more straight forward proposition to focus on their strength in the consumer market. T-Mobile has reinvigorated it enterprise effort by hiring 1,000 new sales people. T-Mobile success in this market will go hand in hand with convincing enterprises that the Window Phone 7 is a better enterprise choice than the iPhone.

Summary:

T-Mobile continues to be a patchwork of strategies in order to get revenues and stay afloat in the competitive US market. The good news is that T-Mobile still has a good reputation among consumers. They will make some network adjustments to remain competitive and gain additional revenues. If they can gain the iPhone then they will be in much better shape, but this is not likely to occur until they prove they have long- term staying power. That long term staying power is likely to depend on how efficiently they are able to rollout their network plans and how capable they are in promoting the Windows/Nokia phone as a strong alternative to the iPhone.

Antennas are a key part of the LTE Transformation

One of the major themes of CES 2012 was the rollout of LTE handsets:

• Verizon announced three new devices the Motorola Droid 4, Droid Razr Maxx and LG Spectrum, a mini-tablet and a pair of mobile hotspots that run on the their network which covers 200 million POPs (Covered Population).

• AT&T announced 7 new devices and a tablet including the Nokia Lumia 900 and the HTC Titan II, the first Windows Mobile OS LTE devices, and a number of Samsung LTE devices with the Android operating system.

• Sprint announced it will have the Samsung Galaxy Nexus smartphone and the LG Viper running on their LTE network they plan to rollout later this year. Sprint and Clearwire’s move to LTE has effectively ended WiMAX as a major wireless technology.

LTE in 2012 will become a major wireless technology in the US. This driven by Verizon’s need for a faster, more cost effective broadband solution, and the need for the other player to match Verizon’s service and to use a technology that will be the worldwide standard. But the rest of the world is not moving as fast as the US. What is going to help make LTE grow as a technology that is adopted around the world?

Certainly, less expense handsets, and more carrier network rollouts in other regions of the world. The US carriers are doing their part to bring down the cost of LTE handsets by creating volume. However, most of these handsets only work in a limited frequency range and thus only work on the carrier’s network and in country. In fact a consumer needs to buy a new LTE phone if they move from Verizon to AT&T and vice versa due to the different frequency capabilities of the phone and the difference frequencies the network operators run LTE on.

A couple of antenna manufacturers, SkyCross and Ethertronics have developed antenna solutions that allow for multi frequency LTE device usage:

• At CES SkyCross announced its VersiTune-LTE tunable antenna module which supports up to 12 frequency bands and optimizes MIMO (Multi input multi output).

• In 2011 Ethertronics announced its EtherSmart LTE 1.0 product line which allows for tuning across 13+ frequency bands.

Not all frequency bands are going to be used in a single device and will be subject to carrier discretion in terms of what frequencies their networks run on, who their roaming partners are and what are relevant regional frequencies for LTE. But these capabilities open up the possibility for global roaming with LTE and provide:

• An incentive for operators to invest in LTE networks in their home country to gain roaming revenues.

• A solution for operators to work together to provide worldwide service packages like Verizon and Vodafone.

• A desire for business people and consumers to push for LTE services which run faster than existing networks.

• A desire of countries to upgrade their services so they are not seen as technologically behind.

Antennas are one step in the solution, the chip makers like Qualcomm need to provide multi frequency LTE capabilities on their chips sets but this is more of an evolution if the market incentives are in place to make this happen. The antenna solutions have started the ball rolling in what can be a true ubiquitous worldwide standard for wireless communication by the end of this decade. The implications of this will be profound on many levels.