Telecommunications, Automotive and Market Research

More than 15 years in the mobile telecommunications industry and an industry analyst since 1998.

Friday, March 25, 2011

Hold the Phone! NFC Isn't Just About Mobile Payments

The buzz about mobile payments is becoming overwhelming these days.

Despite the fact that I'm a big fan of Near Field Communication (NFC) being used for mobile payments, I think it's important not to lose sight of the fact that it can do so many more things. And those other functions are going to become critical to the well-being of the NFC ecosystem.

Here's why:

  1. In the US, the battle has broken out among all the players who make up the mobile payment ecosystem, just as I predicted last year (and in my first Mobile Wallet report from 2006). This could delay or totally derail the NFC payment world as these giants battle over the three- to five-cent fees most mobile payment transactions will generate.
  2. Handset vendors, point-of-sale terminal makers, application developers and merchants will be forced to wait-and-see which technology will ultimately win out. While they're waiting, they're not building compatible NFC devices or apps.
  3. HOWEVER, if there is some other reason to use NFC -- some reason other than mobile payments -- you can get a head start on making handsets, applications, and building  a profitable ecosystem.
So what sort of things could you do with an NFC-equipped smartphone?
  • Ticketing for public transportation
  • Movie and other performance tickets
  • Point-of-sale information (imagine if your product's mobile entire web site could pop up on a buyer's phone with a single swipe)
  • Location-based services such as search and navigation
  • Loyalty cards (such as your supermarket discount card)
  • Coupons
  • Membership credentials (gym membership, library card, even checking in at the doctor's office)
  • Personal information transfer (swap business cards by bumping phones)
It's time to focus on non-payment NFC applications and devices
It's time to get away from the focus on mobile payments and start thinking about ways to make NFC useful for everything else. That way the warring banks, mobile operators and handset makers will have to follow and we won't have to rely on them to lead in that direction.

Friday, March 18, 2011

Should Have Known Mobile Payment Prospects Were Too Good to Be True

Yeah, it's started. The bickering and squabbling among the players.  Now I'm on a roller coaster of thoughts about how soon we'll start to see mobile payments using Near Field Communications (NFC) on our cellphones.
Cool New NFC Logo
I was quite pessimistic when first I wrote about mobile wallet in November 2010. I thought all the players who would be involved would spend so much time bickering over technology. And there is always the problem of figuring out who gets paid.

Then I was just ecstatic when the joint venture Isis was announced just a few weeks later. "At last," I thought, "maybe the key players will actually learn how to agree on things and get along."


My mistake. They're fighting already. Before things get off the ground.

In a Wall Street Journal article called RIM, Carriers Fight Over Digital Wallet, by Phred Dvorak and Stuart Weinberg, say the battle is now coming down to, "who owns the customer?"

The dispute centers on where key data related to mobile payments will reside on the next generation of smartphones, slated to come out later this year. Now, such information is stored in the magnetic strip on a credit or debit card. RIM [makers of the BlackBerry] and other handset makers are poised to make phones that will store this data, known in industry parlance as "credentials," in the devices themselves. In a transaction, the customer would wave the phone near a special electronic reader at a store's checkout.
 But RIM and carriers like Rogers Communications Inc. in Canada, and AT&T Inc. and T-Mobile USA in the U.S., disagree over exactly where on the phone the credentials should reside—and thus who will control the customers, revenue and applications that grow out of mobile payments.


What's the big problem?
Apparently, if your credentials/password/bank account info is stored in one part of the phone, the handset vendor "owns" you. If that's all stored somewhere else, the carrier owns you. And, I'm sure, it won't be long before your bank thinks it should own you, your credit card company wants to own you, Starbucks wants to own you and iTunes wants to be in there as well.

What does it mean?
These squabbles will all lead to more delays (or, at worst, total failure) for mobile wallet and mobile payments using NFC. Already, the lack of standards has caused Appple to wave off its first attempt at NFC, which was expected to be in the iPhone 5.

Is there any hope?
Of course there's still hope. There is no question that NFC payments work; systems have been in place for years in Japan. But the key is that Japan's system was built with cooperation among all the players. All the mobile operators in Japan have adopted the same technology and all their phones are compatible. But it works. And it could work here in the US... providing, of course, everybody finally agrees how it's going to be done.

Thursday, March 17, 2011

The Three Revolutions in Cell Phone Design

There has been a lot said about "disruptive technologies" and how important they are. but in the 25+ years since we've had cellphones, there have been only three revolutions, three changes that have actually changed the way we think about the design of mobile phones.

Stuff car phone components in a bag and you have a hand-portable cellphone!
Where We Started: The Bag Phone
Cell phones were car phones. There was a handset inside the car with a transmitter/receiver mounted in the trunk. Your car's electrical system supplied 12 volts to run the thing. Was that good enough? For the first couple years it was, until the need for portability arose and all the components were stuffed into a bag... handset, transceiver, antenna and a 12-volt lead-acid battery. It was big and heavy, but you could carry it anywhere. Plus, it operated at 3 Watts, five times the power of portable handsets. Those bag phones would operate even in very low signal areas (and, face it, in 1991, there were a LOT of low signal areas).

Motorola DynaTAC.
First Revolution: The Brick
Starting with the venerable Motorola DynaTAC, (was that a great phone, or what?) there were generation after generation of "brick" phones, that gradually became smaller until they became what we now describe as "candy bar" phones. They got smaller, added features, lost the external antenna and got made over with fancy color screens. But it was still the same basic design (reading from top to bottom):

The Second Revolution: The Clamshell Phone
Motorola StarTAC, 1996
In 1996, the Motorola StarTAC turned the cellular world upside down. Designers at Motorola split the basic candy bar phone in half, putting the earpiece above the hinge and the screen, keyboard and mouthpiece on the other half. If you don't remember, the StarTAC was an absolute sensation. Cellphones were still the province of the wealthy and connected at that time, and crazed stockbrokers were paying two and three times the suggested price to own one of these treasured devices.

Yes, they were mostly analog models in the US and, yes, you would have to buy several batteries to get through a whole day of usage. But the clamshell put Motorola at the top of the industrial design market for cellphones. The ultimate expression of that was the beloved - and later reviled - Motorola RAZR.

The Third Revolution: iPhone
Apple iPhone, 2007
If you missed the excitement the StarTAC generated, you got to witness it with the iPhone in 2007. Aside from all the hyperventilating about the user interface, iPhone has created an even greater revolution in the deployment of applications to mobile phones, forever altering the relationship between the cellular customer and the cellular operator.

The longer-term effects of the iPhone have been to breed another classification of device: the tablet computer, (re)introduced as the iPad, which is little more than a big-screen iPhone.

Looking Back From 2011
Cellular networks were launched in 1983 and started to come into their own in the early 1990s with the DynaTAC and other portable devices.

It was nearly 10 years before the StarTAC revolutionized handset design and another 10 years before the announcement of the iPhone. In the meantime, cellular networks matured, went through three generations themselves. If you're extrapolating the changes in phones, look for things to change significantly... in 2017

Wednesday, March 16, 2011

My rules for thinking about technology

I spent more than a decade working as an industry analyst covering telcommunications, wired and wireless.  I was part of the emergence of cellular systems, mobile internet (which we called "wireless data"), and witnessed the rise and fall of the competitive local exchange carriers during the ill-fated dotcom boom.

During those years, I developed ten rules for people who were doing my job and had the chance to witness first hand the benefits of following those rules and the problems caused by ignoring them.

Here are Chamberlain's Rules for Assessing Technology:

  1. Ignore either/or beliefs about technology (e.g., Remember "WiMAX thrives therefore 3G dies?") 
  2. Reality-check your assumptions by looking around you. Would YOU adopt the technology that you are expecting millions of people to use?  Would your friends?  Your Mom?
  3. It is dangerous to drink Kool-Aid when technology vendors are serving. 
  4. Incumbents, especially highly regulated ones, are extraordinarily adept at protecting themselves from competition.
  5. “Success” for a new business or technology does not necessarily require mass consumer adoption or the creation of a publicly traded multinational corporation.
  6. Remember the better mousetrap: The world, not the inventor, beats the path to the door. There are very few true technology revolutions. 
  7. “Cheaper” or “free” is not a business plan, let alone a recipe for world domination. 
  8. If the most compelling argument supporting a new technology includes the words “bits per second,” it isn’t very compelling.