New and Interesting NFC Developments

After my little hiatus, I've been finding the pace of near field communication (NFC) deployments and trials is picking up its pace.  Here's a sampling of what's been happening.

This is the area I've long said has to get the focus of development in order to lay the groundwork for mobile payments (groundwork means enough phones having NFC capability). These are primarily small deployments, minor applications, but are the sort of thing that is going to be needed to get people thinking about NFC, using it, and, more important, developers finding ways to integrate NFC into useful, productive, profitable applications.

Blackberry Tag was announced by Research in Motion in early October. 

[Tag] will allow users to share contact information, documents, URLs, photos and other multimedia content by simply tapping their BlackBerry smartphones together. BlackBerry Tag will also enable friends to instantly add one another as contacts on BBM™ (BlackBerry® Messenger). 

RIM took the industry lead last year when it announced it would eventually include NFC in all its devices. RIM is also opening its NFC application programming interface to allow developers to start making their own NFC apps.

Media Junction deploys smart posters for Jamiroquoi's European concert tour. Despite the lack of NFC-equipped phones (only the Google Nexus S and Samsung Tocca). Neil Cartwright of Media Junction says the phones will "automatically sense the contact and take the user to a webpage on their mobile browser. Users will be able to share the page with other fans and friends once viewed and they know secret URL.  The exclusive content, a behind-the-scene video, was specially commissioned for the promotion to provide a strong incentive for fans to tap on the poster."

Vox Cinemas in Dubai started using NFC for in-theater promotions using smart posters. The system was introduced by Proxama.  Exit displays allow NFC phone users to tap a tag to access movie listings and a Nokia Facebook 'Like' page.

Art Lovers Rate Exhibits with NFC at the STRP Festival in Netherlands. According to NXP, the semiconductor company that provides NFC chipsets, "By simply tapping a work of art with an NFC enabled device, visitors can rate pieces... Enabling visitors to share their appreciation for the arts with their friends via social media, the Android app also gives visitors information about the art through a synthesized voice." I'm not completely certain what a "synthesized voice" is, but but at least uses NFC.

A Concept Medical Device called MiniME is a personal device that monitors "ECG, blood pressure, heart rate, pulse oximetry, body temperature, blood glucose, cholesterol, hemoglobin and prothrombin time. Data are communicated through a cloud or internet site and shared with healthcare professionals via mobile devices." Even though it's not expected to become a commercial device in its current form, the MiniME, designed by Sweden's Ergonomidesign is expected to bring together all the stakeholders in the remote monitoring ecosystem.

Google Making More Wallet Progress

OK, now things are getting even better.

Remember Google Checkout? That's a way you can consolidate your purchasing information into a single credential that you could use at a wide range of e-commerce web sites. I'm no expert and haven't used it before, but it seems like a good idea but nothing that's too earth-shaking.


Remember Google Wallet? It was a way you could consolidate your purchasing information into your cell phone.

Now Google is putting the two of them together and replacing Google Checkout with Google Wallet. Anybody who had agreed to accept Google Checkout is automatically transitioned to Google Wallet.

I mean, think about it... I wouldn't want to use a separate payment method online and in real life (oh, wait; I do that right now with PayPal feeding my debilitating addiction to art deco clocks from the 1930s. I don't use the PayPal account for anything else. Pity)

Understanding the Vision 
Google's move means that we're moving closer still to the mobile wallet replacing the leather wallet. Rather than having separate operations serving the online and in-person purchase, having a single entity handle both kinds of payments is more like the way we use the credit and debit cards in our own wallets.

What about Privacy?
Well, there is the privacy thing. You have to remember Google makes its money from advertising and its ads are successful because of targeting... targeting that comes from knowing so much about you. When you unify all your purchasing, you're also providing all your entire purchase history -- online and real life -- to Google. It's important to remember with companies like Google (and Facebook) that you are NOT the customer... you are the product. And the more information you willingly provide, the more valuable you are as an advertising target.

Google Wallet Looking More and More Like a Wallet

Ever since the first report I wrote about mobile wallets in 2006, I had identified as the key obstacle competition among the players, especially competition based on the technology.

In Japan, all the mobile operators unified under a single trade name (osaifu-keitai, or wallet phone), even thought it was originated by one of the major mobile operators, NTT DoCoMo. All three operators also adopted the same technology, the near-field communication variant called FeliCa. 

In the US, heavy competition and a hands-off approach by regulatory bodies had caused many delays or the death of some new, interesting technologies (remember AM Stereo? I didn't think so).

These will be getting thinner and thinner

However, an announcement last week shows that there's more cooperation than competition among the key players for mobile wallet (and ultimately, mobile payments): VISA and Google have agreed to put VISA's PayWave technology and brand name in Google Wallet phones. 

PayWave cards and dongles are already offered through a number of issuing banks including BarclayCard, BB&T, Chase, PNC, Wells Fargo and others. 

Hey, prospects for mobile wallet are getting better, aren't they?

You bet they are. The things I believe are going to be required to push the entire market forward are the open wallet concept, rather than the closed system initially proposed - and abandoned - by Isis. For the ultimate success, mobile wallet is going to have to replace everything you now keep in your leather wallet: ID, gym membership, loyalty cards, all your credit and debit cards, library card, pictures of the kids and all the other things. And only after ALL those things are possible will the mobile payments component of the mobile wallet be ready for its inevitable success. 

Isis making the right moves

It's with considerable hope that I watch some recent announcements from (and about) Isis, the joint venture of AT&T, T-Mobile and Verizon Wireless.

First, Isis CEO Michael Abbott has been saying the right things about the "competition" Isis would face from Google Wallet. Instead of putting Google down or dismissing it (as Square's Chief Operating Officer recently did about its NFC competitors), Isis is supportive of its huge competitor, recognizing that Google's success in the market will surely propel the entire segment forward.

Second, Isis is expanding the expected scope of its 2012 rollout from one city (Salt Lake City) to two (Austin, Texas). Reportedly there will be fewer than 1 million phones involved with the rollouts, which sounds extremely ambitious when you consider the two cities have a combined population of 2.8 million.

Third, Isis has been hinting at having three banks involved with their rollout, without naming the banks. However, there have been reports that JP Morgan Chase will be providing a credit account and CapitalOne offering a prepaid card. BarclayCard was part of the of Isis's initial closed-system business plan.

What does it all mean?
In my estimation, these three items point to some acceleration of the realization of NFC mobile payments in the U.S. I've said it before, though: we need to be considering ways to encourage non-payment NFC applications such this NFC building access application for BlackBerry. Just don't expect things to happen immediately. It's going to be a while before there is enough infrastructure to support a robust cellphone-payment ecosystem.

Interested in seeing the numbers?
By the way, I published a forecast for report at GigaOm concerning NFC handsets and a variety of NFC applications, which you can see here... you need to be a member of GigaOM Pro to read the whole thing

Netheads vs. Bellheads: Disrespecting "the cloud"

I continue to believe there's a big difference between Netheads and Bellheads, but there's something I heard this morning that really points out a huge disconnect between those two worlds.

What started me thinking was a sponsor message this morning on National Public Radio that promised improvements in business by taking advantage of "the cloud." 

Mmmmm... what a lovely image. Light drifting shapes that appear and vanish all by themselves,  with no intervention or control by those of us who live on the Earth. Who made the clouds? Nature. Who controls the clouds? Thermal currents, winds, humidity, terrain. Some might even attribute clouds to the benevolent Hand of God.  Farmers and their crops depend on clouds. The utility businesses of our cities and towns rely on clouds to supply drinking water and light. 

Real clouds

But listen more carefully to the use of "the cloud" when it comes to computing.  Folks, the computing cloud is anything but light drifting shapes beyond the control of those of us on Earth.  In fact the computing cloud was built and continues to be maintained by some of the biggest and most important companies in the world. Each of those links between servers, between your computer or smartphone and "the cloud" were built at great expense by telecommunication companies, some of whom rose and fell during the dotcom boom of the late 1990s.

What does that mean in this world? It points out the difference between those who use the network (the Netheads) and those who built the network... the Bellheads. Google, Apple, and others are building by attaching devices and services to either end of The Cloud but have little responsibility for the creation and maintenance of The Cloud.

Google and Apple can't live and can't thrive without The Cloud. Will they someday compete with and even replace the companies that provide The Cloud? I have my doubts.  I think the Nethead business case falls apart when the realities of the enormous capital and operating costs (as well as the pressures of providing world-class quality-of-service) is factored in. 

 

Google Voice a Threat to Mobile Operators. We Mean it This Time.

How many times have we heard this? “A new technology that is starting to gain acceptance signals the death knell of the incumbent telecommunication operators.” Let’s see. What was that technology again?

Wi-Fi.

Skype.

Vonage.

WiMAX.

And on and on and on. Now, in the article CNN Money by David Goldman, Google: Your Next Phone Carrier  breathlessly predicts Google will become a mobile operator by using its voice over IP application. Based on what evidence? The article cites the fact that Google might be buying dark fiber, might become an ISP and once bid on some wireless spectrum. But the key information is here:

“Google already allows people to bypass their mobile carrier's service. Google Voice lets customers send free text messages, and the new version of Android ("Gingerbread") supports VoIP Internet calling, allowing users to make calls over over Wi-Fi networks.”

Wow! It’s wireless Skype all over again, which has had exactly zero effect on the mobile operators. And hasn’t really cut the legs out from under the wireline companies, either.  And, really, all this talk ignores some of the most important facts out there: 

• Wi-Fi isn’t a wide area network. Isn’t now. Won't ever be. Tried a couple of times and crashed (remember municipal wi-fi networks?”). Even Google’s own experiments in San Francisco have tanked.
• If you’re going to have mobile access, you will have to use a mobile network. 4G doesn’t yet have enough footprint and will end up being controlled by the mobile operators anyway. 
• It’s not easy to build a mobile network. The vaunted Verizon Wireless has achieved its current network coverage after more than 20 years of buildout. AT&T has also had 20 years and Sprint 15. People are still complaining about coverage.

A couple of scenarios:

“I’m going to replace my AT&T/Verizon Wireless/Sprint/T-Mobile with the Google network.” Assuming a deployment twice as fast as those companies were able to accomplish, it would be 2021 before there would be similar coverage. And, as rich as Google is, it still doesn’t have the financial resources of the telcos. Come back in 10 years. Oh, wait. It’ll be at least two years before they can complete the paperwork with the FCC and obtain nationwide spectrum. And all those communities who are already sick of putting up cell towers? They don’t want more. 

“Google Voice will replace the mobile operators because the price is zero.” OK, where are you going to get mobile access? From a mobile operator who is charging you a for a voice plan whether or not you use it. Or you could go with a data-only plan using a 3G/4G dongle for your laptop. Great: 1) you’re still tethered to a laptop, which is tough to use at the bar when you want your buddies to come down and 2) you’re still using AT&T/Verizon Wireless/Sprint/T-Mobile and paying $60 a month… about the same as a basic voice plan.

“I’ll use Google Voice on Wi-Fi.” Great idea. But where? Home, Starbucks, McDonalds, home, someone else’s home and… where else? Wi-Fi’s not a mobile network (something I’ve been saying since 2003). Terrible coverage. Not useful where you want to make calls.

What it really means: Nothing. Is Google going to become a serious mobile operator using its Android phones, some spectrum somewhere or Wi-Fi? Probably not. Skype didn’t. Vonage didn’t. Once again, Nethead domination of the telecommunication space will remain a fantasy. Bellheads, ultimately will be responsible for paying for, building, and maintaining very complex, very expensive networks. And consumers will keep paying – and paying a lot – for access to those networks.

Two Worlds: Netheads and Bellheads creating our future.

In a previous post, I alluded to what I consider to be two different worlds in the mobile payments space. In reality, those two worlds are facing off in almost everything mobile.  I call people from those two worlds "Bellheads" and "Netheads."

Bellheads, as you might guess, are people who work for the phone companies. Call them what you like... telcos, telecom carriers, incumbents. Their business has always been to connect two phones and make one of them ring. And, of course, keep meticulous records so they can charge for every minute of use. All of the US telephone companies and cellular operators are run by Bellheads

Netheads, on the other hand, come from Silicon Valley and are wrap their businesses around computers and communication via the Internet. You know the Netheads by name: Apple, Google, Microsoft, Dell, Yahoo!

Bellheads are network builders. Netheads are network users.

Bellheads want the meter running for everything. Netheads prefer unlimited bandwidth.

Even though they'd been eying each other warily for years, the real collision came in 2007 with the release of the iPhone when the Netheads showed the Bellheads their best. And, because of their success, the Netheads got to dictate some of their own terms.

However, despite the fantastic hardware and all the App Store applications, there's still one place where the Bellheads have the upper hand: Capitol Hill.  Their influence is strong, they are savvy and they know how to make legislation and FCC rulings go the right way.

Back from the dead... NFC shows up in cell operators' plans

I had all but given up on near-field communication (NFC) for financial transactions in the US. It's extremely popular in Japan, but I've been pessimistic about the ability of diverse companies to put aside their competitive differences and pull together behind a single standard.

And yet, here's news from two different fronts that suggests that a technology I've been trying to champion for the past four years may actually be gaining a foothold. In one corner is Google. In the other corner is a consortium of rivals from the cellular and financial industries.

First, there's this New York Times article by Claire Cain Miller about Google's new phone including an NFC chip. Google's CEO, Eric Schmidt, was quoted in the article saying:

Phones will know when someone walks into a store and can provide relevant information, he said. The technology reduces the risk of fraud, he said, because the person and their phone must be present at the point of payment, and could be connected to a person’s credit card number.

“This could replace your credit card,” he said. “The reason this N.F.C. chip is so interesting is because the credit card industry thinks the loss rate is going to be much better, they’re just more secure.”

Sounds a lot like something I'd said a couple weeks ago.

Isis

Second, there's ISIS, a consortium of AT&T, Verizon Wireless (it's hard to picture them in the same room) and T-Mobile along with Discover Card said:

Isis is working with Discover Financial Services' payment network ... to develop an extensive mobile payment infrastructure for the joint venture.  Barclaycard US, part of Barclays PLC, is expected to be the first issuer on the network, offering multiple mobile payment products to meet the needs of every customer.

Realistically, what does this mean? Unless your favorite color is purple, don't hold your breath while you wait for ISIS to allow you to make payments from your cellphone.  Here's what will need to happen before the first card swipe (or phone tap) happens:

•  Develop and distribute NFC-compatible card terminals to millions of retail locations (somehow, convincing those retailers that they need to purchase the new terminals, with are exactly like existing credit card readers, but also have a touch-and-go capability)
• Arrange with credit card companies, retailers, banks and other financial institutions to accept this new technology
• Convince cell phone vendors that there are enough compatible card terminals at retailers to spark demand for the phone
• Convince wireless subscribers to buy an NFC-equipped smartphone
• Convince owners of NFC-equipped smartphones that they are safe and secure enough to use them as a credit or debit card

That looks daunting, almost impossible. Yet, I'm really optimistic about mobile payments, much more than I have been for several years.  First of all, these three mobile operators have access to about 200 million US mobile users. That covers it from the telco side.  Plus, Google, and its incredibly successful Android smartphone operating system are pushing from the other direction. If the mobile operators don't get there first, they're going to have to cede yet another battle to the Internet companies.

But if these diverse groups are willing to cooperate on the telco side and compete with the Internet world, I'm suddenly full of hope that you'll see this soon. My guess is that it will be routine within five years... call it 2015.

Go back and read my pessimistic post about the leather wallet vs. the smartphone from only two weeks ago. That vision is not likely to happen without NFC, and NFC wasn't likely to happen in the US before these announcements.

(But what do we know about ISIS? Well, according to Wikipedia, Isis is "also known as the goddess of simplicity, protector of the dead and goddess of children from whom all beginnings arose." She also had a baby with her brother Osiris, which would pretty well disqualify her from, say, being a Supreme Court justice or holding any other public office.