Ki Mae Heussner is the newest member of GigaOM New York team. Along with Ryan Kim and our PaidContent colleagues, we are ramping up coverage in the big city. Our focus is the startup ecosystem, changing media landscape and the movers & shakers.
This week’s popular content focused around mobile: tablets, payments and our older anthology about the future of mobile. A critical analysis of Facebook’s recent IPO — just how much is the company actually worth? — was also a big draw.
The mobile analytics firm Flurry released new data today indicating users are spending more time with their mobile apps than they are surfing the mobile web. That is part of a continuing trend that started at least 18 months ago, when consumers were spending about 50 percent more time on the mobile web than on their apps. That trend will likely be reversed eventually as HTML5 makes web-based apps easier to use, as my colleague Ryan Kim astutely points out here. But as I’ve discussed before, web vs. native isn’t a black-and-white issue, and our usage of the web will increasingly be “wrapped” in native apps that make it easier for us to access what we’re looking for. So I don’t really see this trend turning around anytime soon.
MasterCard and Intel have jumped aboard the mFoundry bandwagon, joining existing investor Motorola Mobility in an $18 million funding round for the mobile banking company. But while mFoundry provides its Software-as-a-Service model to nearly 600 banks, its biggest opportunity may lie in powering mobile payment services for partners such as Starbucks. As my colleague Ryan Kim astutely notes, banks already have the kind of trusted relationships with consumers that others such has Google and Isis (the carrier consortium) are trying to build. Which means banks — and mFoundry — have a head start in deploying mobile payment services.
As you might have guessed, there’s no shortage of headlines about mobile shopping on this Cyber Monday. IBM reports via Fortune that iPhones and iPads accounted for an impressive 10.2 percent of all online retail traffic on Black Friday as mobile purchases tripled last year’s figures, and mobile shopping is expected to be “more popular than ever” today, according to PCWorld. But my colleague Ryan Kim has one of the best pieces of the day, analyzing new ComScore data to determine that mobile devices are helping to “front-load online holiday sales” by blurring the line between online and offline commerce. Users are increasingly taking advantage of holiday downtime to make purchases rather than stand in line on Black Friday or later in the season, and mobile is a big reason why.
As eBay has evolved from its person-to-person auction roots into a retail hub and e-commerce infrastructure provider it has become a pretty aggressive technology acquirer. Its latest move is on the recommendations engine Hunch, possibly for $80 million. Ryan Kim thinks Hunch will be another piece of its e-commerce technology platform, and Hunch’s founders say that eBay will use Hunch on its own site to expose buyers to products that collaborative filtering recommendations would probably miss. Hunch’s engine uses machine learning to understand unstructured data, and makes recommendations based on a user’s social network connections (Likes, who he follows on Twitter, etc.) as well as a Q&A process it uses to tailor a “taste graph.” That’s completely different from the consumer reviews companies that I wrote about in my weekly update, but they’re all parts of next-generation commerce.
Research In Motion today is making headlines with an offer to give away a free PlayBook to every customer who buys two of the gadgets. But the promotion comes on the heels of news earlier this week that RIM won’t release PlayBook OS 2.0 until February, which means users must still tether the tablet to BlackBerry phones to perform simple things like sending and receiving email. So as my colleague Ryan Kim writes, this smacks of a desperate move to clear out inventory — and one that isn’t likely to resonate much with users.
Apple’s technology has given the voice-recognition software market a much-needed lift. But technical shortcomings and limited use-case scenarios will prevent Siri from having the kind of massive impact touchscreens have had when it comes to how we use our phones.
Apple said this morning that sales of the iPhone 4S topped four million over in its first three days, making it the most successful iPhone launch ever. And as my colleague Ryan Kim points out, Apple’s Siri has provided a major boost to rival voice-recognition applications. Vlingo, for instance, saw its best week ever with five consecutive days of record usage. Voice recognition has been around for years, of course, but it has failed to gain mainstream traction because A) the user experience has often been nightmarish and B) app developers failed to demonstrate why the technology is valuable. Apple has delivered on both counts, which may change the way many of us interact with our phones. Just as it did with touchscreens.
Google and PayPal have each bolted out of the gate in these early days of the mobile wallet, with PayPal outlining its ambitious initiative two weeks ago and Google Wallet coming to market just a few days later on Sprint Nexus S handsets. While Google’s effort is centered on short-range NFC technology, PayPal is eschewing the stuff in favor of a multifaceted, less techie approach. But both will require significant changes in how consumers buy and how retailers sell. That’s why both are a long way from getting legs.
To NFC or not to NFC?
As my colleague Ryan Kim documented, Google Wallet requires users to sign in to their Google accounts on their handsets and then load their Citibank MasterCard accounts (to be accessed directly from the app) or load funds into a Google Prepaid Card. While establishing and maintaining an account is a slight hassle, NFC enables a lightning-fast transaction (and that catchy tap!) that provides users with an updated balance as they shop. But the real selling point for Google Wallet is its integration with Google Offers and Google Shopper, which enables users to search for nearby discounts and save them to the app.
PayPal, by way of contrast, uses several alternative methods to enable transactions. The company’s blog post outlining the service features a video showing one woman scanning bar codes to buy items at the shelf in a corner store, while a man enters his phone number and PIN at a counter terminal before walking away with his new grill. And like Google Wallet, PayPal is wisely trying to lure users by helping them shop easily and cheaply. Before buying a grill in the PayPal video, for instance, the shopper scans a coupon in the store entryway while a woman who finds a dress she likes at a chain store is informed which outlet has the clothing in her size.
Early leaders in a marathon
But delivering those compelling apps isn’t easy: Apps must be created that integrate with the specific payment systems, and local ad networks must be built that can deliver enough offers to make mobile payments worthwhile for consumers. Google has a head start over PayPal here, but it will take many months — and maybe a few years — before either player offers a compelling app that supports transactions and offers from dozens of vendors, both local and national.
Just as daunting, though, is the challenge of building an infrastructure to support mobile payments. PayPal’s lack of dependence on NFC appears to give it an early edge: NFC-equipped handsets will claim just a fraction of the worldwide device market in 2015, as David Chamberlain recently noted in this GigaOM Pro report, and retailers must adopt NFC-enabled terminals.
But don’t make the mistake of thinking that PayPal’s NFC-less strategy paves a smooth road to market. In the video demo, the woman who scans the bar code in a store bypasses a long line at the counter by simply flashing her phone at the swamped clerk – a laughable proposition. Instead, a retailer would need to install a stand-alone reader or employ some other method of verifying purchases. And integrating PayPal’s system with existing pay terminals won’t be painless.
PayPal and Google are clearly sprinting to deliver a mobile wallet, but they’ll soon be joined by an army of players, from powerhouse carriers and credit card companies (Isis looks particularly compelling) to startups such as Dwolla. It’s far too early to lay odds on who will end up on top or whether NFC — or any other technology — will be a force in the space. But players who aren’t already laying out their strategies and building their ecosystems will lose a race that’s only just begun.