Posts Tagged ‘Google Wallet’

It may seem like I have been mostly regurgitating news. Look deeper. I am trying to point out the trends of convergence and transparency and how they are reaching everywhere. On the surface Google Wallet is a nice tweak to how you pay for what you buy. In terms of those affected it is easy to see the retailers, banks and credit card companies. If you look on the surface at semiconductor companies you might just think about those chips which enable NFC. This is part of something much bigger that affects many more companies. NFC services like Google Wallet will make transactions more transparent i.e. easier and more convenient. They also converge services into the phone and continue pushing the phone towards becoming your dominant computing platform. This is what I started this blog off with. It doesn’t matter if Google Wallet in it’s present form becomes big or not. It’s a symptom of a larger movement. No matter what business you are in you need to evaluate your strategy with convergence and transparency in mind. How will your business play out when the phone is the dominant computing platform? Intel and AMD are reacting to this today. For once the interests of AMD and Intel are aligned. They need to bring the X86 architecture to tablets and then mobile phones. Microsoft is also reacting as they worry about Windows being marginalized. Think how differently this would have been had the iPhone and iPad been based on the Atom processor. For the other chip companies there is the increasing importance of LTE and the cloud. Flash memory will continue to be pushed to grow in density and decrease in price. The world is moving towards one gigabyte of storage in the phone. Remember reading about how over built the global network is? Think again. OLED screens will finally become a mainstream technology driven by the phone. Eventually they will grow to be the dominant technology in both laptops and TV’s.  This shift affects media. The RIAA and  MPAA continue their vain attempts at protecting intellectual property rather than embracing the technology trends and profiting from them. That’s an entire blog (or two or three) in and of itself. Is your company preparing for the upcoming changes? More importantly, have you looked deep to see how convergence and transparency will change your business landscape?

I have mentioned PayPal in not one, not two but three different posts. Yesterday PayPal got upset and filed a suit against Google. It’s the usual stuff about stealing employees and with them intellectual property. What it is really about is Google daring to attack PayPal and PayPal getting scared. I suspect this is a pointless battle. Lawyers will make money but otherwise progress will march on. The system will get more streamlined and efficient. PayPal will ultimately disappear or get merged in with an electronic wallet system. It’s not like this is the only attack on PayPal. The credit card companies are also starting to offer PayPal type services.

Google just finished announcing Google Wallet. This is their NFC based payment system. In reality it is a lot more. You can read the details here. I have talked about this before. I don’t want to regurgitate details already covered but I do want to cover a few obvious items and some not so obvious one. The first involves why Google is doing this in the first place. In the near term (more about this later) they are making nothing on the transactions run through Google Wallet. The seeming financial beneficiaries are the store involved, the credit card company and the clearing house. We must ask our selves what Google’s business model is. It’s advertising. Targeted advertising is more valuable and hence able to fetch a higher price than random advertising. In the near term this is all about knowing who you are, where you are, and how you spend your money. If you are getting a little edgy about your privacy there’s a reason. You won’t have any. Google already knows more about you than the government does and that knowledge base is growing. Google Wallet extends that knowledge base. You do get benefits in return. For giving up your privacy you will gain ease of use and discounts on your purchases.

Watching the players in this was interesting. Each took their assigned segment. Google proclaimed they were the altruistic software provider that happened to make money on advertising but nothing else. Sprint  was happy to be the carrier placing the services on the phone. Citi wants to be the bank involved, Mastercard the credit card company and lesser known First Data the clearing house. Then there was the lineup of retailers happy that it would be easier to part you from your money. In many ways, players like Mastercard, First Data and Citi have little choice. This is going to happen with or without them. All of these players will be near term winners. I wonder, however, if any of them have a little fear about the long term future. The immediate losers are companies like Groupon. The retail coupon business is slipping into a Google business unit. Groupon isn’t a very large outfit nor are the others like it. I doubt many will see this as a big deal. A bigger potential loser is PayPal. Not mentioned was the fact that Google Wallet will quickly pick up the capability of PayPal. All of this is relatively near term. What happens later as mighty Google and it’s rivals Apple and Microsoft seek new avenues for increasing revenues? Google, with the world’s most powerful computer network, will have to ask itself why so much of this process, including the profits, goes to others. Perhaps they will decide to become the clearing house and edge out First Data. After that perhaps Mastercard will be a target. I doubt they will want to be your bank but who knows. Some of those faces that were smiling today might be wearing frowns in ten or fifteen years.

For the consumer, Google Wallet and related moves will mean a further increase in retail efficiency. Generally this is a good thing. Purchasing will get easier and tracking purchase will get easier too. Lost receipt issues will go away. Coupons will be easy to use and not a low paying paper cutting  job as it sometimes seems. While privacy will diminish, it will mean advertising that is relevant and generally useful.

I’m a semiconductor guy. What does this mean for the chip business? It means volume in everything related to this process. It means smartphone sales, and the chips inside them, will increase. It means lots of readers being deployed so stores can accept Google Wallet. The reach doesn’t stop there. Behind all of this will be massive data centers and a lot of network bandwidth. That means all of the chips that support these areas have a bright future.