Google’s product strategists just announced the launch of Google Wallet — an NFC-based mobile payment solution. As my colleague Charlie Golvin pointed out, this is another early salvo in what will be a long and hard-fought battle to change consumers’ payment behavior and, as a potential result, the makeup of the payments landscape.
We have covered this issue in more detail in a new Forrester report “Google Wallet Is Not About Mobile Payments.” Clients can access the report here.
Given its core search business and ad-based revenue model, why would the company make that investment? Because Google’s product strategists’ focus is not on the payment itself; it’s on all of the other elements that comprise a commerce experience and the data that characterizes those elements.
Indeed, appending real-world purchase information to its treasure trove of online behavioral data will vastly increase the value of customers’ profiles and increase the rates Google can charge its advertisers. It will be a way for Google to increase its local presence. NFC is too often equated simply with payments, but Google understands that NFC tags have broad application (working like Quick Response [QR] and other 2D barcodes do today). Google can help retailers use NFC tags for in-store promotions and check-ins, augmenting the understanding of customer behavior for ad targeting.
Rarely a mobile conference goes by without this debate popping up: Should you build a mobile website or an application? I don’t think it really matters; in fact, I’d say it is irrelevant. This is just one of many topics where technology leads marketing by the nose— as is often the case in the mobile industry! Product strategists often forget to ask themselves the right questions: which product and services, for which audiences, at what cost, and when?
Consumer product strategists designing product experiences for mobile phones and smartphones must decide on their development priorities across the mobile Web and apps. While some believe this is a fundamental “either/or” choice, current consumer behavior suggests that consumers are using both. More than half of European (and 60% of US) consumers who download apps at least monthly also access the Internet via their mobile phones at least daily. In short, heavy app users are also heavy mobile Web users. The more frequently consumers access the Internet via their mobile phones, the more likely they are to download apps at least monthly. More than 10 billion apps have been downloaded cumulatively since the launch of the Apple App Store — the majority of them via iPhones. But this doesn’t stop iPhone owners from being the most frequent mobile Internet users: 72% of European iPhone owners (and 63% of US iPhone owners) access the mobile Internet on a daily basis.
A recent article in The Wall Street Journal mentioned that Google could team up with MasterCard and Citigroup to pursue a role in mobile payments; this is yet another indication that disruption is looming in the payment space.
In his keynote at 2011’s Mobile World Congress, Google CEO Eric Schmidt stated that “NFC should revolutionize electronic commerce as well as payments.”
What does Google have to do with payments? Well, it has already rolled out (quite unsuccessfully so far) Google Checkout. What’s different about this new proposal is that this is not just about payments: Google would embed Near Field Communication (NFC) technology in Android mobile devices, allowing consumers to make purchases by waving their smartphones in front of a small reader at checkout counters. So what? Well, NFC is more than just a payment technology; it brings mobile payments together with mobile marketing and loyalty programs. As with mobile devices in general, it helps bridge the digital and physical worlds.
Once again, I spent a couple of days in Barcelona at Mobile World Congress (MWC).
With 60,000 visitors (10,000 more than last year) — including an amazing 12,000 developers (!), 3,000 CEOs, and 2,900 journalists — MWC is the place to be for anyone wanting to make the most of mobile technologies.
Year after year, it is interesting to see how the show is becoming more global, more open to non-telecom players (advertisers, developers, etc.), and more open to connected devices other than just phones.
While it is difficult to summarize all the news and announcements, here are my key takeaways from MWC 2011:
Android, Android, Android.Google’s Android stand was the hit of MWC this year. Why? Very clever marketing: It was located in the main hall away from all the other players in the App Planet hall; it had a “cool” bar with animations; the Android robot logo was all over the place; and it featured interesting demonstrations from startups and key players. Google’s Android was helped by Apple’s absence and the lack of a serious upgrade to Windows Phone 7, unlike last year. Of course, the Nokia-Microsoft deal came up in most conversations. Forrester has already published its take on the strategic implications of this key announcement (clients can read it here). As my colleague Charles Golvin sums it up: “Nokia hopes to produce its first Windows Phone in 2011, but it will not bring a significant portfolio to the market in volume until 2012 — a lifetime in today’s smartphone market.” With 300,000 Android phone activations per day and 170 Android-based handsets currently available from 27 vendors, Android is definitely getting a lot of traction.
Nokia just published its fourth-quarter and annual results for 2010. I am not going to focus on the overall announcements and what they mean for Nokia’s device business in particular, but Nokia’s update on the Ovi Store is quite interesting.
Here are some of the key takeaways from a data perspective:
4 million-plus daily downloads on the Ovi Store.This is an increase of 200% from the 2 million daily downloads statistic shared at Nokia World in mid-September. If momentum continued and we assumed an average of 5 million-plus daily downloads throughout 2011, this would represent close to 2 billion downloads for 2011 alone. That’s not bad considering that Apple just announced 10 billion cumulative downloads since the launch of the Apple App Store in July 2008.
Good performance in BRIC and emerging countries.Seven of the top 10 most active countries are in the BRIC region or are emerging countries. These include: China, where Nokia claims to be the No. 1 store with 65% share (based on independent research); India; Indonesia; Russia, which sees more than 1 million downloads per week; Saudi Arabia, Turkey, with 1.6 million downloads per week; and Vietnam. One should not forget that growth and volumes will increasingly come from these regions. As a result, developers may increasingly be open to Nokia’s pitch that it offers local reach and global scale. One of the main advantages of the Ovi Store is its ability to provide operator billing (currently available in 32 markets), which makes a lot of sense in unbanked or underbanked countries where credit card penetration is low. Interestingly, 27% of the current downloads come from low-end devices (e.g, Nokia’s S40 proprietary platform) — meaning that apps are not just for “smartphones.”
In a recent post, my colleague Julie Ask and I examined what happened in the mobile space in 2010. In a new report, we are highlighting what we expect the key trends to be in 2011. While we believe that most of the trends identified last year will continue throughout the year ahead, here’s a snapshot of more specific trends that will shape the market in 2011.
• The mobile/social/local combo will explode in usage but generate little revenue.
• 2011 will be the year of the “dumb” smartphone user. Thanks to handset subsidies, smartphones will be available to the masses. Expect new smartphone users to be less engaged and active than the first cohorts of Android and iPhone early adopters. The good news is that thanks to customer education and the convenience that these devices offer, even “dumb” smartphone users will consume more mobile media than ever before and will have incremental usage of mobile data!
• The mobile fragmentation problem will continue in 2011. Prioritizing mobile developments will still be a challenge, and cross-platform development has not yet been achieved successfully.
A year ago, I tried to highlight what the key trends for 2010 would be. I wrote: “I’m not going to say that 2010 will be ‘the year of mobile’ or ‘the year of mobile marketing.’ I think 2010 is more likely to be the ‘year that every firm needs a mobile strategy.’ Mobile is simply too disruptive to merely have a year. After all, who remembers the year of the TV or the year of the Internet? Instead, I think 2010 will be a key year in mobile's transition to center stage in the digital marketplace. A new mobile decade is opening up, and now is the time to start your journey. In the past 10 years, mobile phones have changed the way we communicate and live. In the next 10 years, they will change the way we do business.”
Interestingly, that report — “2010 Mobile Trends” — was one of the most-read at Forrester, highlighting that a growing number of companies are starting to take mobile seriously.
So many things happened in 2010 that it is difficult to sum up the year. However, my colleague Julie Ask and I took a step back to offer our high-level take:
• New entrants are disrupting existing mobile ecosystems. Non-telco companies, such as Apple, Facebook, and Google, increased in importance as key players in the mobile ecosystem. Together, Apple and Google are closing in on controlling about half of the smartphone market and mobile advertising share in the US and have obtained a lot of traction in Europe and other regions of the world.
First of all, the technology is not new at all. It is simply moving from PC and industrial environments to a marketing and mobile context.
Let’s face the reality: for now it is primarily used by brands willing to launch innovative mobile services and in search of a “wow” effect.
Few consumers are currently holding up their smartphone to interact with their environment as a totally natural gesture. Whether you look at the installed base of Junaio or Layar’s mobile users, this is a niche market.
From a pure technology standpoint, AR requires object recognition and computerization on the mobile device itself, as well as 3D rendering to superimpose images on the real world. This is a technology that only a few companies such as Metaio and Total Immersion really master.
The information displayed must be ultra-accurate and delivered in a perfectly seamless way. This is still far from being the norm for many of the so-called mobile AR applications.
To put it succinctly, mobile AR is not yet delivering its promise. There are certainly more significant short-term opportunities to tap into with Web-based and kiosk-based AR solutions, in particular related to eCommerce.
However, Forrester believes consumer product strategists should not dismiss the technology. On the contrary, it is likely to trigger disruption in the years to come and to open up new opportunities.
Is this a key technology moving forward? Yes.
Think of mobile AR as: “A way to click on the real world with your phone the way computer users navigate their desktop with a mouse. Just point in the direction you want to search, or at a place you want more info about,” which is how GeoVector summed it up in promoting its World Surfer application.
To help consumer product strategists and executives answer this question and benchmark their mobile consumer strategy, Forrester fielded a Global Mobile Maturity Online Survey in Q3 2010. We interviewed more than 200 executives in charge of their company’s mobile strategy across the globe (40% in the US, 40% in Europe, and 20% in the rest of the world).
First, only a third of respondents said that they had had a mobile strategy in place for more than a year. Companies in this situation are from many different industries, but online players, media companies, and financial institutions are often more advanced. Forty-five percent of respondents are just waking up to the mobile opportunity and thinking about integrating mobile into their overall corporate strategy — just like they did a decade ago with the emerging online channel.
For the majority of respondents, mobile is mainly seen as a way to increase customer engagement, satisfaction, and loyalty. Mobile is less useful as a way to acquire customers and generate direct revenues — just 2% expect to generate more than $10 million in mobile revenues for 2010. While companies are assigning clear objectives to the emerging mobile platform, 23% of respondents still consider their primary objective with mobile to be to “test and learn.”
Because of poor execution in 2009, the industry consensus — particularly in the US, where Nokia has a small footprint — was that Nokia was not in a position to catch up with the Apple App Store or Android Market. Reports of the Ovi Store’s death were greatly exaggerated: Nokia simply cannot afford to fail. On the contrary, it is now catching up, particularly in emerging countries, where Nokia clearly differentiates thanks to its unique local presence and relationships with operators (mobile billing is currently supported in around 30 countries).
Nokia just issued a press release this morning insisting that Ovi Store downloads are now reaching 2.3 million per day for a total installed base of 140 million active users. Bear in mind that a user is considered active on a six-month period and that this figure includes multiple Ovi experiences, including the 17 million Ovi mail and chat users as well as users of Ovi Maps, Ovi music, and Ovi life tools.
That's an increase versus last May (1.7 million) and versus the data that was announced at Nokia World two weeks ago (2 million). More interestingly, 200,000 people are signing up daily to Ovi. That's a significant trend.