Apple, Google and Microsoft emerge as mobile commerce top dogs

Mobile commerce (‘m-commerce’) has been the hot topic for a few years now in the mobile telecommunications industry. M-commerce covers several products and services including mobile payments (‘m-payment’), mobile ticketing, location-based services, mobile advertisement, and many others more. To shed some light on the evolution of m-commerce experiences in smartphones we should not only look at what is happening in payments, but also pay some special attention to non-payment products and services.

M-payment, which gets a lot of buzz nowadays, is a fast-moving market where opportunities are evolving quickly. A multitude of players have been trying to enter the ecosystem and at the moment, fragmentation is the name of the game. Despite all this effort, it will still take a few more years for m-payments to go mainstream.

When looking at the broader m-commerce arena we see several players entering by bringing their products and services, such as loyalty cards, coupons, tickets, memberships and more to the mobile world. Such non-payment services are fairly straightforward and do not require complex business models or infrastructure development. Those services have started to reach the mobile sphere under various forms: as stand-alone apps, as digital wallets, as virtual cards within the digital wallet, or as a combination of the aforementioned. By ‘digital wallet’ we are referring to a ‘container’ of several applications, of which each application can be seen as a virtual card. In other words, the digital wallet is intended to be a complete avatar of your physical wallet.

In 2012 we’ve seen the giant smartphone platform providers each establishing their proprietary digital wallet. And we believe that Apple Passbook, Google Wallet, and Windows Phone Wallet have, in all likelihood, got what it takes. It’s possible that they are laying the foundation for shaping the future of m-commerce through user experience, starting in non-payment services. A key advantage for these solutions lies in their platform-integration and as such they provide a seamless central space for developers to create m-commerce-oriented applications.

With their global reach, these solutions entice a myriad of smaller players to jump on the bandwagon. We see that this crowd dynamic is a core ingredient for global success, just as the Apple and Google App stores have enjoyed. Passbook is already available to all iPhone 3GS, 4, 4S, and 5 users and developers, giving it a potential reach second to none. Developers will again be lured by the proposition of easily tying in their applications, reinforced by the strong functionality that comes with the platform and the easy reach to a large market of smartphone users (Starbucks and Lufthansa, to mention only two multinational companies, have already taken the leap into the era of m-commerce via Apple’s solution.)

This will not happen overnight and without challenges. Platform providers have to get big name service providers on board to drive adoption. Google has to make sure operators will not reject its new upcoming version of its digital wallet (like happened with the previous one) and Microsoft needs to significantly increase their market share. If they manage to overcome those challenges, consumers will likely be drawn to the m-commerce solutions for their value-added user experience; e.g. simple access to the plethora of incentives and discounts they have collected from various service providers. User experience will ultimately be the crucial factor for the consumer uptake of mobile wallets, as for everything else. And in this respect, strong developer dynamics gives Google, Apple and Microsoft a distinct advantage.

Once the platform-integrated solutions have been populated by a multitude of non-payment services, it will be even more difficult for other players to attract interest in their alternative digital wallets. On the other hand, individual delimited m-payment solutions may either coexist with such platform-integrated wallets or merge into proprietary m-commerce offerings. In any case, we believe that the m-commerce space is still open for many players, but opportunities are with services and partnerships rather than on creating yet another wallet. For example, Operators can leverage their local reach to bring service providers on board, while partnering with platform providers to get the basic enablers in the form of the wallet solution in place.

An example of this type of partnership is that of Orange and Microsoft with their Windows Phone 8 Wallet launch. This wallet solution aims to be a hub for users to access their membership, loyalty and payment cards as well as deals, offers, tickets and passes. It also comes with a PIN and cards that users can choose to use for NFC payments and/or m-commerce payments. Other operators seem to be in the pipeline for partnering with Windows on this new wallet. And, by the way, to make this ride even more interesting, giants such as Facebook and especially Amazon only intend to increase their presence in the m-commerce space…   so, strap yourself in!

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