By Shadoe Huard

All Together Now - June 4th - D9 Edition

1. Stephen Elop

2. Reed Hastings

3. Jack Dorsey

4. Steven Sinofsky

5. Léo Apotheker

    All Together Now is a collection of quotes picked from the web this week and curated together into a particular perspective of authors from the best place to buy research papers - company. 

    Posted at 4:20pm and tagged with: tech, d9, netflix, HP, google, microsoft, quotes, one column,.

    Just because there is a version of an operating system at a price point doesn’t mean that it is a great experience. 1 Consumers want us to have all the new stuff. But it’s very expensive, and we can’t afford all the new stuff. 2 [We] don’t have an answer and I don’t think we need to have an answer. 3 We have an approach that is different. 4 We’ll get the bureaucracy to organize [it]. 5

    May 26th 2011

    More Square Than NFC   

    It was only a matter of time, but Google finally made the first move in the digital wallet arena, announcing Google Wallet, a new service adopting Near Field Communication technology to enable Android users to make contactless payments for all sorts of transactions. Along with the help of MasterCard, Sprint and CitiBank, Google is looking to redefine the point of sale experience for both consumers and business owners. For the sake of maintaining their aura of openess, Google announced they would be making Google Wallet available beyond just Android devices, presumably through an app. It’s astonishing, given how implausible, they even bothered making such an empty statement.

    Today’s news is only going to push rumors of when we might see Apple’s NFC implementation in the iPhone. As one of the more popular rumors floating around for the last little while, we’re to hear even more from speculators and analysts on when we may see an NFC equipped iOS device. Rather than wondering when, we might be better served wondering whether Apple is even interested in the technology.

    Before we get ahead of ourselves however, let’s use some numbers to try and obtain some perspective on the state of contactless payments as they stand today.

    From the consumer’s end

    As of the end of 2010, there were approximately 88 million MasterCard PayPass (RFID) enabled credit cards, out of 975 million total cards in circulation. This amounts to roughly 9% of total cards.

    Visa boasts a total card circulation twice the size of Mastercard, with around 1.9 billion cards. Finding statistics on the number of cards with Visa’s version of PayPass, called payWave, was a bit tougher. For the sake of argument, let’s say it’s around the same percentage as MasterCard, around 9% , about 171 million cards. 1

    The 2009 Boston Federal Reserve Survey of Consumer Payment Choices seem to corroborate these percentages. Their study found that while 24% of U.S. Consumers owned a contactless payment device, only 9% of those were linked to a credit card account.

    From the vendor’s end

    The statistics don’t seem to quite matchup in this instance, but it’s worth looking at them anyway. MasterCard claims there have 276 ooo Paypass locations worldwide. Meanwhile, David Eads from Kony Solutions estimates in an interview with CNET that there are 750 000 NFC enabled terminals in the U.S, alone. He clarifies that the number represents about 1% of total sales terminals in the country.

    Concerning the number of transactions, the SCPC study found that about 3% of transactions carried out in 2009 were done using a mobile device. 1.3% of payments were made through NFC enabled devices.

    Getting an idea of the numbers is important because there’s just too much PR fluff going on. When taking stock of Google’s announcement today, it’s good to keep in mind that relative to the entire industry, the lofty figures they throw around is but a small drop in an enormous bucket.

    Despite the relatively small figures, there is still lots of money to be made, which is why Google and it’s partners are pushing hard for the transition to NFC payments. Specifically, they are after a chunk of interchange revenues, consisting of fees collected by banks and third parties for actually processing your credit card transactions when you shop. 2 From the same CNET report:

    “Electronic payments in the U.S., according to the Federal Reserve was $40 trillion in 2010,” David Eads, who leads product marketing for Kony Solutions told CNET. “So for every 1 percent of mobile payment adoption that happens of that number, that’s $407 billion in transactions.” Eads, who has a background in the mobile payments industry, founded the mobile consultancy Mobile Strategy Partners and held positions at mFoundry and Tealeaf Technology. He explained that the big ticket item in that magic $407 billion number was the “interchange” revenue, which is where various parties get a cut from fees. That can run anywhere from $4 billion to 6 billion on each $407 billion chunk. It also makes things more competitive among the various parties that take fees, since retailers can choose the card or payment provider they want to support.”

    NFC solutions are desirable to banks and credit card companies because they are an evolution of a their current business model. A chip replaces a card, but the transaction is still done over a custom POS terminal, where various interchange fees can be collected. They are the ones who stand to gain most from NFC technologies; it’s a reason to charge more money. Obviously, Google wants in on this action. And while their presentation seemed to paint a bright and rosy picture for the future of NFC payments, there are quite a few unresolved issues to deal with. Biggest of all is that the technology isn’t particularly attractive to merchants.

    Businesses, especially big chains, are notoriously slow to make any sort of technological change. Any potential changes are bound to be carefully considered and planned well ahead of time. Hence why Google wallet is only starting with a field test in San Fransisco and New York. I don’t think their official launch in the summer is going to be much bigger.

    There is some upside for retailers to transition to contactless payments. MasterCard claims that clients with PayPass cards used their cards 27% more frequently than clients with regular cards. There is also the speed and ease of mobile payments. Time is always money in the business world. Finally, as demonstrated by Google, there’s a large potential for the creation of apps that can deliver context based advertisements and deals directly to consumers. All good things for retailers.

    The flip side is that there is no pressing reason for merchants to jump onto the NFC bandwagon. With few NFC enabled phones actually out in the market ( I can only think of the Nexus S), there’s not much incentive to make the upgrade immediately, especially taking into consideration the extremely low percentage of sales actually made by NFC payments. It’s a sort of catch-22; that one percent figure is only going to go up if merchants adopt the technology and phones are made available, but they themselves aren’t likely to make a move unless they see that figure rise first. The costs involved in the transition to contactless payments is also something businesses are taking stock of. Even more than just the cost of upgrading or installing new point of sale terminals, the emergence of a whole new slew of players in the interchange fees game might be off-putting. As the ones ultimately footing the bill for those fees, the costs involved are an essential factor. It’s yet unclear how much Google and it’s partners is going to charge for their services, but it stands to reason that costs are probably not going down. If Apple or other companies also get into NFC payments, we’re likely going to see a fragmentation of the market as retailers pick and choose which services to offer.

    This is without delving into issues relating to security. The jury is still out. Banks and credit card companies will obviously claim NFC payments are secure, but there isn’t any real hard data to test to. Swiping account numbers and personal data from physical cards is a more labor, time and skill intensive endeavor for potential criminals than something requiring only a few software hacks. 3 This is a problem all mobile payment systems are going to face, not only NFC technology.

    Google doesn’t seem concerned with those issues. Beta services are in their DNA. Their philosophy is to just engineer issues away as they arrise. Which brings us to Apple. What might their move be?

    Unlike Google, Apple is going to survey the wireless payment landscape before making any decisions. Like any other emerging technology, Apple is never in a rush to jump into any beds unless it has a clear reason to do so. It’s almost certain they will make a move with mobile payments, but it may not necessarily be with NFC technology. Yes, Apple is researching the technology, they’d be remiss not to. That doesn’t guarantee that your next iPhone is going to have an NFC chip in it.

    Apple is going to want two things with any mobile or contactless payment system they decide to implement in their devices:

    - Curatorial control over the design and delivery methods of any payment or virtual storefront applications. User experience is sure to be primordial.

    - A cut of potential profits that corporate partners are likely to find onerous.

    Apple is always going to negotiate for these two points, their argument being that they believe no one else can match the popularity, awareness and technical superiority of the iOS platform. With so many people involved in processing an NFC transaction 4, it’s possible Apple sees they won’t be able to negotiate favorable terms for themselves with everyone and that they’d rather not bother with all the bureaucratic hurdles.

    Technical factors is also something to take into consideration. Fitting an NFC chip into the internals of their iOS devices, however small, might be something they’d rather avoid, given the limited space. And given Steve Jobs penchant for simple and elegant hardware solutions, it’s possible he may just not like the whole process of an NFC transaction.

    So where else could Apple be considering? One option might be to forgo NFC chips altogether and use third party apps that deliver software solutions over a wireless network. Such an example is Square, an application which transforms an iOS device into a portable POS terminal and inventory manager that can deliver a wide range of services. Using a proprietary card reader, which plugs into a headphone jack, business owners can carry out credit card transactions simply and effortlessly. Furthermore, Square recently announced the introduction of Card Case, a customer application that allows businesses using Square as their POS terminals to send menus, advertisements and bills directly to customers using Card Case. One feature they announced, Tabs, allows customers to make payments directly over their phones at participating businesses, after making an initial physical credit card transaction. Your data is stored afterwards with the business and they simply bill you over the air subsequently.

    Square is about redefining the entire Point of Sale experience, for both the consumer and the merchant. On their website, Square elaborates on the advantages their system provides to restaurants and small businesses. For them, it’s an easy,simple and affordable solution. Square charges one flat interchange rate and doesn’t require that the business owner meet a certain quota of sales or enter into a contract.

    Some critics think that while Square’s solution works for the restaurant industry or small businesses, it doesn’t exactly scale up to large retail operations, where inventory and book keeping needs go beyond what Square can provide. While that may be true presently, it take a serious lack of foresight to be unable to imagine a similar solution at a larger scale. Apple stores already show this is possible. Apple specialists roam the salesfloor with customized iPhones that have bar code scanners and credit card swipers to process transactions anywhere in the store. It’s also not hard to imagine their new iPad sale displays being morphed into an app customers could access directly from from their iOS devices. You could imagine they could allow customers to make purchases directly from their iPhones, with an Apple employee bringing the merchandise right to them.

    Following this chain of thought, it’s possible to imagine why Apple might prefer to emulate Square and offer their own App based POS solution rather than adopting the proposed NFC model. This option would definitely satisfy the two main criteria outlined above, concerning design control and profit share. They could develop their own POS application for both retailers and and consumers, where transactions could be handled simply through the credit card number stored in your iTunes account. Unlike Square’s tab system, no initial physical transaction would be required. Adopting this route eliminates the need for Apple to negotiate deals with banks and credit card emitters. They can simply charge businesses one flat fee, from which only they profit. 5 They could also sell customized iOS devices to larger businesses who need access to bar code scanners and have more complex logistical needs. It might be an extremely ambitious move, but it is still a plausible one.

    Why might Apple prefer this route?

    - They retain control over the whole experience.

    - They provide the software and set the financial terms.

    - No need to deal or negotiate with anyone else.

    - No hardware restrictions. No need to build devices with NFC chips.

    - Unlike NFC enabled devices, there is already an enormous iOS device install base.

    That last point is one area where Apple could entice businesses in a way that Google Wallet can’t. There is already an established and global presence of iOS devices with iTunes accounts waiting for retailers to use. There is no need to wait and see how long it takes for NFC devices to become popular. Google doesn’t necessarily care about owning the whole experience. Their strength lies in advertising and reaping profits from those avenues. They are happy being just another middleman in the POS experience. However, Google Wallet’s success depends on a whole bunch of different factors, many of which they can’t really control. Dependent isn’t in Apple’s vocabulary.

    Near Field Communication is a technology that, similar to Blu-Rays in the video industry, runs the risk of being leapfrogged by something more effective. NFC payments as currently imagined don’t benefit business or consumers so much as banks and advertisers. Which is why Google is so quick to get in the game. Mobile payments are the way forward, no doubt, but they are still a ways off. When Apple makes a move, and it probably won’t be soon, it’ll be because they are ready to make an impact. It’s entirely possible Apple will still adopt NFC for iOS devices and enter into some sort of partnership with major credit cards and banks, much in the same way Google has. Despite this, the trail being blazed by Square shouldn’t be discounted. Their approach is trying to enable an entirely new way for business and customers to interact with each through rich and feature filled software. It’s designed with the retailer and consumer in mind, not interchange fees.

    So in trying to consider what Apple may do, think of what Google Wallet and Square are trying to accomplish. Compare them and ask yourself, which model seems more like something Apple would think of?


    1. Visa doesn’t seem to really focus on payWave numbers in their press releases and media kits, at least from my own research. Generally, when companies don’t tout numbers, it’s because they aren’t that good. My 9% figure might be generous.

    2. Which is part of at the reason why I think there isn’t so much talk about using NFC technology with debit cards. It probably isn’t as enticing since only really the banks are involved in the transactions.

    3. There are so many ways it could be done. Off the top of my head: rerouting wireless transactions to another device. Or criminals could set up false “storefronts”, pretending to be the store customers are shopping at.

    4. The only way vendors would accept to use NFC payments from various companies is if a multipurpose terminal is available for them to use. This would involve, at some level, negotiations between Google, Apple and any other mobile provider. It’s hard to imagine all of them coming to an agreement easily or amicably.

    5. Obviously, Apple pays their own interchange fees when processing transactions from iTunes account. They can cover those costs through the fees they charge the business. The advantage for the business owner is that they only have to deal with one middle man, rather than several, something they would inevitably have to deal with using NFC terminals.

    Posted at 7:53pm and tagged with: Square, NFC, apple, google, visa, mastercard, tech, one column,.

    All Together Now - May 13th 2011

    Google/Microsoft Edition

    1. Paul Miller

    2. Andy Ihnatko

    3. Peter Bright

    4. Mat Honan

    5. Steve Lyb

    6. Ben Brooks

    All Together Now is a collection of quotes I’ve culled from the web this week and which I’ve curated together into a particular perspective of my own.

    Posted at 7:49pm and tagged with: Microsoft, Google, web, quotes,.

    Google still treats new markets in its typical Google way (beta everything)1, making big announcements and demonstrating interesting new concepts and products that just sort of lose steam and fade into the rearview mirrors. 2 Unfortunately, when you’re creating products that people actually spend money on, beta isn’t so hot.1 It was incomprehensible when it was rumor; it’s even more incomprehensible as fact.3 It’s just offering to hold your shit for you.4 We’ve seen delusions of grandeur all too many times before.5 This is not something a confident business does, this is something an arrogant business does.6

    May 11th 2011

    When one isn't enough.

    Today at Google I/O, it was all about updates to their computing platform that fits into all sorts of mobile devices both big and small, syncs your stuff with the “cloud”, has a new revamped app store and for which people are pretty excited about. They gave a device away to attendees.*

    Yesterday at Google I/O, it was all about updates to their OTHER computing platform that fits into all sorts of mobile devices both big and small, syncs your stuff with the “cloud”, has a new revamped app store and for which people are pretty excited about.  They gave a device away to attendees.*

    Can’t wait to see what they announce tomorrow.

    *Google’s Favorite Things ™

    Posted at 4:25pm and tagged with: Chrome, Android, Google, I/O,.

    May 10th 2011

    Number Crunching Google Music Beta

    I did some math* concerning the Google Music Beta that was announced today at Google I/O.

    Let’s make the assumption that the average size of a song is about 5MB.  It’s about 6-8MB per song for my iTunes library but I’ll gander that most people still listen to poorly encoded music. Let’s also assume that Google isn’t using any fancy compression when uploading or downloading music to/from their service. Lastly, I’ve calculated the average length of a song on my iTunes library: 3.7 Minutes. So I’ll make the final assumption that people can probably listen to about 16 songs an hour.


    1. Approx Time to upload 5000 songs(approx. 25GB) to Google Music Beta = Approx. 29 Hours**

    2. Steaming, or downloading (“Pin”) an hour’s worth of songs to your Android device =  80MB (16 x 5)

    3. Amount of data used if you listen to 1 hour of music a day for a month on Google Music Beta using your Android device = 2.4GB (30 x 80)

    Here’s to hoping there’s Wi-Fi wherever Android users are commuting.

    *Feel free to correct me.

    **Based on an average, consistent upload speed of 2.048 Mbps ( Net Index claims a 2.71Mbps average in the U.S.)

    Posted at 2:51pm and tagged with: Google, Music, Beta, Dataplan, wi-fi,.

    May 9th 2011

    This particular strategy is working wonders lately.

    Via All Things D

    Posted at 10:39pm and tagged with: google, music, cloud, i/o,.

    …Google has apparently decided that it would rather launch a reduced version of a music service than none at all.

    November 22nd 2010

    Regarding Google’s Slow Death    

    I’m sharing these thoughts mostly as a response after reading Ben Brooks’ article regarding this subject.  I suggest you go and read both, as it will definitely frame what follows in the proper context.


    Ben Brooks, on Android:

    I have no concrete reasons why, it just seems to me that they have yet to figure out what will keep them alive. Android could have been a great source of money for them, but then they decided that the Android platform would not be a direct profit center, instead they would profit off of mobile search and in-app advertising – using Android to help drive those revenue sources.”

    Judging from Androids current leading market share in unit sales, couldn’t you say using Android to drive those revenue streams is a good business decision?  Sure, there’s lots of other ways Android could be profitable, but there’s nothing wrong with sticking to your strengths either.  I don’t agree with the thought that Google needs to be anything other than a search and ad company to remain successful. 


    On success:


    Long-term sustainable success – the success that puts your company in the Fortune 500 – is only done two ways: being innovative while executing well, or by having something that few others have (rare goods). The latter consists of oil companies, diamond companies and so on – companies that have goods that for one reason or another the general population desires. The rest are in the former category: innovative and executing well.

    I would argue that search itself is a valuable good.  Nobody would deny the importance or desirability of search on the internet and Google has the lion’s share of that market.   I’d wager that it would probably still be incredibly successful if it didn’t even have anything else but search.  I am probably right; Without having done the research, I could probably correctly claim that most of Googles profits come from search and advertising.

    But what about innovating and executing?  It’s hard to truly know.

    I don’t think there is something inherently wrong with merely acquiring new products of ideas.  One could claim that Google is great at acquiring ideas and integrating them into their business model.  Perhaps they are good at executing acquisitions.

    Google’s primary interests, and what pays their bills, is search and ads.  If you don’t think Google is successfully creating innovative products and services, that doesn’t mean they aren’t successfully innovating and executing on new ideas related to search and ads.  Almost every product or service they release, whether acquired or created in-house, serve to to improve how Google mines data.  Be it Gmail, Google Earth, Android and Google TV all harness the powers of Googles ability to gather and sort information.  In turn, they themselves feed the search and ad machine that is Google’s cash cow.  Some of these innovations we might not even see; who’s to say how many improvements they bring to their search algorithms each and every day.  

    Perhaps instead of questioning Google’s innovation and execution on consumer services and products, we might instead judge their innovation and execution on the company’s real business interests: search and advertisements.  

    In comparison, what would we say of the innovation and execution of other companies interested in search and ads?  

    I don’t think Fred Wilson’s argument are necessarily false.  I just think they’re ignoring how Google became successful in the first place.

    Posted at 12:20pm and tagged with: google, ben brooks, success, search, business, ads,.