Sources close to Google are reporting that the company will announce the release of a Virtual Wallet with NFC (Near-Field Communication) functionality, available on Sprint’s Nexus S smartphones using the Android operating system. The primary functionality will include the ability to pay for goods with a simple swipe of the phone, as well as redeem coupons and rack up points in a loyalty program; working with Google to make this technology possible are VeriFone and ViVO Tech. The news is expected to be broken tomorrow, May 26th, at a press event in New York City. The list of retailers who will be participating in the early stages of this release includes Subway, Macy’s and American Eagle Outfitters, which should bode well for the generally younger, more tech-savvy user base of Droid smartphones.
This release should also serve as a wake-up call for retailers and grocers, and underscore the need for mobile device functionality at their stores. Smartphone and financial payment technologies are clearly converging and will certainly be tied to social media and location based services like Foursquare and Gowalla in the very near future. One example of a retailer with good intentions in the area of customer engagement is Target, which has been making great efforts to meet their customers on their smartphones. Interestingly they are holding off on mobile payments for the near-term, citing uncertainty in the smartphone mobile payments landscape and somewhat slow user adoption to this point. With Google entering the space on one of its most popular Droid devices, the issue of user adoption could be solved very quickly, and retailers who grasp this reality and are able to get a head-start over their competition (for example by using software like ours!) will be in a great position to win more business and delight their customer bases.
In a not-so-surprising report from comScore, it was revealed that the Google Android OS now enjoys a 7.6% lead in market share over its nearest competitor, Research in Motion. In 3rd place is Apple, which achieved a .5% boost from Q4 2010 and now commands 25.5% of the market. More disappointing news for Microsoft and their Windows Phone 7 efforts as they lost nearly another full percentage point of the market and now stand at 7.5%. It stands to reason that their recent acquisition of Skype, valued at $8.5b, will likely play a role in Redmond’s attempts to somehow keep this sinking ship afloat. Many Skype users are already voicing fears that with the buyout, Skype will no longer be fully supported on competing devices, as was the case with Internet Explorer when Microsoft discontinued new software releases for the Mac in 2003 and ceased all support of the platform in early 2006. It seems very unlikely that a similar strategy will prevail with Skype, largely due to the increasing popularity of Google Voice, and everything seems to be pointing toward more sustained growth for the Droid and iPhone in the near future. Developers/retailers/consumers stay tuned!
Expected to be released later this year, Google has teamed with Mastercard and Citigroup to build a near field communication (NFC) mobile system on their Android OS that will allow consumers to use their smartphones as credit cards. People with Citigroup credit or debit cards would simply need to download an app on their Android phones and authorize their smartphone to communicate with their bank. Google’s position in the ecosystem appears to be centered around enabling retailers to target their customers more effectively by selling ad space and the opportunity to pitch discounted offers to people near their stores.
This move by Google and co. is an extension of the recent success that Starbucks has enjoyed with their NFC-enabled payment application, and with the proper privacy considerations should be a big hit with retailers and consumers, alike. The biggest question on the table is with the notion of “targeting” offers. What are the criteria available to assure the offers are relevant? Will it be made up of purchase history, internet browsing history, surveys, or all of the above? What’s your take on all of this? Would you use this technology or does it seem too invasive? Send us your comments and reactions!
Nielsen reported today that the Google Android operating system is now controlling 29% of the US Market, with Apple and Research in Motion (RIM) sharing second place with 27% apiece. For many analysts, this news comes as no surprise given that unlike the iPhone, the Droid is available on myriad devices and networks, and consumers have been moving away from RIM’s Blackberry for several quarters running.
The piece of news that does qualify as somewhat unexpected is Microsoft’s Windows Mobile and Windows Phone 7 falling to 10% of the US Market. This result comes on the heels of their $400m investment in the launch of their new mobile efforts. Their market share in the previous three quarters stood at 18%, 15%, and 14% respectively, and this figure raises some serious questions about their ability to compete in the smartphone space. The folks in Redmond also recently announced a partnership with Nokia, as well as the launch of Bing mobile, now with the ability to aggregate location-specific deals for users. The question is will these recent efforts from Microsoft deliver any meaningful results in the way of smartphone market traction? Or is this quickly becoming a classic case of throwing good money after bad?
Big news this week as Starbucks coffee drinkers can now use their smartphones as a payment method at nearly 6,800 of the Seattle-based coffee shops nationwide. The app allows users to attach Starbucks giftcards to a user’s Blackberry or iPhone and then scan a barcode on their phone at the point of sale, and can also be charged with value via PayPal or any major credit cards. The message coming out of Starbucks HQ seems to be that they’ve opted for a barcode-based payment system today, but are planning to take this technology in some pretty interesting directions, such as Near Field Communication (NFC) in the future. Starbucks also has the ability to add value to its customers reward cards for taking surveys, and will now presumably be able to complete this entire process of presenting a survey offer, accepting customer responses, adding value to the customer loyalty app and accepting payment all on a single smartphone. The functionality being utilized for this rewards app is very similar to the Digital Wallet software available from companies like Google and Accelitec, and the fact that Starbucks has now taken the lead should serve as sign to other brands and retailers that now is the ideal time to be targeting customer loyalty by creating and launching rewards applications for smartphones.
This weeks sign of the times has to be the news that eBay saw their sales via mobile devices rise from $600mm to over $2b in 2010. The apps, which are available for the iPhone, Android, Blackberry and Windows Phone 7 operating systems, have been downloaded by over 30 million people in more than 190 countries. Interestingly, the UK has been the fastest Eurpoean adopter of eBay’s mobile app, and combined with Germany they “generated nearly one third of all eBay’s mobile sales in 2010“. According to eBay, every minute there are 94 bids made for various products and 13 items of clothing/shoes/accessories are purchased. This really highlights the growing trend for consumers to do their shopping online and should resonate loud and clear with traditional, brick and mortar retailers.
The message being sent by the market is very clear – develop an online/mobile presence so that our shopping experiences are as fast and painless as possible, or we’ll buy from someone else who can. We’re already seeing the response to this trend from macro retailers like Target, Safeway and BestBuy with their expanding presences on Facebook, mobile applications, and location based services like Shopkick and Foursquare. For the mid-size and smaller retailers who are losing the tech-race, the time is now to start implementing solutions like the Accelitec software suite if they hope to close this growing gap and ultimately start winning back a percentage of these sales lost to online retailers.
iPhone owners with $.99 can now consolidate all of their loyalty, membership and insurance cards in one place – their smartphones. Scanaroo is available in the iTunes Store and lets users shed the majority of the plastic cards in their wallets and on their keychains with the goal of making life easier and simpler. The next step is aggregating purchasing history data and then allowing complimentary companies to reward customers simultaneously via social media; a member of Gold’s Gym buys a double cheeseburger at McDonalds and gets a Facebook message addressed from their personal trainer offering them a month of free membership if they sign up for a new pilates class; a family rents a movie on Netflix and are instantly offered a special on 2 large pizzas and a 2 liter soda from their local Little Caesars.
Meijer has now joined the ranks of Android Application developers with its release of “Find It”. Functionality includes a map of the store layout, locations of various sale items, promotion details and even the ability to locate your car in the parking lot once you’ve finished shopping. The technology in and of itself is really not pushing the envelope in the mobile space, but this type of functionality is fairly cutting edge for the grocery industry. What remains to be seen is whether they can not only draw their customers to use the app, but more importantly keep them using it on subsequent visits to the store with the right blend of relevant, timely rewards and useful information.
Facebook announced yesterday that they have officially entered the LBS market with their release of ‘Places’, which is expected to compete immediately with the business models of Foursquare and Gowalla. Largely built on Microsoft’s Bing Maps architecture, this release is also a threat to Google’s dominance in the map-based application space. “Check-in Fatigue”, a phrase that has become more and more common recently, seems to be the biggest hurdle ahead of these LBS providers; convincing current users to keep interacting and enticing new users to join will depend on a combination of the relationships these companies are able to build with brands and retailers, and the resulting benefits or discounts that are tied to frequenting each location. Another major hang-up are privacy concerns, and although Facebook promises to have put major development effort behind improving these issues, many users remain skeptical. The ACLU of Northern California has been one of the first groups to step forward on the current issue, saying that “Facebook made some changes to its regular privacy practices to protect sensitive location-based information, such as limiting the default visibility of check-ins on your feed to ‘Friends Only.’ But it has failed to build in some other important privacy safeguards. In the world of Facebook Places, ‘no’ is unfortunately not an option. Places allows your friends to tag you when they check in somewhere, and Facebook makes it very easy to say ‘yes’ to allowing your friends to check in for you. But when it comes to opting out of that feature, you are only given a ‘not now’ option (aka ask me again later).” This has been raised as a key issue in the past with Facebook apps, and their management are adamant that with ‘Places’ these problems with user privacy have been solved with the use of “opt-in” functionality. All privacy issues aside, Facebook has just entered a new space with over 500 million active users in tow, which compares to a little over 2 million currently on Foursquare. If they are able to combine the Facebook social experience with meaningful rewards for LBS users, then we have entered a whole new realm of social media where monetizing a user base just became a whole lot simpler.
As location-based services like Foursquare and Gowalla gain more and more users, and the coverage of retailers using these services grows apace (the PR guys and tech media are really showing nice symbiosis here), the long-term challenge for retailers remains sustained differentiation. These services may be creating buzz and driving short-term results, but when everyone has the same access to the same tools, it’s unclear how meaningful the technology really is in producing results.
If the goal of the marketer is to achieve short-term objectives, all is well and good. A friend of the company once reminded us that discounting can drive behavior, but doesn’t produce long-term brand relationships; that’s where the hard work is, and it’s work that can’t be compressed into a weekend promotion. While it’s fun and interesting to have short-term projects around some of these new technologies, whether the important long-term results can be achieved is an open question.
It’s surely worth pursuing the experiments and running the campaigns to see how LBS (location based services) can work, and we’re all watching them with great interest. But if they’re offering the same thing to everyone, and unable to fit coherently into a broader strategy aimed at sustainable brand engagement, they risk being marginalized over time as an interesting but ultimately unproductive distraction.