ANALYSIS/OPINION:
As we head into the end of 2010, I would argue that one of my key thesis points for my “Powering The Mobile Consumer” theme is ringing true — there has been a proliferation of smart phones and what we consider to be mobile is migrating into other devices. The term “mobile” is also changing and increasingly these types of devices be they smart phones, pads, tablets or devices to be named later will be thought of as connected devices. Connected to the Internet, a variety of communication networks and more.
What’s also interesting about these devices, particularly smart phones like Apple Inc.’s iPhone, Research in Motion’s Blackberry or the Google Android-powered ones offered by Motorola Inc., Samsung Electronics, LG and more, is how they have usurped certain functionalities and eclipsed other devices.
There are several examples of what they have replaced — day-timers and calendars, digital cameras to some extent, GPS, for some old fashioned notebooks and others video devices. Roughly 22 million U.S. subscribers viewed video content on their mobile phones in the second quarter of 2010, up 44 percent year over year according to data from the Nielsen Co.
All in all it’s the intersection of computing power and connectivity and mobility in the palm of your hand and maybe in your back pocket. It appears there is no near-term slowdown ahead for smart phones and pads and tabs. Google’s Vice President of Engineering Andy Rubin tweeted that the company is activating 300,000 Android phones each day and that is close to Apple’s current activation rate for iOS devices.
Meanwhile, earlier this week Intel CEO Paul Otellini shared that his company has won 35 agreements from manufacturers to put its chips into new tablet models, which are set to compete with Apple’s iPad next year.
As newer networks are deployed, such as Verizon Wireless’ new 4G network that launched earlier this week, and processing power continues to improve, odds are there will be other capabilities and applications that find their way into these connected devices. It used to be that, when a person left his or her house, he or she would make sure to have their wallet, keys and cell phone or increasingly their smart phone.
It appears that may be changing starting in 2011.
This week Renesas Electronics announced a new near-field communication (NFC) system-on-a-chip that is bound for smart phones and other mobile devices and powers contactless payments and other wireless financial transactions. The chip will sample by March with mass production scheduled for July and carries a suggested retail price of $5.
It’s one thing for a company to build and offer a solution, but it’s even better when the market to be addressed by that solution is ready as well. It appears that in this case Renesas’ NFC chip is on time because sales of NFC enabled devices are expected to gain momentum starting 2011 as branded handset vendors including Nokia, Samsung, RIM as well as Google, telecom carriers and others are ready to launch related devices.
Nokia, still the largest mobile-phone vendor by volume, has stated that its Symbian platform will support NFC and that its smart phones will have built-in NFC functionality, while Google has teamed up with NXP Semiconductor to develop solutions for Android-based Nexus S smart phones. Samsung is scheduled to launch its own NFC-enabled chips and will use the chips in its smart phones, while Research in Motion has also voiced its support for NFC. As usual, may are waiting to see what Apple’s stance will be when it comes to this new technology.
Chips and devices, but what about the carriers and their networks?
Three of the major mobile carriers in the U.S. — AT&T, Verizon and T-Mobile — have created a new mobile payment system called ISIS and it is designed to let you make NFC payments with your smart phone. According to the three companies, the ISIS system is more than just a replacement system for your debit card, as you can store coupons, reward cards and also public-transport passes.
In terms of banks and other financial institutions, there have been a number of beta programs regarding mobile devices. One of the more recent ones includes Wells Fargo & Co., which is rolling out a Visa microSD mobile payment pilot that will include 200 Wells Fargo team members who are users of specific BlackBerry and iPhone models. To make payments, users open the Wells Fargo Mobile Banking application, select “pay with phone” and wave the phone in front of the contactless reader at the point of purchase. The reader will light up and beep, indicating that the payment has been received. Pilot participants can choose their payment instrument with the option of loading up to one Wells Fargo Visa Credit Card and one Wells Fargo Visa Debit Card.
Pretty neat. As with most new things there will be some issues to be ironed out, including standards and fee structures. These things usually sort themselves out over time as more players get into the market. I, for one, would be anxious to demo such a device, on my iPhone or not.
It seems that pretty soon you will not only be able to leave your wallet at home, but you will be able to have your money, your way — or at least spend it your way — as “the new cashless consumer.”
• Chris Versace, the Thematic Investor, is the director of research at Think 20/20, an independent equity-research and corporate access firm in the Washington, D.C. area. He can be reached at cversace@washingtontimes.com. At the time of publication, Mr. Versace had no positions in companies mentioned; however, positions can change.
Please read our comment policy before commenting.