Digital payment: Apple Pay catching up with Google... and shaking up the market?

According to ITG*, 1% of all digital payments in USD last November were made through Apple Pay, compared to 4% for Google Wallet. The latter was launched on May 26th, 2011, the former last October 20th, and judging by the apparent success among early adopters**, Cupertino might have already seized an even more significant chunk of this fat holiday season pie. Over November, Apple barely scratched the surface, with a very early-adopter kind of retailer leading the pack: Whole Foods Market claimed 20% of Apple Pay transactions (28% in value)***.

But here, once again, Apple is leading in innovation rather than in invention, and this market pedagogy could also benefit Google itself, who didn't promote very much its own solution so far, but can leverage much wider platforms. The biggest loser could be PayPal, and ITG's Steve Weinstein thinks that they are likely to suffer against Apple Pay's much more user friendly solution. 

Needless to say, bigger players in finance are also paying attention. Many consumers still feel reluctant to make payments through other players than genuine financial institutions, particularly the ones that issue the reassuring plastic fetishes that, not so long ago, used to be referred to as 'smart cards'.

mot-bile 2014


* see "ITG Investment Research Report Finds Strong Apple Pay Momentum"
** key findings by ITG:

• 60% of new Apple Pay customers used Apple Pay on multiple days through November, suggesting strong customer engagement. In comparison, New PayPal customers used the service on multiple days during the same time period just 20% of the time.
• Apple Pay customers used the service roughly 1.4 times per week and used Apple Pay at the same merchant for future transactions roughly 66% of the time.
• Upon adoption of Apple Pay, the average consumer uses the service for approximately 5.3% of all future card transactions and 2.3% of all future card dollars spent.

*** Walgreens comes second (19%/12%), McDonalds third (11%/3%).

NFC goes shopping : live in Seoul

As announced (see "Grand NFC Korea Alliance"), the heart of Myeongdong, a major shopping neighborhood popular among younger generations and Japanese tourists, will be a key test bed for NFC transactions in Korea next month.

This "NFC special district" operation is organized by the KCC (since security is key, the national authority delegated the mission to its KISA unit / Korea Internet Security Agency) and involves all 3 operators (SKT, KT, LGT/LGU+), 9 credit card companies, and key players and enablers listed last June (more are expected soon, particularly in ticketing / couponing applications).

Now for the hard(ware) part ? Terminals are ready on both ends : 100 shops will be equipped with dongles, and enough enduser should be enabled from day one. The NFC payment solution has already been embedded in the Samsung Galaxy S II and other recent models, and rival iPhones can join in thanks to a plug-in developped for Korea Telecom.

Microsoft might join later, but I'm not sure the Samsung Series 7 Slate has already the solution.

mot-bile 2011

Grand NFC Korea Alliance

Ten years ago, SK Telecom would carpet bomb Korea with 400,000 terminals ("dongles") to boost its Moneta mobile payment service. Yesterday, Korea Inc. announced 300,000 NFC-enabled Point Of Sales by the end of 2011 to put the country ahead of the pack in this very very strategic sector.

The difference ? This is not a solo act anymore : SKT alone couldn't succeed in setting the new standard in mobile payments at home and pushing the concept overseas, but this time, the whole value chain and ecosystem is following. And if it works, each player will claim a nice slice of a much bigger pie.

Under the regulator's umbrella (KCC, the herald of "NFC-based Mobile Smart Life Services"), over thirty Korean CEOs met at the Seoul Press Center to sign this decisive MOU in Near Field Communications, and if you throw in the members of the recently formed Grand NFC Korea Alliance, you've got the closest thing to a mobile payment dream team :

- all 3 Mobile Network Operators : Korea Telecom, SK Telecom, U+ (LG Telecom)
- the biggest card players around : Visa, MasterCard, Shinan Card, Kookmin Card (KB), Lotte Card, Hyundai Card, T-Money, MNO partners (Hana) SK Card and BC Card (KT)...
- key authorities and associations : KCC, ETRI, TTA, KISA (Korea Internet & Security Agency), MOIBA (Mobile Internet Business Association), RAPA (Korea Radio Promotion Association)...
- top manufacturers : Samsung, LG, Pantech...
- top enablers: UbiVelox, KEBT, MtekVision, 3ALogics Inc, KICC...
- top payment enablers / billing service providers : KSNet Inc, Mobilians, Galaxia, Danal Corp., KCP...

The only players missing on the picture are the endusers.

And as we saw before, pedagogy will be key in a country where hacking happens to be a national pastime (if you include North Korea in the package), where few people protect their handsets with a PIN code, and where distrust in smartphone security keeps spreading like wildfire.

Of course, "Near Field" meaning 10 cm and below, close encounters of the third thief will require more intimacy than via Bluetooth. Besides, many Koreans are already used to contactless micropayments thanks to T-Money (ie Seoul public transportations and taxis, thousands of convenience stores and vending machines...). Furthermore, NFC trials have been under way for quite a while : for instance KT's "Mobile Stamp" couponing system, SKT's Mobile Commerce Zone or Q Store pilots, or cross border trials between SKT's T-Cash and Japan's KDDI and SoftBank...

This MOU aims at multiplying testbeds and giving momentum to the technology, the bulk of the infrastructure being planned for Q4 2011. So where will NFC-based payments be available ? GS group plans to implement them in its convenience stores (GS25) and gas stations (GS Kaltex). Major retailers (Lotte Mart, Emart...) are joining the party. Seoul and Gyeonggi-do buses and subways, as well as many taxis will be converted. A major shopping area for tourists (particularly from Japan), Myeongdong has been identified as a strategic hotspot to feed the buzz.

Needless to say, the number of NFC-enabled handsets is another essential element in the equation. The alliance targets an ambitious 5 M units by the end of the year, leveraging on existing devices (Samsung Galaxy S II and Sky Vega Racer opened the way), and the Google-Apple war : since Android Gingerbread OS supports NFC, Cupertino had to consider it for iPhone 5.

And oh. This non-event : Samsung is expected to surpass soon Nokia as the world's top handset manufacturer.

mot-bile 2011

* sorry, not yet in English : "국내 통신사·금융(카드)사 CEO 최초로 한자리에 모여 NFC 서비스 활성화를 위한 MOU 체결"

KT and Softbank wed in the cloud

Two years after the merger of Korea Telecom with KTF, the group claims 27% of its turnover in the "non-communication sectors", and targets 45% by 2015. "Non-communication" covers "convergence, IT service/media and global operations", which have something to do with communication but nevermind :
- 'Communication' means wired and wireless comms + call centers (KRW 18 Tn in 2010, 22 in 2015).
- 'IT service/media' stretches over 'SI/NI, cloud, solutions, contents', so typically Software as a Service (SaaS)... (evolution 2010-2015 : KRW 2 to 6 Tn).
- 'Convergence' includes 'communication-finance convergence' (KT will absorb BC Card and challenge more directly Hana SK Card or the duo SK Telecom - Hana Card), 'car' (KT Rental), 'security', 'ad/commerce' (evolution 2010-2015 : KRW 4 to 8 Tn).
- 'global operations' collects the rest : 'investment, IT and communication' (!), and probably real estate (evolution 2010-2015 : KRW 1 to 4 Tn)

In this last category, KT intends 'to expand its global markets for Smart City, Cloud, and ICT Solutions', and 'to secure more than ten new business items, such as Smart Home, Smart City and Digital Signage', or to 'develop globally competitive products and services and consider expanding its business worldwide from the launch of a project, as in the case of KT Kibot and CCC'. For your information : KT Kibot is a cute robot.

CCC means, of course, Cloud Communication Center. And that's where Korea Telecom and Softbank decided to create a 51/49 Joint Venture next September : a huge cloud data center will be created in Busan, with a back-up system in Seoul. A smart risk management move from ethnic Korean Masayoshi Son : the March 11 earthquake + tsunami followed by Fukushima meltdowns caused major business disruptions and massive energy shortages. This center will start with a 6 MW capacity (the equivalent to 700,000 PCs or 10,000 servers according to KT), and quickly reach 20 MW. A dedicated 10 GW line will secure the traffic and that's another reason why Korea's second biggest city was chosen : it's very and one of the closest to Japan (210 km or 130 miles), with all the right IT and human connections.

Yet. If Korea is spared by tsunamis and earthquakes, it is frequently attacked by North Korean hackers, and that's the reason why mobile banking and finance, a traditional strong point in the country, is not booming as fast as smartphone sales.

NFC-based Google Wallet* will have to overcome even more resistance there considering the company's image in Korea these days and the intense lobbying campaign from local netcos against its potential dominant position.


mot-bile 2011

* see "Coming soon: make your phone your wallet"

SK Telecom keeps Hoppin

While I was blogging about KT's cloud computing services, rival SK Telecom was presenting its own cloud computing platform to the press, N-Screen.

The idea is to make convergence as seamless as possible for the enduser and service providers : the platform automatically recognises the device and adapts the content to it, and all DRM hassles have been taken care of in advance.

There too, your handset is as more a smartphone as a smartTV enabler. It's a Samsung device, of the now well established Galaxy S family, and it's branded Galaxy S Hoppin (among other characteristics : Android 2.2, 1 GHz CPU, 4-inch Super AMOLED display...). Subventions included, it will cost you KRW 300,000.

SKT has already been advertising massively for Hoppin, with an enduser glued to the screen in every context, even asleep. Since Hoppin is also the name of their cloud computing service, they will eventually communicate about other devices (TV, PCs, tablets, fixed phones... - note that more and more models of fixed phones feature a color screen in Korea).

N-Screen is an open platform, meaning first of all that everybody is invited to join. To prove successful, that should include, beyond endusers, more than a few content providers or handset manufacturers.

Same story for Android platforms : SK Telecom boasts about its close partnership with Google in hardware and software development (GED / Google Experience Device, Samsung Galaxy, Motorola Xoom Tablet, LG Electronics G-Slate...), and it is a clear leader at the handset level (SKT sold 83% of all Android handsets in Korea and now averages 20,000 units a day), but the operator is still struggling at the BtoBtoC level, even if developers are proposed a "T Academy" to create more apps for the "T Store".

This press conference followed the announcement of a partnership with Japan's KDDI and Softbank Mobile for NFC-based mobile payment. Smart Poster will be operational in both countries and aims for the global market. Local competitors with exotic proprietary solutions, take notice :

The aim of the trial test is to establish mutual compatibility between countries using NFC as a common international standard instead of existing local Korean or Japanese mobile financial service methods. Currently in Korea, telecommunication companies provide mobile financial services such as credit cards, public transportation, stock trading and banking using a finance-enabled USIM chip called the 'Combi Card'. While Japan's finance service utilizes a self-developed method called 'Felica' by installing a second chip, apart from the USIM, within the mobile device

NTT DoCoMo, a partner of KT, must have appreciated the ironic tribute. Some may hear some bitterness in the tone : as we often mentioned earlier, SKT has somehow abandoned its cultural and innovative leadership to Korea Telecom. It reshuffled its management and pledged to develop a "young, speedy organization", to promote "openness" and "collaboration", and to regain confidence overseas.

MelOn recently made it in Indonesia, and this partnership with Japanese MNOs is really significant, but it will take more to be recognized as a major value aggregator at the international level. Let's see how the new management takes up the challenge.

mot-bile 2011

Communication-finance convergence: KT joins SKT

Seems like SK Telecom's debuts as a credit card operator (see previous posts about the SKT-Hana Bank deal) spurred the competition. Korea Telecom announced yesterday that their participation in BC Card, the national leader, would increase from 1.98 to 35.83% after purchases from Woori Bank (20%) and Shinan Bank (13.85%). KT also negociates a further 4.03% participation with Busan Bank.

Lucky Koreans MNO: they can become content majors or financial institutions just by signing checks. And they formed a common lobby with other financial institutions to promote mobile banking in Korea (SK Telecom and KT with Mastercard, Shinhan Card, Samsung Card).

"Finance-communications convergence" comes handy as MNOs need to completely revamp their business models : voice revenues keep decreasing, and the data equation went crazy.

Significantly, KT is now insisting on Wifi coverage in its smartphones advertising campaigns, and promoting uCloud for consumers also as an IPTV service (Smart TV tomorrow I guess). Remaining a leader in cloud computing is an absolute must... and it sure beats car rentals as diversification (KT are also campaigning about that peripheric service of theirs).

mot-bile 2011

Atos Origin and the Three Musketeers

Atos Origin and France's 3 MNOs Orange, SFR, and Bouygues Telecom created Buyster, a JV devoted to ecommerce with a focus on micropayments and a first batch of merchants already on board (Darty, Rue du Commerce, Aquarelle...).

Led by Eric Gontier, a mobile multimedia veteran with an Atos origin (via Axime, who merged with Sligos to found Atos Origin during the late XXth Century), the new platform targets within 5 years a 10% market share in ecommerce against the likes of PayPal.

The concept also ties the Buyster account to a bank card (transactions will require a Buyster code), but it adds a link to the phone number, a key ID in this mobile world of ours. Conveniently enough, Orange, SFR, and ByT manage the bulk of France's numbers, be they fixed or mobile.

So long life to the new venture... and good luck for the URL : buyster.com is owned by an Australian retailer (buyster.com.au). From checks to kangaroo bounces... And oh, Box Creative LLC recently preempted buysters.com.


mot-bile 2011

As Daum goes (a bit) mAd, SK Telecom jumps to L Commerce and Mobile Virtual Banking Operator

I've been expecting a lot from Korea's leading portals Naver and Daum*, but so far, they've not exactly revolutionized mobile internet. For instance, they've only recently set a timid foot into mobile advertising**.

To their credit, it's hard to get a slice of the wireless pie consistent with their impressive web portal market share, even after the implementation of USIM cards, which undermined Korean MNO's lock on handsets, and even after the rise of smartphone apps, which also weakened their positions on the value chain.

According to KoreanClick, #1 NHN / Naver controls 63% of the portal market (31 M Unique Visitors for Naver.com in April 2010) and #2 Daum 21% (28.9 M UV), but #3 Nate (10% MS, 24.7 M UV) can leverage on key enablers provided by owner SK Telecom : the leading cellco, already a quadplay giant, has always put a lot of importance on Location Based Services and financial enablers.

That focus has become even more evident with the creation of the Hana Bank - SKT JV (see "SK Telecom's Wild Hana Card"), confirmed by the first services earlier this year***. The recently rebranded Hana SK Card targets 400 to 500,000 cardholders by EOY 2010.

SKT has also been redefining the "mobile wallet" concept over the past few weeks : leveraging on Visa PayWave radio frequency technology, the "T Smart Pay" (always that "T" umbrella brand of SKT's) concept allows the consumer to monitor up to 8 credit cards, 30 mileage / point cards, and 50 coupons with the same '13.56MHz RF SIM' card (always that "technerdy" trend of SKT's), to the risk of storing all your most critical information on one single device. Each time you present it for a contactless payment, you're proposed the choice between all registered cards.

Of course, Hana SK Card holders can also enjoy a simplified UI :



Here, SKT almost acts like a Mobile Virtual Banking Operator roaming on tens of rival networks and helping the consumer make the most of each buck, picking the best provider depending on the store, account status, promotion... Needless to say that this entry point will be massively exploited for contextual offers : ever since NATE Coupons, SK Telecom has been a major innovator in couponing and in July, SKT will launch 'L-commerce', a new set of Location Based Services bound to confirm the return of its mojo.

About ten years ago, I was impressed by how deep this player ventured into new trades like media or banking. Since then, SK Telecom didn't fully succeed overseas as a classic mobile operator, and at one moment lost some appeal as the marketing king at home, but lately, it seems to be experiencing a revival. Even telematics are back in fashion (SKT MIV / Mobile in Vehicle).

Note that on the more traditional battlefield, SK confirmed 8 more Android handsets by EOY (see "SK Telecom pushes Android"), and KT remains the most likely guess for the iPad exclusivity : Apple's latest gizmo is being approved for import, and TriGem, Samsung, and LG will suffer from a minimized delay before their own tablets****.

mot-bile 2010


* see "KT claims 500,000 iPhones"
** "Daum rolls out mobile advertising network" (JoongAng Daily 20100511)
*** see "Wal-Mart's Vudu Trance - home entertainment and apps"
**** see "Samsung S Pad in a Flash"

2nd Million for TU Media - 2nd country for SK Telecom - Citi JV

June 25, 2009 ? Apparently a good day for SK Telecom PR :
- subsidiary TU Media signs its 2,000,000 th customer
- JV with Citigroup launches mobile banking services in the Philippines, a few months after Hong Kong

The SK Telecom - Citibank Philippines JV (Mobile Money Ventures LLC) is definitely good news : in Hong-Kong, services were more about portfolio management than actual personal banking and transactions - what Citi Mobile Banking (CMB) is all about in the Philippines. These browser-based services shall soon be implemented in other countries, and confirm the operator's international ambitions in mobile finance (see recently "SK Telecom's Wild Hana Card").

But is TU Media really a success ?

Many European players would love to boast 2 M mobile TV paid users, but 2 M is not even equivalent to 10% of SK Telecom's customer base and for this operator, a 10% penetration after 4 years doesn't seem very impressive.

Besides, to claim its second million customers, SKT's S-DMB unit took more time than it did for the first : TU Media was launched in May 2005 and reached the 1 M mark in December 2006.

Indeed, TU Media was in a very poor condition last year, both financially (mounting debts) and commercially (it claimed only 1.3 M subs in June 2008, a gain of 300,000 in 1.5 years). The 700k customers gained over the past 12 months are the result of what appears to be a make or break move by the owner : SKT went up in the company, injected KRW 55 bn more, and offered massive discounts to its own mobile subscribers... to the point that an undisclosed proportion of its "paid subscribers" don't have to pay to enjoy the service* !

As a consequence :

=> TU Media becomes more competitive with terrestrial accesses (T-DMB), which have been free since the beginning (launched in December 2005) : as we saw ("3M DMB subs - SBSM on its way"), that's the reason why they are much more popular. T-DMB claims the bulk of Korea's 20M+ DMB-enabled devices (every other handset is OK for mobile TV).

=> At the corporate level, TU Media is now more a MNO's Business Unit than the initial stand alone operator. The very few people who didn't use SKT as their mobile phone operator are encouraged to join the leader, and for the rest, TU Media looks almost like an option among others.

=> TU Media has been burning a lot of cash, and a sustainable TU Media requires more differenciation, and even greater efforts :

- Technological differenciation is not necessarily positive : in covered areas, terrestrial has theoretically an edge over satellite for indoor. SKT does enjoy a truly nationwide coverage, and propose an in-car access offer (TU Rideon - KRW 11,000 / mo - 3 yrs offered for Basic) as well as a real time traffic service (TU TPEG - KRW 3,000 / mo), but T-DMB is very popular for buses and coaches.

- Content and added value services remain key, and SKT will not always surf on such events as the Beijing Olympics, a major boost for subscriptions last year (the whole population was hooked and literally always on one way / media or another)... but not very differentiating since several broadcasters offered the same images (SBS clinched the exclusive TV rights for the next Olympic Games). The only "paid service" operator could try and lock some key rights to pimp up its own premium channels TU Entertainment and TU Sports (both available through the TU Select service : 1 channel for KRW 2,000 / mo, 2 for 3,000, 3 for 4,000). Other premium services feature TUBOX (movies PPV for krw 1,000 or 1,500 apiece) and PREMIUM 19+ (adult for krw 3,000 / mo or 1,200 for 2 days).

Still now, SKT seems to be as much pushing the service as trying to pull it out of a ditch. The technological landscape keeps evolving and in 2012, fixed and mobile broadband will reach respectly 1 Gbps and 10 Mbps. Typically, SKT is investing massively in optic cabling (from 5,000 km to 88,000 km) through SK Networks.

But mobile TV has found a public anyway, and SK Telecom is not the kind of player to abandon leadership easily. Particularily in such a key vertical.

So it brought along TU Media in its trials in Thailand, so...

... not to be discontinued yet.

But stay tuned.


* With TU Media, you pay only for subscription charges. Neither for traffic nor for content, except for movies on demand (NB: these days, KRW 1,000 is about USD 0.78) :
- Basic rates are KRW 6,000 for TU Slim (9 TV channels + 16 audio), idem for TU English (10 TV + 16), and KRW 11,000 for TU Basic (unlimited 21 TV + 16 audio)
- SKT customers enjoy a 6,000 discount on basic rates, which sets Basic at 5,000... and Slim and English services at zero