The fast-moving mobile market is the smart direction to go, but getting to grips with business on the move can be challenging, writes Stephen Armstrong
Misunderstanding the mobile market is a potentially career-ending move. Departing Intel chief executive Paul Otellini had predicted all sorts of successes for his new x86 processors, while the mobile world moved towards the rival ARM format – something Mr Otellini had dismissed back in 2006.
Mark Zuckerberg tried to hide Facebook’s problems making money from mobile users just before his IPO (initial public offering) in May. It didn’t work and Facebook’s stock market launch became a farce.
You can understand both men’s problems. It’s not like they’re not smart guys. But grasping the mobile market is like grasping an oily eel in a tub of jelly. Except a lot less fun.
Take mobile advertising – the petard that hoist Zuckerberg. Mobile app company Trademob says as many as 40 per cent of clicks on mobile ads are “fraudulent” or accidental. Mobile eCPM (effective cost per mile or marketing benchmark) is sometimes as low as 20 per cent of its desktop counterpart.
At the same time, more than 50 per cent of both the UK and the US population now own a smartphone. Meanwhile tablet computers, despite having roughly 10 per cent penetration, account for 40 per cent of all retail searches on mobile devices, according to the British Retail Consortium.
Soon we’ll see folding screens and screens that roll up into a scroll
Mobile payments are equally challenging. In the United States you can walk into an Apple store, scan the barcode for an iPod Nano with your iPhone’s camera, pay for it there and then with your iTunes account and walk out of the store without speaking to a single shop assistant. It’s called EasyPay and Walmart, who own ASDA in the UK, will be using it soon.
PayPal president Scott Thompson believes that by 2015 digital currency – effectively payment by mobile through near field communication (NFC) – will be accepted everywhere from the local corner store to national chains.
“We will no longer need to carry a wallet,” he says. Mr Thompson has been putting his money where his mouth is – last year PayPal spent US$240 million buying mobile payments provider Zong and, since the spring, you’ve been able to use the PayPal inStore app on Android and Apple phones in Coast, Oasis, Warehouse and Karen Millen. The app generates a unique barcode and transaction number, which the shop assistant scans.
Samee Zafar, director of advanced payments at consultancy Edgar Dunn & Company, on the other hand is excited by mobile banking systems in Kenya, where the local mobile phone operator Safaricom started rolling out a pay-by-text system called M-Pesa in 2007. Some 15 million Kenyans now use their phones as de facto debit cards and M-Pesa is launching in Tanzania, India, Egypt and Afghanistan.
“Your mobile has access to all your data,” he explains. “It can download loyalty points or offers in your area, make payments, scan barcodes or QR codes – pretty much everything. We’re already seeing developments in how phones look. Soon we’ll see folding screens and screens that roll up into a scroll. You could have a phone that’s the size of a £20 note which will be able to deal with all the payments you need.”
Futurologist Ian Pearson believes this is just the beginning. He predicts it’s only 15 years before we have handshake banking thanks to mobile-based contact payment systems, where the phone is split into constituent parts in watches or jewellery – with earpiece in an earring, for example – that send small currents down the skin so that a simple handshake transfers £10 between accounts.
“The next step is directional messaging,” he says. “Imagine a messaging device that works just by pointing at the recipient instead of needing to know their phone number. Companies will send personalised messages beamed at shoppers in situ without privacy issues over data.”