Google Point of sale locations
But what about the Windows, Blackberry and iPhone users out there? Google appeared to be open to working with these companies, though the feelings are unlikely mutual. Each of the big players have their own plans for the potentially highly lucrative mobile wallet space. That won’t likely stop Google from trying to sneak their way onto other devices. For example, Google’s Voice product was denied by Apple for the iPhone when it debuted on Android and was relegated to a web app that ran on the Mobile Safari browser. By the time Apple finally approved the Google Voice app for the iPhone, there was little need for it. Google may take the same route, with NFC stickers, to circumvent handsets and carriers who don’t want to let their customers use Wallet.
And the other carriers, namely AT&T and Verizon, are already tipping their hands: They’ve allied with a rival NFC alliance, ISIS and will probably release their own NFC system soon.
Google Offers: The carrot
The biggest hurdle to adoption will be consumers, however. While paying with your phone sounds cool, it’s hardly a must-have app. That’s where Google Offers come in. Offers is Google’s answer to Groupon and Living Social, and will work hand in hand with Google Wallet. Offers is an integral part of the Wallet ecosystem and the company clearly hopes it gives Wallet some momentum. It’s amazing to think about how different the Wallet launch would’ve looked if Google had been successful in its $7 billion bid to snap up Groupon.
Offers will extend over to online purchases too, where all of this new mobile infrastructure will integrate with Google Checkout, its Paypal competitor. Speaking of Paypal, Ebay’s
online payment leader wasted no time in
suing Google over Mobile Payment secrets just hours after the announcement. Google executives Osama Bedier and Stephanie Tilenius came from Paypal, which alleges the pair took trade secrets over to Google and used them in creating Google Wallet.
Wall St. analysts seem cautiously bullish on the Google Wallet announcement:
Cowen’s Jim Friedland believes that Google Wallet is well positioned to become the leading platform because: (1) Google is not collecting any transaction fees, platform highly attractive to banks, credit card companies, and retailers; and (2)the platform is completely open. He adds, ” We believe it will take 2-3 years for to reach a critical mass of Google Wallet enabled phones and point-of-sale terminals, so material local commerce ad revenues are unlikely to kick in before 2013.”
Citi’s Mark S. Mahaney sees the move as a modestly positive one for Google:
Google Wallet is a unique way to push the Mobile Point Of Sale Payments market forward, and Google opting to not charge could drive quick adoption, as it did with its Android strategy. Monetization for Google will be indirect – this creates the potential for superior Ad Targeting based on closed-loop transaction knowledge. Good news – there doesn’t appear to be major new GOOG infrastructure spend risk. As for Google Offers, this seems like a natural extension of its Local and Social offerings. We don’t anticipate Google Wallet and Google Offers being material to GOOG’s P&L for the foreseeable future.
Justin Post of Merrill Lynch, sees Wallet/Offers as a chicken or the egg conundrum getting off the ground but once so, as a benefit to Google’s current ad business. In a research note, he wrote:
Google Wallet will have deep integration with Google Offers and potentially other new ad formats (like coupons in search results or geo-targeted coupons) which can help extend Google’s advertising reach to the local retail market, a market somewhat untapped by Google. From a local merchant’s perspective, these services and ad formats will enable direct marketing to consumers with offers and coupons based on search intent, consumer location, and previous merchant relationships allowing merchants to deepen customer engagement.
It will be interesting to see what kind of deals Google can get to pull people in. At the event today Google hinted at half-price seats for baseball games. That’s a pretty good start, and if Google can really move major league teams to offer mobile offers of that caliber on the fly, it might have more people, including me, eyeing switching over to a Nexus S.