Apple bought mobile ad platform, Quattro, late last year. Earlier this month it previewed its new mobile ad software system for inserting ads on the web pages generated by its application providers. Yesterday’s rumors suggested that Apple was about ready to buy Vivotech, a contactless payments solution provider.
Meanwhile, Google plunked $700 million down last year to buy AdMobs, the leading mobile ad provider, although that deal is reportedly hung up with the regulators in D.C. And just yesterday, Google Ventures announced an investment in Corduro which offers a “state-of-of-the-art payment gateway” for internet, mobile and traditional retail transactions. (not much info is available on it—hopefully the investment will enable this startup to finish their website). All the eyes seem to on these two giants, who were used to be such good friends.
These days, all seems quiet on the Microsoft front, which seems unable to leverage its leadership position in desktop operating systems into mobile phones despite massive investments over many years. Nokia may be more significant, especially outside the United States, as this leading mobile phone maker has been making significant investments in mobile payments, software, and commerce.
If you ask me, Apple is the company to watch at this point. It has accumulated an incredible set of assets that could enable it to dominate mobile phone e-commerce. It has the leading smart-phone with the largest number of applications. That ecosystem is growing rapidly. More applications encourage people to get more of Apple’s wireless devices which encourages more application developers.It also has more than 100 million iTunes customers with internet wallets (with a card already included) who could help seed an online payments mark that would rival PayPal at the jump. Apple could also beat Google to integrating a mobile ad platform with its other assets if its AdMobs purchase gets further delayed or blocked.
This puts Apple in the position of having an ecosystem that creates positive feedback effects between its mobile hardware devices, mobile software development platform, application store, advertising network, and payments mark. It isn’t hard to imagine that this ecosystem could undergo explosive growth and put Apple in the middle of all a vast mobile-device centric commerce space. One shouldn’t think of this as just mobile phones. The iPad is an example of a device that could become popular as a point-of-sale device at larger stores and enable the kinds of things in the publishing world that once seemed more like a pipedream.
Can Google catch up? First, it really wants to, needs to, and has the cash to do so. Unlike Apple, Google just makes money from advertising. It works hard at making sure that nothing gets between its advertising technology and eyeballs and advertising spaces that it needs to reach those eyeballs. Apple is seriously getting in the way for a potentially enormous amount of eyeballs and inventory. Hence Google Android and its venture into phones.
Second, because it isn’t looking to make money from mobile devices directly, it is pushing an open system. Just like Microsoft’s decision to move from the closed IBM platform to a promote a multi-vendor hardware ecosystem, Google’s decision could generate tremendous positive feedback effects by getting many mobile phone makers to install the Android operating system and many developers to write applications for it. (On the other hand Google’s similar efforts to take on Facebook by promoting open standards for social networks hasn’t worked.)
Third, Apple may soon become the new Google which was the new Microsoft—that is the company whose potential dominance scares the living daylights out of needed partners. Everyone from mobile carriers to payments networks software developers to advertisers are probably concerned. Google—who everyone used to be afraid of—may be their new best friend here.
So, the question is whether anyone else can enter this race before the current contenders get too close to crossing the finish line. My guess is that will one of two things could happen. There could be a drastic technological development like the iPhone, that none of us has anticipated, coming from an established player or a newbie, that changes the game. More likely there will be acquisitions—alliances hardly ever seem to work—that will enable one of the existing players in the grand mobile-payments-application-advertising ecosystem to really take Apple and Google on.
It’s an interesting race to watch, for sure.
Karen Webster is the President of Market Platform Dynamics (MPD), a consulting firm that helps companies find, implement and monetize innovation. She serves as an advisor and member of the board for a number of companies operating in the payment, technology and digital media industries. More info here.
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