Mobile As A Platform

[An Independent Study]

by Tarik Setia 09-ITMG-1097-CSE

Introduction
The plight of a mobile application developer these days is a challenging one. On the one hand, development in this space is vibrant and full of opportunities; a spectrum of new devices, from smartphones to tablets, is redrawing the boundaries of what users can do. On the other hand, this new landscape also brings new development questions including, what devices to target, how to create simple yet effective applications, and how to secure the data that is uploaded and downloaded. In particular, the so-called trend of the consumerization of IT weighs heavily on enterprise mobile application developers. This trend encompasses many facets. Increasingly, corporate users are accessing enterprise data from mobile devices which may be their own or may be deployed by their internal IT department. That means developers may not know what the target platform is, requiring either a cross-platform or multi-platform development effort. But the consumerization of IT also presumes an element of ease of use. Corporate users, from the boardroom down, increasingly demand that applications be as easily understood as the applications they use online or for their personal computing needs. As a result, developers need to craft applications that are not only straightforward, but also lack a lot of menus and options that require screen real estate that isnt available on most smartphones. As if those parameters werent enough, there is the increasing demand for organizations to interact with customers via online applications on smartphones. Whether the industry is nance, transportation, retail or others, organizations are looking for ways to cement the customer relationship through mobile delivery of updates, offers, and alerts. Newly available in the customer- relationship arsenal: so-called disposable applications that are time-sensitive, relating to specic events and promotions. As there are many application scenarios that developers face, there are an equal number of elements that they must consider in mobile application development, including data access, security, ofine capabilities, and back- end integration. For mobile applications to be as useful as possible, they must transparently synchronize data with back- end systems. There are also many development environments. Developers can also choose from either native development tools for each of the major mobile devices and platforms (including Apple iOS, AndroidTM, Microsoft Windows Mobile and Microsoft Phone 7, Symbian, RIM BlackBerry, Java, Linux, and MeegoTM) or cross-platform environments .

The Mobile User Experience

[Can Mobile Lead Your Customer Experience?]
Just three years ago, the idea of mobile taking the lead in customer experience would have seemed ridiculous. However, thanks to the iPhone charge, mobile is now signicantly more important to most brands, and it has become an integral part of many brands multichannel experience. We think that mobile will continue to increase in importance. And within the next two years, mobile will actually start to lead customer experiences for a number of brands. Why is this? Quite simply, its due to peoples appetite for mobile services that are genuinely useful and fun. Brands will want to satisfy this appetite, so a combination of new technology, developmental experience and greater investment will lead to innovation and even better mobile experiences. Whats more, these improved experiences will be available to a wider audience thanks to increased penetration of smart mobile devices. In turn, this improvement in experience will increase demand, fuelling more innovation and creating a virtuous circle. The opportunity is real, but taking advantage of it will not be easy. Brands will have to create great customer experiences, and this comes with a series of challenges. We will explore this viewpoint by answering the following three questions. Is mobile working? Will mobile continue its rapid ascent? What are the challenges in creating great mobile customer experiences?

Mobile Working?
To understand how far mobile can go, it is important to get a good understanding of just how far mobile has come. From a small initial base, the audience for mobile interactive customer experiences h as grown quickly in the past two years. Mobile ownership is now nearly ubiquitous (its 89% in the UK), and while phone and text still dominate usage, interactive usage has grown signicantly in the two major areas of mobile internet and native apps. People now spend on average 32 minutes a day using mobile internet services, and more than 10 billion apps have now been downloaded from the iTunes App Store alone. Customers are consuming these mobile experiences on both phones and tablets, at home, at work, or on the move, and are looking for experiences that are fun, useful, usable and/or convenient. When this usage is converted into business results, CEOs stand up and pay attention. Customers are becoming increasingly comfortable transacting on their mobile, which has led to some impressive revenue gures. Online retailer ASOS brings in more than 1m a month through mobile transactions, Amazon brought in $1bn in 2009/10, while eBay sold $2bn worth of products last year (a 300% increase from 2009). In the UK, 8% of online shoppers reported making a purchase from their phones this Christmas (2010), compared with only 2% this time last year. However, the inuence of mobile reaches far beyond just direct sales, and extends across the purchasing lifecycle. Brands are using mobile to build awareness through search and banner advertising, with an increasing component made intelligent through location- based services. Consumers are using mobile to research products both at home and in-store: a great example of this is the trend for customers to use phones in-store to scan barcodes and compare prices in other physical and online shops. Brands are also using mobile to build loyalty through customer care and loyalty member tie-ins and offers. One key reason for this level and range of usage is simply that mobile devices are carried with you almost constantly. This allows customers to engage with brands whenever they want. When added to the fact that it provides a gateway between the physical and digital world, mobile then becomes a powerful tool for creating connected multichannel brand ecosystems that can deliver real customer value. The rapid rise in mobile might suggest that customers are delighted with the experiences they receive. In many cases however, this is not the case. In fact, mobile has grown quickly despite some of the poor services offered. In the world of apps, 90% are deleted after 30 days , 38% of people are not satised with the app from their favourite brand and, in app stores thousands of disgruntled customers express their negative views, especially when it comes to the tablestakes of technical stability and basic features and functions. The mobile web does not fare much better, with half of the surveyed 18-24 year olds annoyed that some website designs did not work at all on their phones . Four out of ve of the UK top 100 retailers do not have mobile-optimised versions of their website even though people spend threeand-a-half times longer and look at three-and-a-half times as many pages on optimised sites , compared with non-optimised. Many optimised sites still use a formulaic approach that does not reect the brand or connect with consumers properly in the channel. Most brands would not consider using another brands design and just change a few colours for their main website, but in the mobile space this is still common.

Will Mobile Continue Its Rapid Ascent?

We believe that the demand for mobile services and their commercial importance will only increase and quickly. This is not based on hype or because it is the in thing. We have identied four key areas that have inuenced mobile growth, and analyzed how these will continue to stimulate future growth.

1. Rise of Smartphone and tablets ! ! ! The rising importance of mobile has been propelled by the explosive sales of smartphones and tablets that give people a far richer mobile experience. This trend will only continue, moving rich mobile experiences into the mainstream. Sales of smartphones in the UK leaped 70% between 2009 and 2010 , and this growth will continue as more people see the value of smartphones and as prices are reduced particularly those running the Android operating system. The rise in tablets has been even more rapid. They were virtually non-existent 18 months ago, yet worldwide tablet sales in 2010 almost hit 16m, and this is expected to grow to 56m by 2012 , with many more players entering the space.

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2. Availability of cheap, fast data ! ! ! ! The rise of mobile has been driven by the availability of cheap data bundles and the roll-out of 3G across the UK. In future, the launch of LTE/4G in 2014 will mean greater mobile broadband speeds and even more mobile growth. However, currently many operators infrastructure are struggling to cope with the ever increasing trafc and bandwidth.

3. Awareness of mobile Services ! ! ! ! ! ! ! ! ! Many mobile solutions fall at the rst hurdle because rms fail to pay proper attention to launching their services, resulting in very poor awareness. A great example of this is apps that are released without sufcient publicity. This is a real problem when app stores are so crowded. For example there are 350,000 apps in the Apple App Store alone. To compete with the saturation, smart brands are looking to how best tag apps,categorize, and drive participation with reviews which increase visibility. In addition, some rms such as Tesco and Lloyds use major ofine and online ad campaigns to promote their mobile offerings. As this trend continues, mobile services will continue to move from niche to mainstream.

4. Better Technology ! ! ! ! ! Mobile technology has developed rapidly. In the past few years, a range of improved technologies such as cloud-enabled and location-based services has started to deliver richer and more complex experiences. Over the next few years, technology will continue to enable ideas to come to a life. Some of the key developments will come in the way of more focused platforms and standards that will help combat the costs of publishing and

! ! ! !

managing multiple apps in a fragmented operating system market. In addition, credit card companies, telcos, and start-ups have started to introduce NFC-enabled mobile wallets that will ultimately bring the smart phone and all of its software closer to brick and mortar retail purchasing and value-added services.

What are the challenges in creating great mobile user experience?

We believe the opportunity is there for brands to make mobile a central, or even leading, aspect of the overall customer experience. However, to do this, brands have to create great mobile experiences and this comes with a number of key challenges. Match your offering with your audience ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Understanding your audience is the rst key step. This is particularly important in mobile as audiences are fragmented by form factor and usage which are also heavily inuenced by culture and geography. In the UK at a macro level, feature phones account for 70% of the market but this is falling . Smartphones account for the remaining 30%, but this is fast on the rise and also accounts for the vast majority of mobile interactive usage. The smartphone market is then further broken down by a number of platforms including Apples iOS, RIMs BlackBerry, HPs WebOS, and Googles Android, which each come with their own considerations. Traditionally, the UK has been a heavy supporter of the Symbian OS, which Nokia announced it will be sunsetting in favor of its new partnership with Windows Mobile 7. It will be interesting to see how much of Nokias base will make the transition or defect to one of the other three leading platforms. Tablets are a closely related form factor, and are the new golden child with skyrocket sales. To put it in perspective, it took three months to sell a million iPhones but just 28 days to sell as many iPads . Whilst phones and tablets are the dominant form factors, our very denition of what constitutes a mobile device is also expanding. For example, cars are now becoming another un-tethered mobile device, delivering personal, on the go mobile experiences straight to your vehicle. On top of these form factors lies a range of mobile behaviour that needs to be considered. This includes lling spare time, performing small jobs that are ideally done on the go, and offering a third screen at home. Mobile behaviour differs again for tablets, which tend to be more of a shared or family device and more often used in specic locations such as on the couch, in the plane, or in the bedroom before sleep. Understanding mobile form and behaviour at a macro level is important, but the real value comes from detailed understanding of your own audience and unveiling key insights. From here truly valuable offerings can be created. The best mobile offerings provide real customer value, utilize the strengths and unique capabilities of mobile devices and forms part of a well integrated and consistently branded multichannel ecosystem.

How it gets crafted ! ! ! ! ! ! ! ! The range of front-end technology is broad and changing by the day. They include native apps, hybrid apps, HTML5 Web applications, NFC, augmented reality, 3D, and good old SMS, to name but a few. These larger decisions have a direct impact on how the consumer obtains, interacts, and perceives the solution. For example, typing in a url inside of a smartphone browser is very different than downloading an app from an appstore. The end solution may accomplish the same ! goals, however the consumer expectations can be wildly different from ability to access information ofine, perceived cost/value, and expected speed and performance.

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From the business point of view, a deep understanding of the technology is not necessary. What is important is choosing the right technology, crafting the right experience on top of that, and understanding the context and expectations around that solution to be sure it is truly integrated into customers lifestyles and meets their expectations.

What the customer doesnt see ! ! ! ! ! ! ! ! Delivering richer more valuable mobile experiences frequently requires access to back-end systems such as product catalogues, e-commerce systems and account information. Too often, companies do not consider their back-end architecture sufciently early. As a result, mobile experiences that rely on good access to back-end systems are often delayed or never come to life at all. This clearly highlights the need for a service orientated architecture, separate business/data and presentation layers, and clean APIs to create a mobile friendly environment. Just because the screen size is small, that doesnt mean that the tech challenges or costs are also tiny.

Delivering Great Mobile Experience

[App vs Web App]
Customers are demanding more and more great mobile experiences on phones and tablets. To meet this need, brands continue to look for guidance on how to best deliver these experiences, whether through the web or apps. The web versus app debate is a long-lasting and confusing topic, and is exacerbated by rapid changes in technology, bafing terminology, and a plethora of options. Here we want to provide a simple, concise, and business-friendly summary of the different delivery mechanisms currently available, along with some guidance on how to pick the optimal solution for your situation. Next we will discuss some mobile delivery option

Mobile Web
Mobile websites are simply websites that are accessed via a browser on a mobile device and delivered to the user in a mobile friendly way. They can be created in a variety of ways including transcoders, Software as a Service (SAAS), CSS styling, and bespoke builds, with each having their own particular strengths and weaknesses. As mobile sites work cross-platform, and on both smartphones and feature phones, everyone with an Internetenabled phone and a data plan can access them. Cost to build and maintain mobile websites can vary widely, but due to their reach they are a low-cost method in terms of cost per potential viewer. The transcoder option in particular provides a fast, inexpensive way that has been very popular with retail, content, and travel brands in the last few years. And like any web option, maintenance is relatively easy with no need for app store submissions. Access is also easy from the user perspective and is as simple as typing a URL, doing a search, or accessing a book-marked icon from the handset. The key downside of mobile websites is that the richness of the experience is not as high compared to the other options. Aspects of this experience include page load speeds, responsiveness, limited range of gestural interaction, access to phones features, and ability to work ofine. There are also two specic points to note about transcoders. Firstly, they can cause painful dependencies on dotcom infrastructure. Secondly, they are often the least optimized user experience as they are typically a subset of what is on dotcom instead of being a truly optimized or enhanced experience. As such, brands that use transcoded solutions for quick time-to-market presence often wean off of this approach when evolving their mobile experience offering. Overall, mobile websites strengths lie in their ability to offer a reasonable (and growing) level of experience to a wide audience, by offering the bulk of the content and basic transactional functionalities the web has to offer for smartphones and tablets. A good example of a strong mobile website is Best Buy, as illustrated below.

Native Apps
At the other end of the spectrum sit native apps. These are specic to a platform (e.g., iOS, Android) and are downloaded from stores such as the Apple App Store and the Android Marketplace. The large majority of the code and assets for these apps reside on the phone, but often interact with the web through service requests. The key strengths for native apps lie in the richness of the experience. Despite the much-lauded rise of HTML5, the current situation is that native apps provide the richest experience, especially in demanding environments such as immersive games. This rich experience comes in the form of the sophisticated gestural interfaces, instantaneous user interface response times, ofine capability, and full integration with all of the phones features including the camera, GPS, accelerometer, chips, and NFC. One consequence of this is that general market statistics suggest that native apps currently convert 30% more effectively than web for commerce. Marketers have taken an early liking to creating branded apps that showcase unique ways to interact with the brand. However, many have also failed with experiences that dont pose enough differentiation to stand out in the app store or lack the inherent value for the consumers to make the effort to install and use. The presence on an app store (especially Apples) can provide a real advantage. Many consumers start their search and browse for a mobile experience in the app store. The dashboard of categories, lters, and search provides a powerful resource for consumers to nd a specic mobile application that serves their need and/or enables them to simply stumble upon something that looks interesting. Visibility and promotional value can also get amplied if the app has great feedback or is actively promoted as recommended or most popular. Gaining visibility on the app store is often a case of marketing, timing, and the follow-on headwind of being on the front page. For each of these positive app store considerations, it is also important to be wary of potential risks. While they can benet from ndability, the size and number of stores can result in apps getting swamped and lost. It is also important to note that some consumers still prefer the web for nding mobile experiences, especially where data rates are high such as in Brazil. Finally, the noted pedestal effect can have a negative impact if customer reviews are poor and easily viewed. The clear-cut downside of native apps is that they are platform specic. A single platform deployment therefore limits your reach to people with a smartphone on the right platform and potentially on the right version of the platform operating system. There are currently six major platforms in the market iOS, Android, RIM, Microsoft, Bada (Samsungs newest foray into the market), and Symbian (now transitioning to Windows, but with a great amount of current marketshare). These platforms have constantly evolving operating systems, and so brands need to carefully consider which platforms they want to use, as producing and maintaining experiences across all platforms is expensive and complex. To address this, brands need to focus on those platforms that deliver return for both the business and their customers. Many service and software rms have also built frameworks and authoring suites that provide various efciencies and successes. Frameworks including Adobe AIR, Kony Solutions, Net Biscuits, PhoneGap, and

Sencha Touch are all now competing in this space, and we continue to monitor their progress. It is certainly the case that if they do succeed in lowering costs of producing cross- platform native apps, a rebalancing in the debate will once again take place. The nal consideration for native apps is that app store owners act as gatekeepers. Apple in particular is strict with their app submission process, which includes rules on sharing data and a 30% cut of all revenue. On the ip side however, tight gatekeeping has led to a higher quality of iOS apps compared to the more open Android market. Overall, native apps are great for customers looking for mobile experiences from app stores, and also provide the fastest, slickest experiences with the fullest functionalities. A hugely popular example is Angry Birds, as illustrated below.

Web Apps
Like mobile websites, mobile web apps are accessed via the browser, but they also have some important differences. For a mobile website, each time a new page is accessed, the device will download all of the page contents (including HTML, CSS, JavaScript, and data). For a web app, the majority of the download occurs on the initial visit and is stored locally. After this, only data is accessed from the web. This may sound like techno-babble, but it has some important real world impacts. At a high level, web apps sit between native apps and mobile websites in terms of key factors such as reach and experience. Whilst some tailoring is needed to optimize the experience across platforms, in general, web apps work on all new smartphones. This means that cost to build and maintain experiences on multiple platforms is typically lower than a native approach that requires separate designs and builds per platform. And like mobile sites, updates are easy for users and publishers alike, with no need for submissions or approvals from app stores. The web app tech approach and developments in HTML5 have also led to a richer and faster experience compared to standard websites. The experience is so good that it is quickly closing the gap with native apps. However at present, there is still a gap in terms of responsiveness and access to certain phone features such as the camera. In some situations this gap is negligible, but for older platform versions and certain demanding environments, such as games, it is still there. The other downside, especially when compared to mobile websites, is that the initial download is quite large. This typically requires a good connection ideally WiFi and can put off some people from downloading the app. Overall, web apps provide good experiences across multiple platforms, but still do not meet the full richness of native solutions in demanding environments. A good example is YouTube, which used to be served as a native app, but is now pushed by Google as a web app, as illustrated below.

Hybrid Apps
From a user point of view, hybrid apps appear just like a native app and are downloaded from app stores. However, as the name suggests, they use a hybrid of native and web technologies. This is commonly in the form of a thin native shell with web technology in the centre. Compared to native development, they are easy to build and maintain across multiple platforms. This is due to the small amount of platform-specic native coding that is required and because the web part of the app can be largely used cross-platform. This technological approach also makes it easier to convert to a 100% web experience if desired, as only small a amount of functionality is built natively. The experience delivered is rich and benets from access to all of the phones native features through the native shell. The fact that both technologies are available means that native functionality can be used selectively where it provides most value, enabling great balance between cross-platform exibility and richness. Hybrid apps are easy to maintain for users, as they see updates right away thanks to the web technology. Only changes to native code would require resubmission to app stores. Finally, hybrid apps benet from being able to go onto app stores and benet from a smaller download size. The only note of caution is to ensure certain rules are met as Apple in particular has been denying hybrid apps that offer no further value than the mobile website. Overall, hybrid apps are gaining popularity as they benet from the best of the web and native worlds. A good example of a hybrid app is the Facebook app, as illustrated below.

Industry Consideration
It is always valuable to look at trends occurring in various industry segments and learn from how others are tackling the app versus web debate. The number of variables in business means that no two situations are ever the same and there is no one right answer, but nevertheless, these scenarios can help provide a useful steer.

1. Retail Sector ! ! ! ! ! ! ! ! ! ! ! ! ! Retail is currently the hottest area for mobile innovation and growth, as customers are showing their desire to research products both in-store and out-of-store, share information, take advantage of couponing, and transact through mobile devices. A good example of a retailer using a full array of delivery mechanisms is Target in the U.S. They have a mobile website to gain maximum reach, especially for non-smartphone users. In addition, they have rich native apps for the iPhone and Android that can be accessed either directly through app stores, via a link on the mobile website, or through a text message, which provides easy ndability. These native apps provide slicker experiences, and enable functions such as scanning of barcodes that a mobile site could not do. There is also an iPad app that provides a unique shopping experience that best leverages the increased size of the screen. It is important to note that across all these different mechanisms the look and feel stays constant, helping the customer to have a common brand experience regardless of how they interact in the digital space.

2. Content Publisher ! ! ! ! ! ! ! ! Another interesting scenario is in content and publishing. Apples strict submission process has encouraged many publishers to pursue an HTML5 web app approach. This includes many mainstream publishers including the Financial Times whose new web app has led to more customers and increased pages viewed per session compared to the old iOS version. Similar to the Target example, the consumer is again given the option of a standard mobile experience or a richer experience when they rst enter the site with Target this was a native app and for the Financial Times it was a web app. In both cases the customer is asked to put effort in, and is rewarded with a better experience.

3. Financial Service ! ! ! ! ! ! ! ! ! ! ! ! ! ! Financial services is another area that is investing heavily in mobile right now. Many of the large banks use the full arsenal of delivery mechanisms, both to ensure the best experience for their current customers and to acquire new customers through marketing. Bank of America, for example, provides a mobile website for basic banking, text banking for quick functions such as balance enquiries, and hybrid apps providing rich, personalized experiences. The hybrid approach allows for Bank of America to easily operate across multiple platforms, as can be seen by the huge number of platforms supported iOS (iPhone and iPad), Windows, RIM, Palm, and Android allowing them to provide a rich app experience for their broad target audience. This heavy investment across delivery mechanisms can only be justied because of the huge importance of mobile to their business and the huge variety of users within their target group. For these companies, and (not or) is the key word as they continually look to meet the needs of the customer and use technology to provide the best experiences to the broadest reach of people.

Thin Is In: The Mobile Digital Wallet

Whats in your wallet? At the very least, most of us carry some sort of payment method, whether its a credit card, debit card, or cash. But you probably have a bit more loyalty cards, business cards, receipts, insurance cards, IDs, subway tickets, event tickets, and the list goes on. When we talk about what a digital wallet is, its not just a way to pay with a device. Its taking that actual wallet in your back pocket, with all of its contents and associated behaviors and integrating it into some type of digital device. Most often, that device is a mobile phone, though it doesnt necessarily need to be. And the phone has already started to replace the wallet. From digital family pictures to an online banking app, the phone and consumer behavior is adopting the new digital wallet. Lets talk about digital wallets through the eyes of the consumer, how they t into the consumers everyday lives, and what we can expect to see in the near future. Much of how we dene the digital wallet is a way to pay with our phones. But it goes beyond that. Just like with a physical wallet, its an ecosystem of applications and experiences. Lets look inside the digital wallet and break down the individual aspects within it, including secondary functionalities that help us spend our money.

Payment Methods
The payment piece is at the core of the wallet. But in order for digital wallets to be readily adopted by the consumer market, marketers and developers will need to gure out exactly how to process the payment and in many cases provide a worthy incentive to change from the superuous, but simple plastic swipe we often do today. All other aspects of the wallet enhance the experience, but Payment Method is compulsory. Take these two examples of how: 1. PayPal. ! ! ! ! ! ! ! PayPal has made its mark by serving as the middleman for online payments, and has now taken that model to real-world payments. Through a partnership with Bling Nation, PayPal is making strides in digital payment through the use of NFC-enabled stickers (well discuss this more later), which allow contact-less payment on any type of mobile phone. They give consumers the ability to make quick, simple purchases on shopping sites with their existing PayPal accounts. Those accounts can be tied to credit cards or debit where the real prot is.

2. Starbucks. ! ! ! ! ! ! ! ! Starbucks is a retailer that has embraced the mobile retail space. Their app lets consumers load Starbucks gift cards onto their phones and reload from their debit cards, credit cards, or PayPal accounts. In essence this comes off as mobile payment to the consumer when it is actually making debits off of a loyalty/gift card program. Once loaded, customers can scan their phone using a POS system at a Starbucks counter and easily pay in a contact less way. Extending the experience beyond payments, this program also allows its users to build loyalty points that can be redeemed for free coffee or coupons, thus retaining customers and increasing return visits.

Financial Managements
Financial management (e.g., Mint.com) is a way to easily manage nances on a mobile device, not necessarily purchasing or paying. Its one of many tools to help users better manage and spend their money based on their payments and transactions. Mints model is to push relevant advertising from 3rd parties that are best relevant to a customers nancial situation.

Coupons
Coupons (e.g., Groupon, ScoutMob) and check-in incentives (e.g., shopkick) tap into the social, communal idea of group discounts and shopping incentives. Many of these services allow a consumer to activate a coupon (often through a store WI-FI or phone GPS) that exists within their digital wallet, or check in at a store to receive promotions or discounts. By providing this incentive, retailers hope to draw more consumers into their stores.

Comparison Shopping
Another tool to help assist users to spend their money better is comparison shopping. Now, the digital wallet can scan UPC or 2D barcodes in a store to nd the cheapest price, customer reviews, or other options such as product demos, related content, or additional inventory. Red Laser has been the leader in this space and was quickly acquired by eBay. The carriers are becoming emerging players in their ability to pre-load their mobile app scanners on devices prior to customer purchase.

Tickets and Passes

It has been interesting to watch the digital wallet transform ticketing and transit functions (e.g., public transit passes) and check-in (e.g., airline check-in, sporting events) standpoint by using wave and pay instead of traditional methods. However, North America has been slower to adopt these methods based on more fragmented infrastructure (carrier and networks) and less dense urban areas that require transit for daily commutes. Ultimately, it may be these applications that offer the most benet of convenience at the POS, which is why it will be critical for NFC to be tied to other value-added experiences to drive consumer adoption. These examples prove that the technology to make digital wallets happen is here, but are consumers ready? Oracle reports (as shown above) that the credit card is one of the top items that will be replaced by mobile phones. If you look at the top three digital cameras, music, and GPS those are already on our phones. How do we gure out how to make it real, useful, and easy?

THE NEAR FIELD COMMUNICATIONS (NFC) CHIP

What is it?
! ! ! ! ! ! ! ! ! ! ! ! ! ! Current efforts like the pay pass or the wave and pay (introduced by credit card companies) were the rst introduction a contactless payment through Radio-Frequency Identication (RFID) tags. NFC chips are a new standard of RFID tags that offer a security layer that allows secure transactions through any device. In many instances, NFC and mobile payments are seen as synonymous, but they are not. The NFC chip is really a technology means with which to communicate and store data. And if we think about communicating, we often forget that there are other ways to apply whats already out there in regards to passing info from one point to another like scanning bar codes !with your phone or presenting QR codes from the phone to be scanned by a retail POS. Companies are also looking to use the NFC chip technology outside of the phone. For instance, BMW is thinking of using it within the key itself to allow remote starting, payments, and more. And, recent buzz about the digital wallet space is being heightened by Google and Apples announcements that NFC chips will become a standard feature in our phones.

What is its value?

! ! ! ! ! ! ! ! ! ! ! ! ! ! With credit cards and one-click online shopping sites, customers dont really want or need another way to spend money faster. And when we look at the difference between swiping a card and tapping a phone, theres not much tangible value added. But what the consumer does want is a new way to spend money wiser. The digital wallet has the opportunity to provide that a contextual, intelligent, relevant way to spend money. The benet of NFC chips isnt the ability to substitute a phone for a plastic card. The potential is in having intelligent computer chips, phones, and POS devices that provide a better, smarter experience for the consumer before, during, and after the shopping experience. These experiences can draw in the consumer before they enter the store through incentives (couponing) or support tools (list making) and continue the conversation after ! they leave the store by offering relevant, contextual incentives based on their purchase, more personal customer support catered to the products they just purchased, or relevant content to help them take advantage of the products full potential. This ongoing conversation between the retailer and consumer builds a cycle of brand loyalty.

The Players
Financial institutions, carriers, and retailers are all looking to own a piece of the digital wallet pie, and all three are critical in making the digital wallet a useful, seamless, everyday part of life for the consumer. Lets discuss what each one brings to the table, and what they still need to learn. Financial institutions. ! ! ! ! ! ! ! ! ! ! ! ! Financial institutions are a must-have for a truly integrated digital wallet. Without them, there is no digital wallet, because they are the players that have the actual ability to process your payment and offer credit card and banking services. Their motivation is simply to make money off of your money. But they are still offering non-memorable services for the most part. Their challenge is the plan of attack against the competitive set of other institutions which most often are held back by the lowest common denominator standards that all institutions abide by, and their dependent connections with retailers who accept that form of payment and house the equipment (POS) that the solution must be compatible with. Credit card companies, however, are now starting to make their direct play as American Express announced desktop and mobile app service Serve in Spring of this year, and Visa announced their digital wallet to arrive this fall.

Carriers. ! ! ! ! ! ! ! ! ! ! ! The digital wallet movement currently lives here for North America, and its the carriers that bring the networks and the actual devices into the consumers hands via our current post-paid culture. Theyre motivated to get the consumers recurring monthly payments because the more things your phone does, the more you rely on that network. The North American conundrum is that we have big carrier services (think: AT&T, T-Mobile, Verizon, and Sprint) that all offer varying numbers of devices and operating systems. These carriers are here to stay, so theyll need to adopt some sort of standard together. Currently, AT&T, Verizon, and T-Mobile (in process of being acquired) are creating a joint venture together called ISIS, a planned mobile payment network that will create a standard solution for both retailers and consumers. This system will use smartphones with embedded NFC chips for contact- less payments.

Retailers. ! ! ! ! ! ! ! ! Retailers are the key inuencers when it comes to driving consumers to use the digital wallet, because they have the most direct contact with the consumer through day-to-day transactions. Retailers own the shopping experience and their challenge remains the same as its always been to differentiate themselves from other retailers and drive sales. To do so in the digital space, they need to embrace the idea of everywhere shopping, the multi-channel experience. However, their often razor thin margins make it difcult to make larger technology-based investments, whereby the store multiplier effect greatly increases costs and keeps operating budgets small.

Startups and digital players. ! ! ! ! ! ! Startups and digital players are a new breed of player that is gaining fast on mobile and the digital wallet, such as Google and Amazon that thrive on technology. The growth of cloud services, increase in dotcom spending, and bridging between dotcom and brick and mortar is opening up a new opportunity space that is not tied to antiquated store hardware. They also wisely leverage the Y generation and early adoptors that is ready to change shopping habits.

Considerations
As the digital wallet becomes a reality, there are two things to keep in mind:
It must be adoptable. Similar to the digitization of the telephone, digital wallets may start simply by using an easily adoptable pay now button. Value-added services will likely be critical in getting the user connected with benets beyond an already convenient swipe n pay routine. However, avoiding the clutter will be key for eliminating frustration and paving the way. Our digital lives are becoming increasingly cluttered between emailing, chatting, social networking, blogging, using apps, and more. Its important to avoid a bloated phone. At the end of the day, the wallet is something that is a day-to- day necessity so it must stay slim while becoming ever more convenient, intelligent, and relevant.

Conclusion

1. So, could mobile lead your customer experience? The simple answer is yes! And even if it does not lead, it will without doubt play an increasingly important role. There are a series of challenges to achieving success, but consumers are demanding it and the opportunities are huge, so the time to act in a serious fashion is now.

2. We have seen that there are a range of delivery options available, and that each have their
pros and cons. This is summarised in the table below. (High, Medium, Low) Mobile Web Audience Reach Richness of Experience Affordability to build/maintain Ease for User Findability Phone Feature Access Proprietary Control High Low High High Medium Low High Web Apps Medium Medium Medium High Medium Medium High Native Low High Low Low Medium High Low Hybrid Medium Medium Medium Medium Medium High Low

There is no silver bullet to the web versus app debate. The optimal delivery mechanism depends on your customer, the business needs, and the experience you want to deliver. However, more and more the answer is not app or web, it is app AND web. I hope this paper has given you a primer on the landscape and also removed some of the confusion. I also hope it will allow you to take the initial steps in choosing the mechanism(s) to deliver a mobile experience in the optimal way. And since mobile is changing fast, an approach of build and learn is essential. One retail VP said it best in a recent interview: Its progress over perfection.

3. There are complex questions that still need to be solved. Financial institutions, carriers, and retailers need to gure out how to work together. They need to gure out how to get enough consumers to use the digital wallet and enough merchants willing to accept mobile payments. It is dog-eat-dog, while co-operation is probably the best approach as this space is thwart with 800 lb gorillas that have to either work together to move things forward or be left behind. All the while, never forgetting that the user experience must remain easy to use and intuitive. This is where Apple may have enough edge in a mature, best-in-class, mobile ecosystem (devices, apps, and app store) and brand equity to get a jumpstart on a bigger carrier conglomerate, or perhaps they will be the spark that ignites ISIS adoption ... all too exciting to watch unfold. At the start of this paper, we asked, Whats in your wallet? But it seems that the question is really, What IS your wallet? The technology is here. Now we need to decide what the wallet will be whether a phone, a key, intelligent credit card, or more and gure out how to make that digital wallet work not just for the consumer, but with the nancial institutions, the carriers, and the retailers as well.