2007 Predictions 8 and 9

Here’s my penultimate burst of predictions for this year – don’t forget to add yours in a comment or link from your own blog.
 

Prediction 8 – Mobile Payments
 

Carlo has already given his take on mobile payments next year and to a large extent I agree with him that the future probably lies with contactless payments (such as RFID) and not mobile payments per se. Most mobile payments are simply too complicated – far more so than credit cards or cash and thus fail at the operational level.
 

The other major issue that a new mobile payment system has to overcome is the classic chicken and egg syndrome, even though science has now shown that it must have been the egg. In this case, it means that it’s hard to build a user base if you have nowhere that they can use their new toy. And it’s difficult to get a merchant base until you can show you have a user base wanting to spend on that platform.
 

However, there is pain to be solved in this ecosystem – namely the 50% (or so) that operators charge merchants for billing users, normally via PSMS. If credit card companies can charge less than 5% and still remain highly profitable, it’s going to be hard for operators to maintain this stance against the power of market forces and possible regulatory forays by Government and Quango alike.
 

Given this pressure on the ecosystem, there is room for a new player to make great strides, especially if they can leverage an existing user base and if they also focus on maximising usage via P2P payments.
 

For me, this dark horse could be PayPal Mobile, who also have the substantial backing of the giant eBay behind them. They’ve been pretty quiet in the market up until now, but I believe that if anyone can make it happen they can.
 

So my prediction is that PayPal Mobile starts to get some serious traction in 2007, though the true potential won’t start to be realised until 2008 and beyond.
 

Prediction 9 – Location Based Services
 

I still believe!  But it seems like I’m only one of a tiny minority, with many operators and others having written it off as a dead loss.
 

We’re in a Catch-22 here though. Unless operators deploy LBS feeds at an affordable rate, we’ll never find the applications that users love about LBS. In the UK, they even charge in the wrong way, let alone too much, which make promising ideas like MoSoSo (Mobile Social Software) unaffordable to run.
 

This is a shame as there are certainly compelling use cases for LBS – navigation for one, though companies outside the mobile communications value chain have taken this market, which seems a big shame for the industry.
 

The argument against more aggressive deployment is that “we’ve tried that and it didn’t work”. Obviously not very Edison-esque, who reputedly found hundreds of ways not to make a light bulb work, before finding a way that did. I mean, if scientists gave up experimenting after the first few attempts we’d still be living as hunter/gatherers and maybe not even that advanced, as that lifestyle still calls for the invention of certain tools, like spears and pits to trap animals in.
 

My attitude is, so what if people don’t want to use LBS to find their nearest ATM? Рthough I could have told you if you’d asked. What use cases can we come up with that they will want, coz they are there?
 

This kind of innovation is unlikely to come from operators themselves, as it’s not what they’re good at, so the challenge is how we let loose the entrepreneurs on this and let them have access to location feeds they need to do their experimenting.
 

It would also be a great shame for the industry is the operators lost out by letting another technology determine location feeds.
 

But my overall thoughts for LBS is that outside a few trials, it’s going to be another disappointing and frustrating year. Don’t worry though, it’s time will come.

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