Google should think before it unloads its Wallet

Google has a bad habit -- a terrible one: it leaps before it thinks. That's precisely what's happened in the company's adventures in NFC-based payment systems within Google Wallet. While this gave the company a short-lived PR advantage against Apple [AAPL] and the iPhone, that advantage failed to translate into anything of any significance whatsoever for most human beings on the planet.

Bad habits

It's a Google thing.

The company's haphazard approach to innovation has seen it use its market advantage to launch high-profile services in numerous fields. Each time it does it likely takes the oxygen out the room for the new market segment, driving smaller players out the business as they try to battle the media, online search and discovery advantages of the search giant.

The company is a giant, but a haphazard one. That's why a recent study found the company shuts down one out of every three services it launches. The lumbering monolith the company will eventually become seems to have better luck with services created in-house: but if you get acquired by the company your outcome seem less likely to stand the test of time.

Add to this that when the company prances into a sector competing segment players will see their business plummet. That may simply be an opinion, but be logical: what businesses ever do well in direct competition with one of the world's largest corporations? I doubt there's many, if any.

Then there's the services the company does manage to attract converts to but then shuts down. Google Reader, for example: this service became so popular it starved other solutions from ever achieving their more modest ambitions of market velocity or scale. That's bad for consumers of course, as now Google Reader's set for closure, they are challenged to find a tried and tested alternative they can trust.

That's what happens when an uber-powerful company doesn't think things through.

Google Wallet is empty

The problems with Google Wallet this week saw the leader of that initiative leave the firm. This reflect a host of challenges Google faces in trying to make NFC-based payment services on mobile phones popular. The company jumped into that pool way before NFC became truly ready for prime time, ignoring a few salient challenges as it skipped into the new sector:

  • Payment systems aren't broken;
  • The lack of NFC-capable terminals;
  • The lack of a cohesive national or international standard for NFC;
  • Beyond technologists, consumers are resistant to NFC;
  • Consumers (quite rightly given Android's track record) don't yet trust mobile networks or device security.

Even Samsung's SVP mobile communications, Hankil Yoon said: "In Korea I think there are tens of millions of NFC devices already in the market. (But) consumers, they don’t know how to use it. They don’t even know they have something called NFC that they can use for transportation and mobile payment."

I sometimes speculate the only reason Google raced into NFC was because it thought (as I did) that Apple intended to enter this space. You can even imagine it being whispered about at Apple's board meetings around the time of the original iPhone launch, if you like. You can imagine anything.

Google didn't commit. It failed to educate its audience, and so far failed to popularize the technology in any significant sense. It produced a few videos and press conferences, but didn't work to meet an existing human need. The great authority on what you will find online clearly thinks that if deigns to introduce something it must be good, classic "build it and they will come" stuff -- except the people didn't come along for that ride, at least not so far -- though the company apparently hopes to extend its list of participating retailers in hope, perhaps, of summoning a new church of participating consumers.

An Apple approach

Apple meanwhile has been quietly working on payment systems for years, hiring in some of the world's experts on NFC and (presumably) other potential payment technologies.

Except, payments are more than technology. Payment underpins most people's experience of the world we're in. We pay for food, drink, and fun. We're used to using cash and have used it for thousands of years. It's only relatively recently we began to use credit cards.

Apple differs from Google because it designs things with the end user in mind.

This is why Passbook works, at least enough to make the tech interesting to airlines and larger retailers. Passbook enables retailers to offer limited payment systems in conjunction with voucher deals and other added-value items; it also accelerates ticketing and door entry at public spaces.

If deployed in conjunction with a tried and tested payment system (iTunes) Apple has quietly built a system which can be extended not to replace the way we use cash to make payments, but to augment it.

Apple understands that innovation needs to be applied incrementally. It has also put together an answer to consumer concern for mobile device security. It isn't trying to stand in the middle of every interchange, selling advertising based on your purchasing patterns as it does.

Google now stands as a company that tried and to a large extent so far failed in mobile payment systems. Apple remains untested. In the event it does choose to enter this sector, then it can do so gradually, incrementally and effectively, and learn from Google's mistakes.

This particular adventure is working out pretty much just as I predicted some time ago.

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