Death of the PC? You don’t have a clue what one is

Apple, Google and Microsoft have only just finished their events and we are now subjected to the usual fanboi articles from the press. Now, I’ve come to get used to this, articles that feel so unbelievable biased to one of these tech giants over the other two, often stupidly so, but recently, the articles themselves just are not understanding the basics of technology or what’s been going on over the past decade, let alone what appears to be happening right now.

My main gripe though in this post is the lack of understanding what a PC actually is. It seems that journalists and fanbois alike, think a PC is a 1990s desktop PC, that’s simply crazy. In addition, people like gartner and forbes with their market analysis constantly needs to re-asses the definition of a PC in the tech market, simply because PC in its pure form covers the vast majority of devices available.

Mobile is PC

First off, let’s just clarify one thing, a mobile phone or a tablet is a PC. PC = Personal Computer, so mobile devices if anything fit that terminology much more closely than what everyone it seems thinks a PC is, a good old 1990s desktop. Mobile is so personal, and it’s a computer, so it’s a personal computer.

As soon as you grasp this, it becomes clear why Microsoft (who seems to be forever linked with desktop PCs) is starting to make its own hardware, specifically aimed at “mobile” and more importantly, expanding that market away from where the likes of Apple and Google dominate. By that, I mean pure “mobile”, as in more focus on personal, less on the computing aspect.

What’s been going on

Since Apple really turned a mobile phone into a form of PC, the market has been shifting towards smaller, more personal devices, and as such, removes the need for homes etc to purchase a good old desktop machine. What has been a complete success is actually removing functionality and reducing computing power. I for one could do more with an original windows mobile pda device than I could do with an iPhone for example. Hell, I used to be able to control servers from that thing. But, the usability of it wasn’t simple, and to be honest, the vast vast vast majority of users use nothing more than a web browser and a handful of simple applications on mobile devices. Because of this, Apple made another great innovation, and that was simply making the phone bigger, so it was easy to use on the sofa. Enter the iPad.

Tablets really are where the majority of day to day users now carry out their computing (if not still on their mobile phone). The reason is because most tablets again, with the web, and access to good apps provides everything the majority of users understand. However, sales if iPads etc seem to have reached that point of market saturation, and that’s not a surprise, end consumers cant keep on buying, buying and buying the same thing. In essence, the PC market is now moving away from desktops to tablets, but that’s still the same PC market.

Microsoft trying to be different?

With the release of Windows 8 and the Microsoft Surface, Microsoft essentially said “yes, we are very late to mobile devices, but we have a vision were these devices are just as powerful as the desktop you used to have”. Now the reason this isn’t that popular is because the vast majority of users doesn’t need that power or complexity. Hell, the tech journalists don’t even understand that’s what Microsoft is trying to do, nor why.

However, the Surface Pro device hit some notes with large chunks of the mobile PC market, and that chunk was focussed around productivity. Though the majority of users out there don’t need to be productive, there is a market for people who are productive and want productivity from their devices. How many people do you know (in business) who turn up with their iPad. They may make some notes on there, but then when it comes to carrying out anything worth doing, pull out a laptop that appears to be a number of years old? Essentially that user is now carrying two devices around with them? That’s not the point of tablet or mobile computing is it.

Microsoft therefore tried to provide for that niche market, in the hope to get a foothold I believe and then expand that to us daily users. It’s taken until Windows 10, and the most recent launch event from Microsoft to really start to show how effective this approach is. With the Surface Pro 3, and Windows 10, Microsoft delivers a device that is Mobile. Its not an old desktop vision for the company or Windows, rather its Mobile and personal first, however with no computing or productivity compromising.

Going forward

Who knows what the market will do. However, Microsoft must be hitting the right notes with sales of Surface Pro devices doing well. You have to just look at Apple and the iPad Pro to see that Apple and Google are aware that Microsoft approach will see them selling devices and potentially taking away market share from them both. After all, why carry an iPad and a Laptop? Or have an iPad and an old desktop machine at home or work when you can have a Surface Pro tablet that is a tablet, your laptop and with a “dock” accessory, replaces your desktop machine too. That’s three devices in one?

For businesses, Surface Pro allows them to provide a single device to their employees, and takes away an utter nightmare regarding provisioning of hardware, policies, security, ISMS etc etc. For consumers it brings the same common sense approach. Why have two/three devices? Why not have a tablet that is my laptop and desktop? Apple and Google have spotted this is a real threat, hence the release of their own “pro” versions of their tablets, though neither has the innovation here or capability to compete with Microsoft Windows 10 or its power on a mobile tablet.

We see that Microsoft is going further with this, especially with Windows Phone 10 and “Continuum” enabling your Phone to replace your desktop with the simple connection to a dock device! That’s your phone powering a real desktop scree,, keyboard and mouse, allowing any user to be productive with just their phone. Enter universal apps from Microsoft Windows 10 and you really see that Microsoft is banking on mobile pcs as actual computing productivity devices, not just personal devices. This theme continues with Surface Book, a laptop first, that can be your tablet (detach the screen) or desktop replacement.

What’s clear, is that the “mobile” market is the PC marketplace, and that mobile appears to be now embracing the need for productivity and computing power. With the market now moving that way, is Microsoft on the right path to take pole position in our computing lives again? Is Microsoft devices along with Windows 10 on the right path, which is all about mobile computing experiences across a range of devices, providing us with real freedom of choice on how to carry out our computing activities while not compromising on productivity or power?

In a recent article in the daily telegraph (Best of luck Microsoft, but the Surface Book isn’t going to save the PC) I couldn’t but think “Oh my God this guy just doesn’t have a clue”. If you think a laptop is a traditional “PC pitch” from Microsoft then you don’t have a clue about what has been going on, what a PC really is or what we are seeing from the tech giants or the marketplace. To be fair though, graphs showing PC sales don’t get it either, they focus on traditional desktop machines, which is a narrow view of the PC market.

One thing we must also remember is that a desktop is easy to upgrade. Many many many consumers out there have old desktop machines and simply update them. The same can be said of businesses, with simple upgrades to RAM, most desktop machines have their life extended quite considerably. Throw into the mix that you can still run Windows 10 on these devices and why do you need to buy a desktop as often as any other device.

The traditional desktop may not be the entire market anymore, but as for the “PC” market, it is simply growing and growing with many more devices delivering personal computing experiences.  Dominating the PC market is still the playing field, the devices just look different!

Will HCE revive NFC mobile payments? No.

As of late there has been a lot of press coverage regarding HCE (Host Card Emulation), which in a nutshell allows devices to make NFC based mobile payments without needing the mobile operators secure element on the device. Both VISA and MasterCard are backing this new approach, in the hope that finally, they can kick start mobile payment offering with NFC, effectively locking merchants back into the card schemes for mobile. Google is also heavily behind HCE, because they need a way of getting their Wallet distributed on actual devices and networks. Google has already had a rocky time with NFC, supporting it, then ditching it, only to now attempt to bring it back to their offering through HCE.

There are many companies pinning their hopes to HCE, touting their solutions and the promise of mobile payments. But is HCE really the saviour of NFC based mobile payments, or is it simply the same old issues dressed up in a new party frock?

 

Secure NFC in the cloud

Effectively HCE allows secure details to be stored in the cloud. This makes a lot of sense if you want to bypass the mobile operators and effectively quash their mobile payment offerings (ISIS in the USA and WEAVE here in the UK). But does it actually add any value for the consumer or for the merchant? Is there actually any real difference? The answer is pretty much no.

If you are using the solution in its pure form, then your phone (no matter how it gets details, from the cloud or a secure element on the device) will broadcast card scheme data to the merchant’s terminal. No matter what that data is, it is being broadcast and is data that is used to complete the payment. This is actually very powerful if you are looking for mass distribution, potentially. I say potentially because though there are businesses accepting NFC contactless payments, they are still small in their numbers. In addition, the merchant still has to opt into accepting contactless payments – and it is worth noting that contactless payments in pure card form are not the same as contactless payments using your mobile phone. In many cases the “handshake” is different requiring businesses to invest yet again in contactless for mobile phone. Do we really think SME owners will continue to invest in technology for zero benefit to their business?

So does HCE make any difference here? No…

 

Availability

HCE and NFC are only available on Android based devices (and not all of them). Though Windows Phone 8 supports NFC, it is locked very much into the Secure Elements, so no HCE support there. If we then look at the most successful mobile smartphone out there (iPhone), we should note no NFC or HCE support (and it doesn’t look like there ever will be). So with this in mind, you are only available to customers on 1 of the top 3 mobile platforms. Though many will say that Android has the lion share in the mobile world, it’s worth noting that they are a distant third in their share regarding mobile web being used. This indicates that the majority of Android users are not embracing all the features on their smartphone, and as such, these probably are the same users that will not look to be early adopters of any form of mobile payment.

Essentially, the consumer base that could potentially look to HCE and NFC payments is quite limited.

 

The customer experience

Many articles will talk about adding value into the mobile phone payment option, but when we do this, any distribution advantages you may have due to card schemes and contactless being accepted vanishes. You may ask why, but the fact is that the acquiring banks (the people who actually operate those contactless card devices) will not be accepting data regarding a discount, or loyalty scheme. To be blunt, they simply can’t accept that data as it’s meaningless to VISA, MasterCard, the Acquiring bank and the customers bank. So in order to accept that data, the mobile payment provider needs to sign the merchant up to their particular version of mobile payments, in order for them to enjoy any added value. Therefore the argument for NFC as an open loop environment using card scheme rails doesn’t fly.

So what does HCE bring my customers in terms of experience over what they have currently with a card. The answer is nothing, unless I buy into a particular vision of HCE by a particular company, and if I am going to do that, I may as well look at alternative payment solutions, that save my business money.

 

Payment processing costs

Do these decrease with HCE? Nope, the poor old merchant is still paying full wack for their card processing, and maybe in some situations more. They will be paying for more expensive NFC based infrastructure on a monthly basis too, so mobile is now costing businesses more to accept. That’s simply not good news for any business owner.

 

HCE a game changer? Nope…

To make mobile attractive to businesses it must be cheaper for businesses to run, maintain and it must bring some added value to their business. It also needs to be available to the vast majority of my customers, so that means available to the top 3 mobile operating systems (Android, iOS, Windows Phone). HCE simply doesn’t stack up on any of these basic business needs. It’s more expensive and provides no added value.

Mobile will no doubt be a game changer in the payments world, but it will not be changed by solutions that look to the same old rails dressed up in a pretty new mobile dress. It will be companies that offer real added value through mobile services, and companies that deliver savings back to businesses with large reductions in payment processing fees.

So if you are a small business, look to see what alternative payment solutions out there provide you with the added value and services you want to move your company forward, helping you increase sales and increase your profitability? It’s an exciting time, and a chance for businesses to break away from the old and embrace the new more productive world.

The cost of plastic

We live in a digital age, and yet all our online and over the phone payments are carried out based on a very non-digital technology – payment cards. Essentially cards are protected by you needing to know a few numbers off the face of the card, and 3 additional security numbers on the back. If you aren’t the only one who knows those numbers, then you aren’t the only one limited to spending on that card.  Yes, there are many new security measures online, such as 3d secure and verified by blah, and yes, there are endless reams of PCI compliancy rules that businesses should follow. But at the end of the day, a bunch of numbers is hardly the easiest thing to secure.

 

The end of cards?

Cards have served us well for a long time now. But the cost of issuing a piece of plastic with some numbers on, isn’t cheap (on such a large scale). The costs of trying to protect those numbers for banks and mainly businesses are always on the increase, and this always results on businesses being charged more to accept a card based payment. What’s worse is, that when that card isn’t physically present, such as online or over the phone (especially when online sales are increasing) the poor old merchant is charged even more for the pleasure of accepting their customer’s payment.

What we must remember is that fraud doesn’t cost your issuing bank much at all. Rather it is the merchant who sold the goods that loses out financially, and they will lose out on the value of whatever they sold. For small businesses that’s quite a risk, especially when they branch out onto the web. I have known many small businesses to be stung like this, loosing thousands in revenue and of course lost product (a double hit for them).

Now we have a number of alternative payment systems and services starting to become available, some in the form of virtual currencies, mobile payments, different payment schemes and processes online (ala PayPal) and these are starting to become quite disruptive to the traditional card schemes and banking business. With alternative payment options growing in popularity, could this possible be the beginning of the end of the card? I say the beginning, as cards are heavily entrenched in our daily lives, and to date, only Starbucks IMHO has shown that consumers and businesses are starting to really make a choice when making a payment – and opting for something other than their card.

 

Digital payments for a digital age

I am a strong believer that when the technology landscape changes drastically, you need to embrace it fully. When cards were first becoming popular, there was no internet, no over the phone payments nor over the phone banking. But the internet is here, and cards haven’t changed at all. The infrastructure hasn’t changed, all that has changed is that software developers let us type in our card details so that the card can be identified. Not much evolution or embracing of the new digital age there.

Payment schemes need to be designed with their current landscape in mind, payments need to be designed for the digital world, which with mobile devices now blends seamlessly at times into the real world. This is what we have done at CloudZync. We have designed a payment scheme for the digital world that can be used online and out there in the real world, day to day via your personal mobile device.

For me, this is just the beginning of looking at how we transact, how commerce takes place, how customer relationships are forged in the real and digital worlds, and it’s an exciting time to be in this space. CloudZync is pushing the boundaries of what we expect from financial products, commerce, customer relationships and in terms of technology making our lives easier. Technology making my life easier and safer as a consumer, and the same applies to businesses. Technology making sales, transactions, experiences and relationships easier to manage and more profitable. To achieve these goals, we must always challenge what has gone before and that includes cards and banks…

Tech looking for a business problem to solve

There are some wonderful new technologies coming to the market at an alarming pace it seems, some technology really helps a particular market, perhaps speeding up processes, changing our experiences, even having quite an impact on our lives. Then we have numerous technology that seems to be made, simply because it can be.

Just in 2014 alone (already and it’s the start of February) I’ve been exposed to a number of new technologies that are technically impressive, but they don’t have a problem to solve. They don’t have a real way of impacting our lives as consumers, or as businesses. Technology for technology sake is a phrase that I find myself uttering quite often, and none more so than when I look at the world of mobile and of-course, mobile payments.

 

My friend, NFC

NFC is a technology that has been around for years now. I remember it in an early Nokia phone (dumb phone not a smartphone) and it’s never really delivered anything in terms of impact on my life. I will be honest, most phones I have owned have supported NFC, and yet I have never used the technology for anything more than showing that it works.

Don’t get me wrong, there are some wonderful applications of NFC, but it’s a technology that doesn’t really solve any real issue, no matter what it is used for. Sure, it’s great for sharing data quickly, perhaps triggering music from my phone to play on a set of speakers when I rest my phone on them, great, but has that changed much compared to playing via Bluetooth? No, not really, if anything, NFC is more limiting than my Bluetooth pairing of speakers to my phone.

When we look at mobile payments, I still can’t shake the feeling that it’s a great technology trying to fit into this space, even though it doesn’t quite fit.

At the end of the day, NFC feels like a great technology, but for the sake of technology. NFC doesn’t change the game.

 

Bluetooth beacons

The latest mobile and mobile payment tech to raise its head is beacons. Apple launch their iBeacon and PayPal have released information on their own Beacon project coming in 2015 (possibly). Both are quite neat, and pretty cool technology, they demonstrate well, and when you read about them you do think “wow – that could be cool”. However, the actual use of the technology again doesn’t solve anything, or remove anything from a process (deals or payments).

Even if a Beacon checks me into the store, I still need to have my mobile phone app (maybe even open), I still need to pay at the till using a payment account (maybe PayPal which isn’t exactly cheap or merchant friendly) and I still need an additional way of assigning that transaction to me the customer. With that in mind, is it worth me having Bluetooth switched on and having my phone pinging off beacons?

Even if PayPal manage all this, has it changed my life as a consumer? Probably not. Because there is no added value. All I have done is identify myself to a PayPal system that I am in that store, and at the expense of battery life. There is no added value to the merchant nor to the customer, only a technology that demonstrates well. We must remember too the practicality of all this for the consumer, even if all stores supported beacons, how long before I need to charge my phone? Having my phone constantly pinging beacons via Bluetooth is not good for my battery life, or my sense of security as a consumer. So much so, that most people have Bluetooth disabled on their devices by default, rendering the whole proposition pointless.

Apple beacon is a different approach, it’s not focused on payments and you have to open the app as the consumer, giving you a little more control. However again the concept of only providing deals or information through the beacon app or iPhone won’t stop businesses having to show deals visually in the store or online. Has this made life easier for the business, or actually made it harder? After all, a business won’t want to lose those customers who aren’t on the Apple iPhone platform. What about the majority of smartphone users who are on Android? That growing number on Windows Phone? What about the number of people who don’t even have a smartphone? Do we really expect a store to not provide all those offers exclusively to their iPhone customers? No, so life isn’t easier for the merchant, it’s more complex. No matter the merits of beacons, it still isn’t a game changer for businesses or consumers.

 

Wrapping up someone else’s tech

This is a particular bug bear of mine. There are lots of technologies now out there, and proposed solutions (especially in the mobile payments space) that don’t actually deliver anything at all. Rather, they wrap up someone else’s tech / app, and all they do is pass information to it to semi streamline a process. Now I don’t have anything wrong with streamlining processes in this way, after all, I spent 14 years as a TA doing this for corporates. But does that make my own technology massively valuable? No, it really doesn’t….I don’t want to point fingers at all, but if you again, look at the mobile payment space you will see a fair few of these examples.

 

Payments, tech first, solve a problem second

Unfortunately most technology companies at the moment seem to rush to get a technology together, then try to shoe horn it into some business problem or experience that either it doesn’t fit in, or simply doesn’t work for. The mobile payments industry is rife with this, with a multitude of different approaches to payments, all based around technology first, user experience second and practicality for the business and others a distant last.

 

Look at a problem, and then solve it with technology

I must be “old school” when it comes to creating technology. I still like to have a problem to solve, either in terms of a real business need / driver, or an experience we need to get to before I start designing and creating solutions and new technologies. I still maintain that if you want your technology to work it needs to exhibit all of the following 3 points:

1. Make life easier for you and or your customer
2. Add value to your current process
3. Reduce your costs

If your solution doesn’t do all of these potentially for the majority of your customers, then it’s not worth investing in or using.

Shameless plug here, but when you look at mobile payments, Zwallet is the only mobile solution that ticks all three of these points off, and that’s because it’s a technology and solution that looked at real problems, needs, drivers and experiences first.

Zapp mobile payments, great concept or dead idea?

Zapp has been getting a lot of press coverage these past few days, no doubt to help bolster their fund raising efforts. (Read an article here at Finextra and have a look through the comments made too, very insightful) The company that hopes to deliver mobile payments for UK banks is trying to raise £100m on-top of the £16m funding it has already received to date. But what is Zapp? What will it deliver?

Zapp, great concept or dead end idea?

We must start with the cold fact that Zapp has not got an actual solution for mobile payments. Zapp has to date delivered nothing in terms or architecture and physical code. With that in mind, everything we read from Zapp is vision based, it’s fluffy and isn’t backed by something tangible like an actual real live working environment. So we must take their comments on what they can deliver with a little pinch of salt, as no one as yet has tried to deliver what they are claiming.

 

The proposition

So let’s now look at the proposition in the wake of Zapp announcing a number of major banks signing up to their solution. When you first read articles or headlines regarding Zapp, you may believe that Zapp has access to your bank account, and that means they can complete payments directly from your bank account for you. The fact is, this is wrong. Zapp does not have direct access to any consumer’s bank account, not ever consumers of those banks that have signed up to the Zapp vision. In addition, Zapp doesn’t have access to faster payments either, again something that many believe they do have. So what do they have that warrants the headlines coming from Zapp….

Well, what they have is an understanding with the signed up banks to be able to send information from their Zapp wallet app to the banks mobile banking app. This information is pretty basic, essentially it’s a reference, an amount and a destination bank account. So in the world of Zapp, you use your Zapp wallet to get a transaction under way, however, in order to actually pay, you are then pushed from your Zapp mobile app into your banks mobile banking application. There you input your PIN for your banks mobile app and then confirm the faster payments transaction that Zapp has set up for you. Complete it in your banks mobile banking app, and then back to the Zapp app you go. It’s also this integration that lets Zapp show you your bank balances in the Zapp app (no direct access to your bank account at all, rather a copy of functionality from Microsoft’s Wallet and Apples Passbook, reading data from other apps).

 

Great concept or dead end idea?

So, is this a winning mobile solution? Should companies like PayPal, Visa, MasterCard, CloudZync be worried. Well the short answer is no. Zapp isn’t offering anything that hasn’t been shown before. Zapp isn’t providing me as a consumer with any incentive to use the app, nor are they providing any incentive to a business to accept Zapp mobile payments. The experience isn’t even one that sounds “cool” for a consumer. Moving between two apps to manually authorise a bank payment is not exactly smooth. But, you can see why the banks they have on board are interested, these are all banks that have no form of P2P transaction apps, nor any foot in the door of the mobile payments industry. Of course they are going to sign up to Zapp, after all the promise is Zapp delivers mobile payments through their own current banking apps. The real proof that Zapp offers nothing new or an experience that consumers will opt for can be seen by looking at Barclays position. Barclays have NOT signed up to Zapp, and you can see why. Why would they, when Zapp is simply a very clunky vision of Barclays own Pingit/buyit app, of which isn’t pie in the sky, is an actual app already out there in the wild with millions of downloads and one that works a lot smoother than the Zapp proposition.

Mobile payments will not take off if we view them as simply an evolution of card payments onto mobile, and this is where Zapp is standing. There is no point for consumers or businesses to invest time and money in an evolution that delivers no improvement for either party. Mobile payments will only succeed when there is incentive and added value to a transaction, and that is why companies like CloudZync and their Zwallet mobile app are light years ahead of the competition. Wrapping other peoples technology to try and make something a little smoother (such as inputting payment information for a faster payments transaction) isn’t visionary and its hardly innovative. When we look at mobile and digital wallets, they need to be innovative, they need to provide real tangible and easily measurable incentives to businesses and consumers to make a conscious effort to use mobile phone as opposed to cards and cash. That’s exactly what Zwallet delivers…

Zapp future

I have no idea what’s ahead for Zapp. I am sure they can deliver the technology to wrap a banks mobile app, it’s hardly rocket science and they aren’t attempting to solve anything that hasn’t been solved already. The question really regarding Zapp is why do they need that size of investment? Do they have anything else planned or is it all marketing, marketing and more marketing money? Who knows.

What I do know is that Zapp is already behind the competition, and has a lot of thinking outside of the box to do if it wants to deliver experiences that get close to its competitors…

Mag-strip to EMV chip and pin

I’ve seen few articles on countries now looking to finally move away from mag-strip debit and credit cards, ditching signatures and opting for EMV chip and pin cards. This is the most recent I’ve read, “Bank of Israel sets deadline for EMV switch”. But what makes me chuckle a little is that EMV is really old hat now, so to start moving to EMV in the next 3 years seems a little out dated already.

In a recent article on Finextra, Bank of Israel sets a deadline for moving from mag-strip to EMV, banks and card schemes have been given 3 and half years to make that switch. In that time, surely many more of us smart phone users will be looking to mobile transactions, so the move seems just like the move from CD to MiniDisc – one with a very short lifespan and rather large investment…(Keep in mind the numbers of smart phone users as opposed to dumb phone users is increasing daily)

 

Card schemes are big

Yes, most of us have a card and therefore card schemes will be with us for a very, very long time. But moving forward, the role cards play in our lives will only get smaller and smaller. With this in mind, is it worth making the investments to move to EMV? Why not now at this late stage stick with what you have and await a mobile revolution?

 

Go mobile

If I were the head of a large bank in this situation I obviously would be looking at migrating to EMV because I am being forced to. If I wasn’t being forced to, I think I would be tempted to leave things as they are. After all the switch will not be cheap, it will also involve lots of customer relations with businesses and no doubt (just like in the UK) waves of consumers complaining about using a PIN (though we seem to love Chip and Pin now).

But my main focus I believe would be looking at pure mobile schemes, looking at what’s out there and how my customers will want to access and spend funds via their mobile devices. (Obviously I would be looking at CloudZync’s infrastructure and technology 😉 but maybe I am very biased on this)…

 

CD to mini-disc to MP3

Currently updating a card scheme, be it to EMV or containing LCD displays in a card, or pairing cards to Bluetooth apps on phones seems, well, very pointless. Many of us believe the physical card will play a smaller role in our future lives, so why keep investing in it? After all, would you as an IT company keep developing and spending money on solutions that had a shelf life of only a few years? Or would you be looking at a longer game plan?

Maybe I’m being harsh on “mini-disc” here, at least Sony were not that aware of the pending doom just a few years down the line with MP3 players (especially the iPod). They were taken by surprise the uptake and demand in MP3 and as such, mini-disc (though a great invention) died a quick death. Here with cards, it seems we have already foreseen their death, and yet we simply ignore it and plough on forward….curious….

The cost of taking our money

As consumers we don’t really think about the costs involved with doing business, all we care about are the products or services we are looking for, and getting them at the lowest possible price. Oh, and to be fair, there is nothing wrong with that. All consumers know there are costs involved in running a business, but some costs, like a business paying to take our money, we often forget about…

This is something that even the EU is now trying to look into, proposing a cap on the “interchange fee” charged by your bank back to the merchant for taking your money from your debit / credit card. The problem here though, is that those fees will probably move elsewhere, meaning it will be pushed onto the consumer – more than likely in the form of us having to pay annually for the privilege of having a debit / credit card (something many EU banks already do).

So in this post I want to quickly look at costs businesses have to pay in order to take our money…

Someone has to pay, every time we use these

 

The average costs

When a business accepts debit / credit cards, they pay for being able to provide that option to us, the consumer. Now you may think that it’s a cost based purely on the transaction process itself, but you would be wrong. Typically, in order to take card payments, a business has to register for merchant services (SMEs and independents usually go through high street banks – though the actual merchant service is usually sub-contracted out). The business pays a monthly fee for this, and the cost of that will depend on the business, amount of transactions they process and their value. But many small businesses, start-ups etc pay around £30 per month per terminal. On top of that, there is a standard flat fee per transaction that goes through the machine, again this will vary in price. For debit cards though, a start-up maybe looking at loosing 20p per transaction, while credit cards may also have a fixed fee associated with them, but will include a fee based on a percentage value of the transaction value. To give you an idea here, this fee could be anything from 1% right up to 4% of the value of the transaction, again depends on your business, your provider etc etc.

Now these fees may seem small, but remember these fees per terminal are per month, and that every single transaction is subject to these fees. When you look at tight operating costs and small profit margins, you all of a sudden see why providing card facilities isn’t always an option for a business.

Here are some facts and figures. The average cost of a credit card transaction (remember average) to a business is 36.2p. This cost drops to 9.6p for debit cards, while handling cash is 1.5p. If you were to calculate your shop sold 100 items in a day – that would mean you have spent £36.20 in handling those transactions (if credit card). Now multiple that by 300 working days (just for simple maths) and you see you have £10,860 lost in credit card charges (not including the monthly fees). Now, for many SMEs, independents, start-ups, actually any business, this is a large chunk of money lost.  Obviously these are just some figures to illustrate my point, and that point is that actually, processing cards is not cheap.

So with these sorts of costs, is it any wonder that businesses want a cheaper alternative, and are actively looking for alternatives.

 

Will Mobile drive down costs?

Mobile payments are the most obvious alternative to typical card transactions. But there are 3 different form factors of mobile payments at the moment:

1. Typical card processing, but using a mobile phone as a card terminal
2. Using NFC technology for contactless payments
3. Use real mobile payments, originating from mobile devices and no need for cards at all

 

So, option 1: Companies like Square, iZettle, Sumup etc provide a dongle that allows any business to turn their smart phone device into a device that allows them to process card transactions. This proposition brings down the monthly cost to the independent and SME business – they no longer need to pay for their merchant accounts with high street banks etc. But these solutions are still expensive for the merchant. Typical fees are at least 3.75% per transaction! That’s very high and ultimately expensive for the merchant. You must remember that these are still card transactions, so in our example earlier, the £30 per month fee may have been removed (saving the company £360 over the year), but their fees have gone up, so still looking at £10,000+ in card charges.

Option 2: Use contactless technology…Well you still need merchant accounts here, so you are still paying your £30 per month (if not more if your bank charges etc for NFC enabled technology). However, your card processing fees will drop a little – and this is because at the moment the interchange fees on an NFC transaction are lower than those associated with Chip and Pin transactions, signatures, and card not present. But this is making only a small dent in the overall fees paid, and again the merchant in our example is shelling out £10,000+

 

Option 3: Real mobile transactions offer real options to merchants. Since they aren’t dependent on card schemes such as VISA, MasterCard, there are less companies involved in the transaction handling process. This means savings can be made in every step of the process, and these savings are passed onto the merchant. Companies like CloudZync and their Zync Wallet product provide drastic savings to businesses. Take our merchant example, with CloudZync the merchant pays no monthly fees, and since they are processing 100 transactions per day, are simply charged 1p per transaction. That means their daily processing fee has dropped from £36.20, down to £1. So the business annual handling fee drops from in excess of £10,000, down to just £300 for the year.

 

Cost of business, and cost of not adding value

What we must remember with mobile though, is the potential here to add value to the merchant – consumer experience and relationship. While cards, cheque and cash provide payment methods, mobile has a lot more to give (just as it does with our emails, social connections, organisers etc). Mobile transactions can be the gateway to greater consumer merchant engagement, better shopping experiences and ultimately, provide a potential tool to ensure business growth.

So while this post really is focussed on the cost of doing business, and potentially doing business with mobile devices, we should also remember the cost of potentially not doing business with mobile devices….Can a business afford to not make processing savings and not increase customer engagement and retention? I don’t know any that can afford to miss out on both…

Windows 8 for business and for home

I know most organisations are either stuck on Windows XP or migrated a short while back to Windows 7. Typically (or should I say historically) organisations seem to embrace every other version of Windows, which puts them on a 4-5 year upgrade cycle. So any ideas that businesses are shunning Windows 8 because of it new tile start screen isn’t quite accurate.

What is true is the fact that no matter what Windows 8 was, businesses wouldn’t look to update until Windows 9 was released, and most of us thought that would be approximately 2 years after the release of 8, so September / October 2014. However, with Microsoft’s recent announcements of Blue being available at the end of the year, it seems that Microsoft is now looking for annual releases of its OS, and since that OS is now essentially across all devices, that includes mobile, tablet, laptop and good old desktops. So this new release cycle from Microsoft will no doubt have an impact on how businesses look to their upgrades.

 

Give it a short amount of time and you come to love the start screen in your business

 

Windows 8 now

My own company, CloudZync, is using Windows 8 for the majority of users (though I will be honest, some are on Windows 7 still) and I must say, having both operating systems in the organisation hasn’t caused a single issue. But, I have noticed that when I move back to Windows 7 I’m starting to get a little frustrated. It seems the start screen has become something of a blessing, even though I spend I would say 85%+ of my time on the desktop side of the OS. I really wouldn’t listen to those who say the OS its jarring and moving between “Metro” and “desktop” is confusing, because it simply isn’t. Sure there are some things you need to learn but they are so easy, like just put your pointer in a corner of the screen, that pretty much sums up what you need to know as the rest is very intuitive (well I think – especially when compared to other operating systems out there). Sure there are some things that frustrate me with Windows 8, but that’s true of every single OS and piece of software I think I have ever used.

I’m glad we have Windows 8 now in the organisation as with Microsoft’s new OS releases being mainly “upgrades” I think moving between Windows 8 and newer releases will be quite a seamless and painless experience.  I expect Blue to be more about upgrades to Windows 8, addressing some of those user frustrations and bringing even more seamless experiences between the OS and the cloud.

 

Intuitive

I do find I get very frustrated with peoples take on what intuitive is. I’m sorry, but something isn’t un-intuitive because it doesn’t work like something else you are used to. That means it’s just different. Intuitive for me means I should be able to logically understand where something maybe. When moving to iOS I have to say I found it very un-intuitive, yet most people say it’s an easy to use OS, which it is, once you know all the little oddities of it. That doesn’t make it a highly intuitive OS. If I handed iOS to my Dad for example he would hate it, and moan like hell about it. (He recently looked at the iPhone, Samsung Galaxy and Nokia Lumia devices, he went with the Lumia as he said that one made sense to him how to use it, the others would require him to learn the UI). Likewise, things on Windows 8 are different to 7, and many of us at first think “wow 8 is so un-intuitive” because it’s different to what we have learnt. But if you come at with no expectations, and don’t think it should be the same as something else, you soon find that actually, it’s a very intuitive OS. Sure there are some odd things that aren’t intuitive, but just like iOS, once you know them they seem brilliant and then obvious.

 

Windows 8 in your organisation

There are some real nice features when you start moving all devices to Microsoft’s latest OS. I have a Windows 8 phone, Windows 8 PC, Windows 8 netbook (which since I have had access to an RT hasn’t been used) and a Microsoft Surface RT. When switching between devices it’s amazing how much is synchronised and how easy it is to be working on one, then switch to the other. I would say improvements could be made for sure, but as a work environment, it really is second to none.

Yes I am aware of how improved Apple is in this department, but I too have an iPhone for testing our software on and our CEO uses his iPad consistently. What I’ve noticed is though anything that is a bit more work focussed or requires greater attention, he has to switch back to the desktop PC, while I’m equally happy on any of the Windows 8 devices (granted I don’t like editing office files on my phone but it’s not that bad).

Moving forward, Windows 8+ is a no brainer for me. Tablets that double up as real desktop, desktop and tablets seamlessly acting together and don’t forget a wide selection of Windows 8 phones that bring it all together on your mobile. For an organisation, it makes almost no sense to splash cash on anything other than Windows devices, all you do is add in another level of complexity that simply doesn’t need to be there, and worse, you have to spend much more money.

Think of this example, my sister in law is a sales rep. She has an iPad which she uses to show prospective clients items they can stock, great, it’s a nice experience. However, if the client wants to purchase or look at anything in real detail, then she has to get out her laptop and boot that up and use bespoke software on there to complete her sale. She is essentially carrying around 2 devices, one of which is being used as a glorified catalogue, something that just presents well. Now if her organisation had purchased a Windows 8 tablet then that’s all she would need to carry. She can replace the iPad delivering the same experience and then still have all the power of her legacy apps available on the tablet. It would have saved her company a tidy sum…

 

Organisation Upgrades

No matter your take on Windows 8, there is no doubt in my mind that come October 2014 we will start seeing mass migration of organisations away from Windows XP and 7 in favour of 8, Blue or whatever it will be called by then. What will be hard is how the media (especially tech bloggers) look at this, will they then say Windows 8 was a disaster like Vista but Windows 9 is amazing? Or will they finally grasp that their rather 90’s view of desktop computing is dead and that the desktop is very much on the same cycle as mobile operating systems and their wireless upgrades?

Microsoft Surface arrives

Monday June 18^th was a weird day in the tech world, for once Microsoft managed to create a buzz and a stir regarding an announcement they were to make, yet no one knew what that would be. This felt more like an Apple announcement than anything we have come to expect from Microsoft – which is a good thing and lead to a lot of speculation.  I too joined in with that speculation, believing that Microsoft was to announce a 7” eReader device with new partners Barnes and Noble, how wrong could I have been…

Microsoft Surface Tablet, showing off its built in stand and magentic cover that doubles as a keyboard

Microsoft Surface Family

We now know that Microsoft has announced a family of tablets named Surface. For those of you who keep up to date with technology, you would already have heard of the Surface name from Microsoft, that particular product being a multi-touch enabled table device that was highly focused and sold to businesses. Now though Surface is the brand name for Microsoft’s own made tablet devices, meaning Microsoft has gone into the tablet market in a big way.

This is a bold move from Microsoft and quite a break from tradition. Typically Microsoft doesn’t do hardware, rather it lets its OEM partners build the hardware and Microsoft focuses on the software. However, in recent years it seems the hardware that runs Windows just doesn’t look as sexy as anything produced by Apple, none of the devices have that wow factor which can only harm sales. The latest ultimate laptops are starting to compete, but it has taken a long time for many of the OEMs to get with the game and start designing good looking, light weight hardware. I can’t help feeling that Microsoft has been forced into delivering its own hardware for the tablet market, simply because it cannot rely on OEMs to deliver hardware that looks as sexy as that produced by Apple.

Microsoft Surface Devices

Essentially Microsoft has shown us two tablets, one that runs Windows 8 RT on an ARM based processor tablet, and the other, running full blown Windows 8 pro on a tablet powered by an Intel Ivy Bridge processor. Here is some information on the specs:

• A full-size USB port and a 16:9 aspect ratio angled at 22 degrees.
• 10.6-inch, 16:9 widescreen HD Display.
• Integrated Kickstand: Built-in kickstand lets users move Surface from active use to passive consumption.
• Touch Cover: 3 mm pressure-sensitive Touch Cover senses keystrokes as gestures will come in different colors.
  

  Microsoft Surface Magnetic Covers that are keyboards

Surface for Windows RT

• OS: Windows RT
• Light(1): 676 g
• Thin(2): 9.3 mm
• Clear: 10.6″ ClearType HD Display
• Energized: 31.5 W-h
• Connected: microSD, USB 2.0, Micro HD Video, 2×2 MIMO antennae
• Productive: Office ‘15′ Apps, Touch Cover, Type Cover
• Practical: VaporMg Case & Stand
• Configurable: 32 GB, 64 GB

Surface for Windows 8 Professional

• OS: Windows 8 Professional
• Light(1): 903 g
• Thin(2): 13.5 mm
• Clear: 10.6-inch ClearType Full HD Display
• Energized: 42 W-h
• Connected: microSDXC, USB 3.0, Mini DisplayPort Video, 2×2 MIMO antennae
• Productive: Touch Cover, Type Cover, Pen with Palm Block
• Practical: VaporMg Case & Stand
• Configurable: 64 GB, 128 GB
  

  Microsoft Surface with its own stand

From the specs I would suggest that Microsoft is going after the business user and home users who like to do more / want to do more with tablet devices. I think this is a wise move as Apple devices still have a very long way to go to get real market share in the enterprise. For any business looking into tablet devices, Microsoft Surface has just made their choice a no brainer. Get Surface for Windows 8 professional and you get the best world of a fully blown ultimate laptop, combined with the flexibility, portability and battery life of a tablet – not to mention the capabilities to hook the device seamlessly into your network at work and run legacy applications if needs be. Why would any business opt for an iPad now?

With regards to home users, Microsoft has really only targeted those users who want a tablet in place of their laptop. Until now, the problem has been for many users (including myself) is that I would love the flexibility of a tablet device, yet I potentially want all the power a laptop provides, meaning I would need to purchase both. Microsoft Surface has changed that, and with the neat magnetic cover doubling as a real keyboard, Microsoft has basically removed my need for a netbook or laptop. For me, and I am sure many other users, Microsoft has moved us to a desktop and tablet only world with the laptop for some acting as a desktop.

OEMs

One of the reasons I personally didn’t think Microsoft would build their own tablets, was that of Microsoft’s relationships with OEMs such as Samsung, Asus etc. It does seem harsh that Microsoft now will actually compete against them in the tablet market, but after spending some time thinking about this move, Microsoft may actually be helping them.

Don’t get me wrong, I believe some of the OEMs will be a little annoyed at Microsoft Surface, however Microsoft is in a far better position to get marketing and the tech world reviewing Windows 8 by having their own hardware. In addition, Microsoft is actually setting the bar quite high in terms of design, and what consumers will now expect from a Windows 8 tablet device. Let’s look at Windows Phone as a comparison.

When Windows Phone launched there was quite some anticipation, however the devices launched by the OEMs (Samsung, HTC etc.) actually were not that attractive to look at. The hardware specs were not that great, and compared to some Android devices and the iPhone, the Windows Phone looked quite underpowered. What is the saving grace is the actual OS itself; however, many people base their phone purchase on how the device actually looks. Only now with Nokia Lumia devices are we seeing some aesthetically pleasing Windows Phone devices, and with that, a little more marketing and market traction. With Windows 8, Microsoft cannot wait for one of the OEMs to finally get their design act together, Windows 8 in many ways is already a big enough risk. Here with Microsoft Surface, Microsoft are showing OEMs what can be achieved, and almost saying “go out there and do better!”. That’s a good challenge to set, one I’m sure will lead to many more Windows 8 tablet devices turning up that a) look stunning and b) contain some real punch.

By Microsoft only announcing two higher end devices, I feel we can read that Microsoft is not wanting to be the biggest hardware player in the tablet market, rather they are showing the way for their OEMs.

Marketplace

One of the main concerns many may raise is the lack of apps available for Windows 8 at launch or the marketplace ecosystem. I personally don’t see this as a problem at all. We have already seen in the past couple of weeks numerous reports about how developers and software companies love developing for Windows phone, how simple it is and how important they feel developing for Windows 8 will be. Attracting developers is not a problem for Microsoft, so getting the “apps” available also won’t be a problem for Microsoft (Windows Phone now has over 100,000+ apps all of which will be available on Windows tablets).

We must also remember that the Windows Marketplace will also allow older software to be sold, which means that on a Windows 8 pro surface tablet, the user has access to any software ever written to run on Windows. They also have access to the complete windows market place for metro based apps too.

I know that Apple has a great ecosystem, but you cannot deny that the Microsoft ecosystem is its equal if not better.

Conclusion

Windows 8 is a big release for Microsoft, and it’s quite a gamble, so much so that I feel Microsoft couldn’t leave it to OEMs to deliver sexy tablet devices when Windows 8 launches. If the OEMs failed, then Windows 8 could possibly fail in this market place, something Microsoft obviously doesn’t want. By producing their own Microsoft Surface tablets, Microsoft has ensured the tablet market has some wonderful Windows 8 tablets available when the general public can finally start purchasing Windows 8 tablets. If anything, this reduces the risk associated with Windows 8 and tablets for Microsoft a little, and ups the potential profits for them at the same time.

Microsoft Surface also sends a message to OEMs, that they can build sexy devices that rival and beat the iPad in terms of design, and with Windows 8 they will have an OS that beats iOS in terms of user experience and productivity, not to mention flexibility in how the user works.

Android has been the OS of choice for most tablet makers, probably because there wasn’t a viable tablet option until Windows 8. Microsoft may have in one swoop confined Android to just the mobile phone world, which makes it quite isolated when we think of how users want to share content across all their devices. That isolation could really harm Android in the smart phone arena in the long run.

Microsoft has come to the tablet market with a bang (this time round) and has actually delivered something special…I for one never doubted them….

Will Mobile kill free services?

Sorry to be blogging about Mobile again, but at the moment it’s my main focus of work….In this post I want to have a quick look at the problem mobile presents to companies that live, and potentially die based on advertising revenues.

 

The advertising model

The biggest player in building their business solely on advertising revenue is without doubt Google. Almost everything it does is based around gaining more information on us users, so that it can effectively deliver adverts back to us in a better fashion, so we are more likely to click on them, and Google gets paid. The more clicks, the more Google earns and can even charge. It’s this model that allows Google to deliver pretty much all of their services, and software (Android springs to mind) for free, all funded by charging for adverts. Don’t kid yourself that Google delivers services for free because it’s a loving, don’t be evil company. Most of the things Google deliver for free are there to help Google gain more data so they can advertise more effectively. Mobile is a great example, and one of the reasons Google purchased Android, so they had a mobile presence to locate us and advertise based on geographic locations.

Google isn’t the only company that lives by charging for adverts, there are many businesses out there, small and large, especially online, that make their money mainly from delivering adverts. How many times do you go to a website and there are adverts delivered on it? How many times do you read a blog with adverts delivered on it? Quite a few. Even Facebook only makes money because it charges for adverts that are delivered on the website to us users.

So what happens to companies if they cannot effectively deliver adverts any longer?

 

The Mobile Problem

Currently Facebook is becoming rudely aware of this problem, so much so that its newly floated stock is now trading almost $10 down on its launch. Why? Well it’s all to do with the company’s ability to monetize and take advantage of its 900m user base. You see, on Facebook the website (used from a desktop) we have adverts constantly being shown to us. These are tailored ads, based on what I like, what I talk about, my own personal status, and as such Facebook can charge for these. However, if I use Facebook on my mobile phone, these ads simply aren’t there. The concern is then, with so many more of us using our mobile phones as our primary device to access the web that companies won’t want to pay for adverts if no one is able to see them. This basically means Facebook can no longer deliver ads effectively.

This problem isn’t limited to Facebook. Think of those free apps we have all downloaded that have ads being displayed. They are free because the ads are paying for them. But how much space do those ads take up, and typically you can only see one single advert. The problem is that ads jar the mobile user experience, they don’t fit in well and the user finds themselves scrolling to see the actual content they use the app for. I for one have un-installed 5 or 6 apps now where I simply got annoyed with the adverts.

Don’t think though Google is exempt here. Using search on your mobile is fine, and Google still can display its sponsored links there, however, a chunk of Google’s revenue is displaying ads on other peoples websites, blogs etc. As more of us turn to mobile to access the web, these adverts start to disappear, and therefore so does Google’s revenues from these ads. The next mobile problem is that many of us prefer Apps over a browser experience on our mobile phones. This means we start to not even search using websites like Google.com, rather we use an app. I for one use the Bing app, the user experience is far better than visiting the mobile website version, and it integrates with other tools and functions, such as QR code scanning, voice and local scout (which delivers search results local to me and includes such things as local restaurants, points of interest etc.) This means the only adverts I have any chance of seeing are those sponsored links that come back in a handful of searches.

With all this in mind, can the likes of Google even see revenues falling as it too struggles to deliver ads down to mobile devices? Sure, Google has a big enough market share of search to survive, but can it charge enough to then keep subsidising so many of its ongoing projects, and even worse, the number of failed projects that have cost millions which are raking up?

 

End of free services?

We have got used to so many free services online, Search, Social Networks, watching videos etc. All these things cost money, and currently so many of them are funded purely by the ability to deliver adverts to us online. Mobile really does threaten that model, if you can’t successfully deliver a number of ads down to user’s mobile device, then why will a business advertise with you? If revenues start to fall, then how long is it possible for companies to make losses on all these free services? Google subsidises everything it does based on adverts, but if those revenues can no longer support everything Google does, will we start seeing services getting switched off, or having to pay for them? No doubt Google search will survive, but the question is can Google afford to deliver everything else it does for free?

For the likes of Facebook, the mobile threat is even greater; it really does present a problem. Keep in mind that if this is true of Facebook, a company with some 900m active users, then it will be for any business that is built on advertisement revenues. Mobile really could be the death of free services online, unless companies can figure out a new way to deliver adverts back down to our mobile devices. That’s tough, especially since ads ruin the user experience currently. At the moment, mobile could be the grim reaper for so many free services.

…We shall see….