HTC’s Rhyme Designed to Appeal To Female Demographic

In an overcrowded market just aching for something fresh and exciting HTC has designed a phone with specific attributes meant to appeal to women. One major example of this design strategy is a charm that attaches to the phone that is meant to be dangled outside of the owner’s purse. This charm will light up when there is a phone call or text. Despite its heft price tag and contract requirement, the android-powered HTC Rhyme is predicted to be the biggest hit in the teen girl markets from age 10-15.

By Rob Spiegel

Though the new HTC Rhyme smartphone’s specs don’t exactly stand out in the crowded Android field, its design and accessories appear to target a distinctly feminine demographic. “If you’re in marketing or advertising and you have a smartphone client, you have to be wracking your brains to come up with new ways to differentiate your product and market,” said analyst Laura DiDio.

Here’s a smartphone designed for charm. The HTC Rhyme for Verizon actually has a charm designed to dangle outside a purse. It lights up to tell the owner when there’s a call. The phone appears to target teenage girls — that is, except for the price point of US$199.99 with a two-year contract. Perhaps a tad pricey for the very young. It comes with three accessories: a dock, headphones and the charm.

While Verizon’s Droid was positioned as macho — remember, the ads called the iPhone “prissy” — here’s an Android-based phone clearly designed for women. HTC is promoting the phone for its style.

The Rhyme runs AndroidGingerbread on a 1 Ghz single-core processor. It has a 3.7-inch WVGA touchscreen and a 5-megapixel camera. The Rhyme also has a revamped version of HTC’s Sense, which consists of a clean home-screen, custom wallpapers and enhancements to the camera app. The Rhyme will be available globally with Verizon as its exclusive U.S. carrier. It launches September 29.

Broad Market?

While the Rhyme seems tailored for females, Verizon insists it has appeal for a larger market.

“The target audience is fairly broad,” Verizon Wireless spokesperson Brenda Raney told TechNewsWorld. “It is intuitive, sleek and comes out of box with a host of accessories that make the experience easy and quick.”

The phone does make a clear style statement, Raney conceded.

“Certainly, a fashion-forward person will love the look and feel of the device,” she said. “And of course, those who are Android fans will love the phone because it ships with the latest Android operating system.”

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New Unlimited Prepaid Plan to be Announced by Verizon Wireless

Verizon Wireless is continuing its aggressive competitive strategies by introducing a new unlimited prepaid plan that will cost $50 for unlimited talk, text, and web. Verizon is attempting to expand the attractiveness of prepaid plans with this new deal. In the past prepaid plans have been marketed to lower income customers but with more attractive phone and plan options Verizon is attempting to change this stereotype.

Verizon Wireless will introduce a new unlimited prepaid plan nationally this week, taking on rivals Sprint Nextel Corp. (S) and MetroPCS Communications Inc. (PCS) as they continue to add customers seeking contract-free service.

Verizon Wireless will begin offering the plan–which includes unlimited talk, text and Web use for $50 a month–on Thursday, said spokeswoman Brenda Raney. In addition to Verizon stores, it will be sold at Best Buy Co. (BBY), Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT) locations.

Verizon is making the push into unlimited prepaid plans as the category drives customer growth on Sprint’s Virgin Mobile and Boost brands, as well as MetroPCS. Prepaid plans, which have historically been marketed to lower-income customers, are becoming more attractive as the cost declines and phone choices improve.

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Dell Teams With Top Chinese Search Engine For Tablets and Mobiles

Dell is reaching out to foreign markets to try and get some sort of customer base for its tablets and mobile phones. Dell and Baidu, China’s leading search engine, are teaming together to bring China Dell tablets and mobiles. Right now China’s market is dominated by Apple and the iPhones, but Dell is scrambling to just try and get a piece of the action in that market before potentially expanding to other areas.

By Melanie Lee

Dell Inc and China’s top search engine Baidu Inc plan to jointly develop tablet computers and mobile phones, targeting the Chinese market dominated by Apple Inc and Lenovo.

China is one of the fastest growing markets for tablets and is home to more than 900 million mobile phone subscribers, but analysts were skeptical that the partnership would unseat Apple as the dominant force in the market.

“I suspect this is just Dell, who has a lot of problems on the mobile and tablet front, grasping at straws to get any kind of publicity that it can to make its product more attractive,” said Michael Clendenin, managing director of technology consultancy RedTech Advisors.

“Ultimately in China, I still think it is Apple’s game, still for the iPad and iPhone.”

Dell declined to give a timeline for the launch of the devices, but local media reported on Tuesday, quoting sources, that it may be as early as November.

Baidu launched a new mobile application platform last week and offered a glimpse of its upcoming mobile operating system, which it hopes will serve a growing number of users accessing the Internet from smartphones and tablet computers.

The company said it already had partnerships with Dell and other device makers and declined to comment on the new tie-up. Dell said the partnership with Baidu involved the company’s new mobile platform.

Baidu has built on its dominance of China’s search market significantly since Google’s high-profile exit last year citing hacking and censorship concerns.

Baidu’s Nasdaq-listed shares are up nearly 50 percent so far this year, giving it a market value of around $50 billion.


A Dell-Baidu tie-up would be the latest in a series of developments reshaping the mobile devices market.

Last month, Google said it would buy Motorola Mobility Holdings for $12.5 billion, putting Google into a lower-margin manufacturing business and pitting it against as many as 38 other handset companies that use Google’s Android software.

“Dell has got nothing to lose. They don’t have a big mobile presence, so by partnering Baidu, they will probably get some momentum for their mobile products,” said Sandy Shen, a research director with Gartner.

Dell has chosen China to launch new products before. In June, Dell said it had chosen to launch its new 10-inch Android tablet in China this summer, passing up on a U.S. and European launch, in a sign of the market’s growing importance to the company.

Dell’s China sales grew 22 percent in the first quarter while its retail presence in China exceeds 10,000 sales points.

In 2009, Dell announced it will enter the smartphone market starting in China before moving into Brazil.

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Justice Department Moves to Block Merger Between AT&T and T-Mobile

The United States Justice Department has recently filed a lawsuit to block the merger between AT&T and T-Mobile on the grounds of antitrust laws. The Justice Department has stated that a merger between the third and fourth largest mobile technology companies would create substantially less competition and cause all of the problems associated with a monopoly. While this poses a problem for the companies, consumer advocacy groups are championing the decision saying that keeping the companies separate will keep prices down  as well keeping new innovations up because of competition- a huge contributing factor to successful free market companies.


The Justice Department filed a lawsuit on Wednesday to block the proposed $39 billion merger between AT&T and T-Mobile USA on antitrust grounds, saying a deal between the nation’s second- and fourth-largest wireless phone carriers would substantially lessen competition, result in higher prices and give consumers fewer innovative products.

The lawsuit sets up the most substantial antitrust battle since the election of President Obama, who campaigned with promises to revitalize the Justice Department’s policing of mergers and their effects on competition, which he said declined significantly under the Bush administration.

AT&T said it would fight the lawsuit. “We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed,” the company said in a statement. “The D.O.J. has the burden of proving alleged anti-competitive effects and we intend to vigorously contest this matter in court.”

AT&T said it had no warning that the government was going to file to block the merger, because it has been actively involved in discussions with both the Justice Department and the Federal Communications Commission since the proposal was announced in March. AT&T has indicated that it would consider some divestitures or other business actions to allow the deal to go forward.

But Justice Department officials said that those discussions led it to believe that it would difficult to arrange conditions under which the merger could proceed. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer,” said Sharis A. Pozen, acting assistant attorney general in charge of the Justice Department’s antitrust division.

The Justice Department has broad authority to influence proposed deals. On rare occasions, the agency takes the aggressive step of suing to block a deal altogether, as it is doing with AT&T and did earlier this year with H&R Block’s bid for the owner of TaxAct tax preparation software.

Sometimes just the threat of legal action is enough to stymie a deal, as in May when Nasdaq dropped its rival bid for the New York Stock Exchange’s parent company. In other cases, the Justice Department will remain silent, blessing a deal by default.

AT&T’s promise to fight the suit could mean a potentially lengthy fight.

Consumer advocacy groups cheered the announcement. “This announcement is something for consumers to celebrate,” said Parul P. Desai, policy counsel for Consumers Union. “We have consistently warned that eliminating T-Mobile as a low-cost option will raise prices, lower choices and turn the cellular market into a duopoly controlled by AT&T and Verizon.”

Harold Feld, legal director of Public Knowledge, a nonprofit group, said, “Fighting this job-killing merger is the best Labor Day present anyone can give the American people.” But labor groups had generally supported the merger, in part because a substantial number of AT&T employees are members of the Communications Workers of America, while T-Mobile is a largely nonunion company.

Deputy Attorney General James M. Cole said the department decided that among those adversely affected would be wireless customers in rural areas and those with lower incomes. He said he also believed that an independent T-Mobile would be more likely to expand its business and add jobs, while mergers often result in the elimination of jobs.

The future of an independent T-Mobile is more of a question today, however, than before the merger with AT&T was announced. Its parent company, Deutsche Telekom, has said it does not want to continue to invest in the American wireless market, preferring to focus on the growth of its telecommunications business in Europe.

Before AT&T announced its intention to buy T-Mobile, there was consistent speculation in the wireless industry that a merger between T-Mobile and Sprint Nextel, the third-largest provider, was in the works. But such a deal looks unlikely in light of the arguments mustered by the Justice Department against the AT&T deal.

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Sprint Adding The iPhone-5

Sprint recently announced that they will be selling the ever-popular iPhone series starting this October. This addition to the Sprint catalog will add much needed sales to the struggling company, struggling at least compared to its peers, and this addition will also help the high selling iPhone continue its sale numbers, maybe even enough to catch back up to the Android’s slight lead in the market. The article below details how this change will effect rival phone companies as well as what this means for Apple and the iPhone.


Sprint Nextel Corp. will begin selling the new version of the Apple iPhone in mid-October, people familiar with the matter said, filling a huge hole in the No. 3 U.S. carrier’s lineup and giving Apple Inc. another sales channel for its popular gadget.

The timing, however, indicates Apple’s new iPhone, which is expected to be called iPhone 5, will hit the market later than expected and too late to contribute to sales in Apple’s fiscal fourth quarter, which ends in September. Most observers had expected the device to arrive next month.

The deal could help prop up the nation’s third-largest carrier and give AT&T Inc. more ammunition in its attempt to win regulatory approval for its proposed acquisition of No. 4 U.S. carrier T-Mobile USA Inc.

Verizon Wireless and AT&T, the two largest wireless carriers, measured by subscribers, will begin selling the phone in mid-October as well, according to two people familiar with the matter.

Sprint had more than 52 million subscribers at the end of the second quarter, compared with 106 million for Verizon and nearly 99 million for AT&T.

Sprint will begin selling the iPhone 5 in mid-October, closing a huge hole in the No. 3 U.S. carrier’s lineup and giving Apple another channel for selling its popular phone. Spencer Ante has details on The News Hub.

Landing the iPhone is a big win for Sprint, whose results have suffered without being able to sell the trend-setting device. AT&T has relied on versions of the Apple device to drive sales since 2007. This February, Verizon Wireless began selling the iPhone 4. Verizon Wireless is a joint venture of Verizon Communications Inc. and Vodafone Group PLC.

In the second quarter, Sprint blamed a decline in its contract subscribers on more pronounced “competitive headwinds,” most prominently, “the first full quarter both major competitors offered the iPhone.”

Sprint will also carry the iPhone 4, starting at the same time, one person familiar with the situation said.

Richard Doherty, director of the research firm Envisioneering Group, said that the addition of the iPhone would help Sprint retain many of its customers itching to upgrade. The iPhone will also increase foot traffic in Sprint stores, which should help the company to sell high-margin iPhone accessories. “Sprint needs it,” said Mr. Doherty. “There are a lot of families that will embrace the iPhone.”

That said, the deal could also hurt Sprint by helping AT&T improve its chances of winning approval from regulators for its $39 billion purchase of T-Mobile USA, said Marc Ostrau, a partner and co-chair of the antitrust and unfair competition group at law firm Fenwick & West.

“It not only is likely to give Sprint a boost but also puts more focus on the increasing importance of device suppliers relative to carriers,” said Mr. Ostrau.

Herbert Hovenkamp, a professor of law at the University of Iowa, said a Sprint iPhone would probably help AT&T’s efforts, but he said the impact depends on how much regulators determine the deal curbs AT&T’s ability to raise prices without losing too many sales.

“The question is how much more competition do you get when you have two rivals rather than one,” said Mr. Hovenkamp.

The cellphone business is increasingly driven by hot smartphones, which are growing more sophisticated and expensive. Apple commanded an average of more than $650 apiece for its iPhones last quarter. Carriers subsidize the difference between that cost and the phone’s $199 or $299 retail price, hoping to make up the difference with the data plans they sell over the course of two-year contracts customers must sign to get the subsidy.

Apple created additional leverage for itself by signing exclusive deals when it first launched the iPhone in 2007. In recent years, the company has changed strategy, inking deals with multiple carriers in countries around the world.

The new iPhone is expected to be similar to the current iPhone 4, but thinner and lighter with an improved digital camera and a new more sophisticated operating system.

Apple said in June that a new version of its mobile operating system would be available this fall, leading many analysts to conclude that an upgraded iPhone would be introduced at the same time.

On a July earnings conference call, Apple Chief Financial Officer Peter Oppenheimer said the company’s September quarter would be affected by “a future product transition that we are not going to talk about today,” increasing anticipation.

While Apple unveiled the iPhone 4 at its June developers’ conference last year, its successor wasn’t ready in time for this year, according to a person briefed on Apple’s product plans. The company then aimed to launch a new iPhone by the end of September, though two people familiar with the situation previously told The Wall Street Journal that the phone could be delayed again if its contract manufacturer couldn’t improve its production yield rate.

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Google Has Acquired Motorola Mobility

Google recently announced that it is buying Motorola Mobility for approximately $12.5 billion. Mobility will now come under the Google umbrella but Google said it is allowing Motorala Mobility to function separately for now. Motorola and Google both have visions on where they want to “Android ecosystem” to expand to, but of utmost importance is to keep the open source feel of the Android platform. Below is an article detailing the acquisition and what it means specifically for both companies.

Google Inc. and Motorola Mobility Holdings, Inc. today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares on Friday, August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies.

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

Larry Page, CEO of Google, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

Sanjay Jha, CEO of Motorola Mobility, said, “This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world. We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses.”

Andy Rubin, Senior Vice President of Mobile at Google, said, “We expect that this combination will enable us to break new ground for the Android ecosystem. However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.”

The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US, the European Union and other jurisdictions, and the approval of Motorola Mobility’s stockholders. The transaction is expected to close by the end of 2011 or early 2012

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AT&T Limits Top Wireless Data Users

In the past wireless companies had unlimited data plans that were introduced before the more current tiered plans. Customers who were grandfathered in with their old unlimited data plan usages have been continually allowed to use the unlimited resources. However, all that will change on October 1st. AT&T has announced that they will no longer use the old unlimited terms and will force its top 5% of data usage customers into a limited data plan.

By Rachelle Dragani

AT&T customers with unlimited wireless data plans may want to watch how much they download and upload soon. The company says it’s going to begin throttling the access speeds of its top 5 percent of unlimited data users. It claims a capacity crunch has necessitated the action, suggesting AT&T’s goal of buying up carrier T-Mobile may play a large part in the move.

AT&T (NYSE: T) will begin limiting data speeds for the top 5 percent of wireless data users who currently have unlimited data plans, the company announced Friday.

Many AT&T customers currently operate under a tiered data plan, but customers who had unlimited usage before the tiered plans were initiated about a year ago were able to continue downloading and uploading an unlimited amount of data over the company’s wireless network each month. Starting Oct. 1, however, AT&T will start dialing down the speed on its heaviest users.

Those at risk of being throttled will receive notification and a grace period before AT&T begins implementing the restrictions.

Recently, Verizon Verizon Wireless joined AT&T in offering tiered data plans for users. T-Mobilerecently announced that instead of limiting customers’ data, it would begin throttling after they reach their selected data usage levels. Sprint (NYSE: S) is the only major wireless carrier in the U.S. to provide an unlimited data plan without throttling.

AT&T declined the E-Commerce Times’ request to comment for this story.

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Microsoft Updates Handheld Platforms With Mango

Microsoft threw itself into the the competitive smartphone market last year with the introduction of its Windows Phone 7 operating system. The market is currently being dominated by iPhone and Android users, with Android alone being responsible for approximately 48% of the overall market share. Microsoft has introduced an updated version of its operating system called Mango with many new capabilities and features which will hopefully put it at the very least on par with the other options available now. Below the article lists the specific upgrades and added features that Mango is introducing.

By Rachelle Dragani

Microsoft has released Mango to handset manufacturers. The new update to Redmond’s Windows Phone 7 mobile operating system features new multitasking abilities, threaded communications systems, and a mobile version of Internet Explorer 9. It’s a sizable update for the young OS, but will it be enough to help Microsoft catch up to Android and iOS?

Mango, the largest update yet to Microsoft’s (Nasdaq: MSFT) still-young Windows Phone 7 mobile OS, was released to manufacturers Tuesday in what the software company called an “important milestone” in its fight to gain some ground in the competitive smartphone marketplace.

The update was first shown off in May and is being viewed as a dramatic upgrade from the basic Windows Phone 7 platform, released in 2010. Mango sports over 500 new features and has a much greater focus on apps and communication tasks now regularly performed on smartphones.

The first phone to roll out with the update is the ISI12T, manufactured by Fujitsu ToshibaMobile Communications.

The update should be available to handsets beginning this fall, but no specific release date was given. The as-yet-unreleased iPhone 5, expected to be a chief smartphone competitor, is the subject of rumors of a September release as well.

New Features

Since the platform was previewed in May, researchers and developers have had time to look over some of the new features the company is touting for Mango’s release. Giving attention to data that shows smartphones are becoming mainstream methods of communication, the company has attempted to integrate social networks, business tasks and personal data needs into one platform.

Developers didn’t want to tangle the different functions, however, so one of the key updates on Mango is its emphasis on multitasking. Known as “App Multitasking,” the feature lets users pop in and out of different apps efficiently.

“The multitasking — switching between apps – UI looks to be intuitive and useful,” Daniel Ashdown, research analyst at Juniper Research, told TechNewsWorld.

Another attempt at efficiency is the threading feature. Using threading, a user can put all different types of messaging into one — combining a text, e-mail and instant message, for instance, into one, easy-to-see conversation. The option also exists to combine personal e-mail accounts into one app to cut down on going back and forth between the two.

Another feature, Groups and Messaging, is probably the most talked-about service. It allows the user to put filters on social networks such as Facebook, so if there are only a handful of News Feed updates someone cares about, those are they only ones they have to see.

Groups can also come into play with the threading feature. A user could start a conversation — say a Facebook chat with one of the select people in their Facebook group — then continue in e-mail without a complicated switch. The history of that conversation will then be in a profile stored in the phone.

Microsoft is also excited that the platform will debut the mobile edition of Internet Explorer 9.

“The addition of IE9 is important, as Microsoft claims it can render webpages faster than browsers running on competitors devices,” said Ashdown.

Also to be added are enhanced search features with Bing. Instead of just typing in something to the engine, a user can use a feature called “Local Scout” to find information on things like restaurants and shopping near his or her exact location.

Mango comes with a visual search, wherein a user can scan an item such as a DVD and then get directed toward a list of prices or reviews for the product. With a book, the user could be directed toward the Amazon (Nasdaq: AMZN) Kindle app and have it downloaded almost instantly. The visual search scan can also translate text into different languages.

Even with enhanced Internet access and capabilities and the compelling search features, the focus with Mango is on integration across social networks, e-mail and apps.

“The biggest thing with Mango is multi-tasking, but it is really feature-packed and represents what an annual release might look like for this platform,” Al Hilwa, program director of application development software at IDC told TechNewsWorld.

Is It Enough?

Even with the draws from multitasking and compelling search and Internet features, it’s unclear whether Mango has what it takes to make Windows Phone 7 a leader in the smartphone race for domination.

“It’s definitely something that will bring Microsoft back into the game, but as far as the smartphone race, there’s still a lot of challenges, obviously. Android and iPhone have made it a two-man race at this point,” Brent Iadarola, research director for mobile and wireless devices at Frost & Sullivan, told TechNewsWorld.

One key will be to make sure a variety of prices and models of mobile devices can support WinPho7.

“I think it will take them some time to build up the level of sales. The most crucial aspect is having a variety of devices across prices and capabilities,” said Hilwa.

Drawing innovative developers to Microsoft’s platform, rather than Apple’s (Nasdaq: AAPL) iOS or Android, is also key. Microsoft’s relationship with Nokia (NYSE: NOK) could be a great draw for developers.

“The largest attraction is the Microsoft-Nokia relationship. There’s just such a large existing base of users globally of Nokia, that there’s an instant attraction in that area. That can provide a very large addressable market without having to build it organically,” said Iadarola.

The bottom line appears to be that while the updated platform features many draws, it alone may not be enough to attract a flock of customers.

“Some of the key elements of the update they talked about were threads and social network integration. Those are all definitely attractive to the platform and a great thing to highlight, and those will provide a unique differentiator, but I’m not sure it’s enough to be a huge draw,” said Iadarola.

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Mozilla Begins Coding For Mobiles And Tablets

Mozilla, creators of the wildly popular Firefox web browser and other software programs, has decided to start coding an operating system for mobile phones and tablet devices. This operating system will be similar to the Android but will be written from scratch. Also, the new OS called Boot to Gecko, will be the chief rival of the Android system as it will be competing to be on the same phones. Read the article below for further details on the upcoming project.

The creators of the Firefox web browser have started developing an operating system for mobiles and tablets.

Although the project will draw on some parts of Google’s Android mobile operating system much of the code will be freshly written.

Once finished the operating system will compete with Android as it will run on the same devices.

The project team said all code development would be done in the open and shared as soon as it was written.

Called Boot To Gecko the code creation is being overseen by the Mozilla Project which created the Firefox browser. It was announced on the Mozilla discussion forum by researcher Andreas Gal.

Gecko is the rendering engine that powers the Firefox browser and the Thunderbird email program. A rendering engine interprets the code on webpages and displays it in the right format on screen.

With B2G, the Mozilla developers aim to get applications running without the need for the browser, effectively creating a web-centred operating system.

It will draw on some core parts of Android but aims to add a wrapper around it that is much more open than the one created by Google. If successful, the project will face stiff competition from Google’s Android and Chrome as well as Apple’s iOS and Microsoft’s Windows Phone 7.

The Mozilla team admitted that the project was in its “infancy” but said it already created some basic software from building blocks that are similar to those needed to get the OS running.

The team said they were publicising the project to root out experts in the Mozilla community and elsewhere who could help and encouraged them to get in touch and sign on.

Mr Gal said the project had set its sights high and wanted to do it “the way we think open source should be done”.

Its ultimate goal, he said, was “breaking the stranglehold of proprietary technologies over the mobile device world”.

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Survey Says Mobile Payments To Become Mainstream Within 4 Years

The meteoric rise in popularity of the smart phone has brought with it news of communicating, have fun, and doing business. Today, businesses are looking towards the future to adopt strategies that take advantage of the near ubiquitous  use of modern smart phone technology. One innovation that is quickly growing in popularity is the mobile payment system. Smart phones do almost everything for us these days and the ability to pay with an easily portable electronic device in our pocket is quickly becoming more appealing to the masses.


Mountain View, CA – As companies race to take advantage of the mass adoption of smartphones and rapid development of new technologies to offer mobile payment services, executives believe the use of a mobile phone or device to make payments or conduct banking transactions will require four years to become widely accepted by consumers, according to a global survey of business executives by KPMG International, a global network of firms providing audit, tax, and advisory services.

The KPMG survey of nearly 1,000 executives in primarily the financial services, technology, telecommunications, and retail industries globally found that 83 percent of the respondents believe that mobile payments will be mainstream within four years, compared to only nine percent who see them as mainstream today. In fact, 46 percent believe mobile payments will be mainstream within two years.

“We believe that exploding smartphone growth and myriad opportunities will grow mobile payments at a much faster rate than our respondents anticipate,” said Gary Matuszak, KPMG Global Chair of the Technology, Communication and Entertainment practice. “A wide variety of payments is ready for adoption, as several key players already provide or are rolling out mobile payments, and interest among consumers in utilizing mobile payments is growing, in line with the industry’s readiness to deploy them.”

Seventy-two percent of the executives said that mobile payments are now or will be reasonably important in the future, with specialist online systems building on its leading position as a payment method, and m-banking and near field communication (NFC) gaining significantly greater traction than today. Fifty-eight percent said they have a mobile payments strategy in place.

“While there is consensus about the significant value of this opportunity among executives across geographies and industries, the type and size of opportunity varies between developed and developing countries depending on depth and reach of the financial infrastructure in place. We believe that those firms willing to engage in cross-industry partnerships and coopetition are more likely to succeed and dominate the market due to the complex set of business relationships required to deliver mobile payments to a mass market,” said Matuszak.

Driving customer adoption and addressing concerns

While the majority of the business leaders surveyed believe consumers are currently concerned about security and privacy when using mobile devices, they believe other factors are more compelling attributes of a successful mobile payment strategy. Specifically, 81 percent believe convenience/accessibility is the highest attribute, followed by simplicity/ease of use, at 73 percent, security, at 57 percent, and low cost, at 43 percent.

At the same time, business leaders, globally and in the U.S., view security as the main challenge to developing mobile payments strategies. Technology and adoption of the technology is a distant second, followed by privacy.

“The business leaders understand that when it comes to consumers choosing a provider based on security, reputation can make the difference, and any damage to a business’ brand can prove costly, even to the extent of being a showstopper,” said Sanjaya Krishna, KPMG U.S. Digital Services Leader in the TCE practice. “As a result, leading businesses are adopting multiple approaches to alleviate customers’ privacy and security concerns.”

“One surprising result of our survey is the absence of divergent views across both industries and geographies, which speaks to the consensus that mobile payment is regarded as an opportunity for players across the value chain of commerce,” Matuszak said.

Race to lead the mobile payments market

With the mobile payments industry poised to make a major leap in the coming years, several players are expected to play significant roles, though two groups of financial institutions are the current front-runners, say respondents. Banks, which scored the highest in level of importance in the value chain, and credit card companies will have the most important roles, according to business leaders globally. They placed telecommunications companies third, ahead of specialist online payment players (eg. PayPal, Boku, Obopay), online service provider giants (e.g. Google, Facebook, Amazon), retailers and technology companies. Among U.S. respondents, online service provider giants placed third, followed by specialist online payment players and telecommunications companies, which were rated of equal importance, retailers and technology companies.

Mobile Payment Methods

Each of these companies’ success can be tied to the prospects for the five current payment methods which are battling for a share of the market. The KPMG survey respondents, globally and in the U.S., see specialist online systems leading the pack, due to the fact that this method already has significantly greater penetration than alternatives, and its penetration is expected to increase. Respondents said that specialist online systems have the greatest prospect for success, followed by mobile banking, NFC, carrier billing and the “mobile wallet.”

“While KPMG believes that these forms of mobile payment will all gain some traction, our view is that M-Wallet is one of the most exciting and promising payment opportunities. M-Wallet provides the momentum to move beyond payments to participate in the entire chain of mobile commerce, from consideration and brand awareness to purchase after-sales loyalty and care,” said Tudor Aw, Technology Sector Head, KPMG Europe.

M-wallet – uses mobile device as a wallet with account and transaction information stored on the devices’ SIM card.

M-banking – direct access to bank services and information via the mobile device

NFC – short-range (millimeters) wireless communication technology

that enables exchange between devices, such as between a cell phone and a point of sale device at a checkout counter.

Specialist Online systems – online payment processing systems such as Google checkout and PayPal.

Carrier billing – purchases are charged to the mobile phone bill

The KPMG Global Mobile Payments Survey

The Global Mobile Payments survey examined the leaders, opportunities, advantages and barriers in mobile payments, and was carried out by KPMG’s global Information, Communications and Entertainment practice. Covering the Americas, Europe, Middle East, Asia/Africa, and Asia Pacific, the study surveyed 970 business people, including 250 in the U.S., in primarily the financial services, technology, telecommunications and retail industries. More detailed survey results are available in the report 2011 KPMG Mobile Payments Outlook that is available upon request. In addition, KPMG also has available Monetizing Mobile: How Banks are Preserving their Place in the Payment Value Chain, a separate report based on data from the survey that focuses on the banking industry’s outlook for mobile payments.

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