Wednesday, August 26, 2009

Maybe mobile money

Nokia announced Wednesday that’s developing a new service Nokia Money by partnering with Obopay. The product is mainly targeted at the rural poor that lack any sort of bank account, just as mobile phones have been targeted in China and India for communities lack wireline infrastructure; the US is in the indefinite future.

So it can enter the services market on the cheap, without having to commit a lot of management mindshare to make it happen. Going outside for new technologies? We call that open innovation.

Nokia also has some form of option on the upside. In March it invested an undisclosed amount in the company in what I’m guessing (given this current market) was a down round. At a minimum, it won’t have to buy out its own shares, although one of the Obopay investors is its old friend Qualcomm.

The US press is focusing on the PayPal rivalry, but I think DoCoMo is a better analogy. PayPal is the big player in its segment, but it’s a small subset of Internet e-commerce. DoCoMo has had a big hit for the past decade with some 48 million i-mode customers, but failed in its efforts to export the business model to other countries.

It appears as though there are few if any between-country network effect for mobile payments, which means the Big Emerging Markets are up for grabs, no matter what happens in the US or Japan.

The official Nokia release says nothing about an exclusive arrangement. Does this legitimate Obopay the way that IBM legitimated MS-DOS back in 1981? Or does it put Obopay firmly in Nokia’s camp, ruling out interest from operators like Vodafone, Orange or T-Mobile?

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