After the brouhaha over Verizon Galaxy Nexus and Google Wallet a few weeks back, it seemed that none of the Isis Carriers will allow Google Wallet on their networks. Sprint, absent from the Isis partnership has, and is a Google Wallet partner. But this past week, news emerged that Google Wallet can be installed and works on the Galaxy Nexus in the AT&T network. Is this evidence of AT&T warming up to Google Wallet and signal the coming of Google Wallet on other AT&T NFC equipped phones?
Sorry to break your bubble, but the short answer is NO. As much as I would like to share in the belief that AT&T had a change of heart and will now support both Isis and Google Wallet on their NFC equipped phones, chances of that happening are pretty slim. That is, unless Google Wallet figures out a working model, where the Carrier is relegated to a dumb pipe (ala Square, Paypal etc.) and obviates the need for NFC and SE and in turn the Carrier/Issuer/Acquirer trinity.
Google Wallet is not on a second carrier. Well, technically it is.. because it works on AT&T Network. And AT&T was wise to avoid any dissonance with Google in this case, a lesson Verizon did not learn until it was too late. But to make this out to be a ‘coup d’état‘ for Google Wallet in the way its being parroted across the blogspace, hardly stands up to light. Here is why – Google owns the keys to Secure Element (SE) on Galaxy Nexus, being a Google branded phone and all. The Samsung Galaxy Nexus (similar to the Nexus S before it) is one of the two phones where Google ended up controlling the coveted keys to SE which are crucial in storing and accessing the encrypted financial credentials that every mobile-wallet initiative or partner needs access to, so as to successfully transact. And in this case as Google owned the keys to SE, AT&T was not giving up much in allowing Google Wallet run successfully on Galaxy Nexus. At the most, it stands to capture valuable data on the number of customers who own a Galaxy Nexus, who will eventually install Google Wallet, a metric that will be valuable in identifying early adopters for its own partner initiative – Isis. It will not be a stretch for AT&T to figure out the number of installs, daily or weekly usage, but there is no evidence to believe that AT&T plans to do so.
As for Galaxy Nexus, similar to Nexus S before it, it is doubtful if Google will share ownership of keys to SE with the Carriers, which lends further credence to my belief that to the Isis partners – both the Nexus S and Galaxy Nexus phones are unlikely to ever be a target device for Isis. Again, they stand to lose little by allowing Google Wallet function as designed on these devices, considering how poorly Google Wallet is received by retailers and customers. At the most, they will be viewed favorably by antitrust observers and the wider tech community.
With the GSMA spec released back in November, and over 45 Carriers worldwide committing to put SIM based SE front and center to their wallet initiatives, Carriers everywhere are expected to incentivize (via subsidies or otherwise) manufacturers in making SIM based SE as the default secure element of choice on the device. A SIM-centric position along with the requirement that these phones support both SWP and HCI will ensure Carrier domination and further reduce the threat of Over-the-top players such as Google.
As other NFC equipped mobile devices are launched by Carriers, such as the Galaxy Note from AT&T mid February, it can be expected that the Carrier stays in firm control of the keys to SE, and Google Wallet will be a distant memory on those devices. It is unlikely that AT&T will share the SE with Google and further help create a groundswell of public support behind Google Wallet, ahead of its own competing partner initiative. We should see evidence of AT&T (and Verizon/T-mobile) strategy playing out very soon as additional NFC equipped devices are rolled out, with no mention of Google Wallet.
Google has itself to blame, and it cannot cry “Unfair!” when these moves are rehashed from its own strategy towards Isis, from last year. And it must move swiftly to counter an increasing possibility of reduced relevance, as rumors swirl of Apple’s own hybrid wallet initiative.
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