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I look at value and contrarian ideas as well as emerging technologies worldwide, both on the long and short side. I also like to discuss the influence of monetary policy on stock markets. I usually do not engage in short-term trading and myopic analysis (quarter by quarter, without looking at... More
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  • Apple And New Markets: IPayments? 6 comments
    Jan 27, 2014 10:23 AM | about stocks: AAPL

    A flurry of AAPL-related news came from interesting sources lately, especially from the WSJ. Among them were:

    - New, larger iPhones for 2014 (a good article on SA - and possible links to solar/sapphire-glass related moves (NASDAQ:GTAT) - can be found here)

    - Work in the medical/sensor/fitness fields (for future wearables ?)

    - Updated Apple TV box (possibly with an app store, especially support for games and/or dedicated third-party game controllers ?)

    - Expansion of iRadio coverage and hardware (especially the iPhone) into more territories (the deals with CHL in China and NTT Docomo were very important for the iPhone, new deals are coming in SE Asia and Russia.)

    - Mobile Payments and related network initiatives (iBeacon, Payments)

    I wrote about the topics listed in earlier blog entries. I will therefore just cover the last one in this update: Mobile Payments.

    The WSJ's latest article on Apple and mobile payments:

    Apple Inc. is laying the groundwork for an expanded mobile-payments service, leveraging its growing base of iPhone and iPad users and the hundreds of millions of credit cards on file through its iTunes stores.

    Eddy Cue, Apple's iTunes and App Store chief and a key lieutenant of Chief Executive Tim Cook, has met with industry executives to discuss Apple's interest in handling payments for physical goods and services on its devices, according to people familiar with the situation.

    In another sign of the company's interest, Apple moved Jennifer Bailey, a longtime executive who was running its online stores, into a new role to build a payment business within the technology giant, three people with knowledge of the move said.

    (...)

    A payment service would launch Apple into what is becoming a fierce battle over how people pay through mobile devices. Other players include eBay's PayPal unit, Google Inc. and startups such as Square Inc. and Stripe Inc. Forrester Research estimates that Americans will spend $90 billion through mobile payments by 2017, up from $12.8 billion in 2012.

    WSJ

    Ever since AAPL eschewed incorporating NFC chips into its phones back in 2011-2012 there was speculation Apple how and when might enter the (mobile) payments space in alternate ways.

    Some of the key challenges for technology companies like AAPL entering this space:

    • Low margin risks (opposed to Apple's high operating margins)
    • Reversing dubious/erroneous transactions (either siding with the vendor or buyer. Each side will try to game the system, one party most probably won't be happy due to the system's design.)
    • Security and Privacy Questions
    • Compliance (Money laundering, cross-border transactions)
    • Antitrust issues in some countries because of Apple's size

    The main open challenge in my opinion is therefore not the technology used (I'm sure Apple can solve these roadblocks with or without using technologies such as NFC or iBeacon), but rather margin and business model questions.

    One key question: Will Apple build its payment service stand-alone and start fresh or build it (at least in part) on top of existing credit card company layers (like PayPal and others did).

    That decision will ultimately influence how disruptive a (mobile) payment solution from Apple is going to be...

    I'm especially skeptical on the possible margins Apple can achieve and how it can create its payments system hardware-agnostic - Apple is not known to be suited at creating services outside of its ecosystem (iTunes on Windows machines being the primary lone exception so far).

    Themes: goog, mobile payments, ma, axp, v, ebay Stocks: AAPL
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Comments (6)
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  • Tales From The Future
    , contributor
    Comments (4107) | Send Message
     
    Author’s reply » Edit: I bought AAPL after a long-time being out of the stock at $501 after-hours (post earnings sell-off).
    27 Jan, 05:53 PM Reply Like
  • Mr. Knowitall
    , contributor
    Comments (7422) | Send Message
     
    good luck tftf, I hope it stops dropping for you!
    27 Jan, 05:59 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (4107) | Send Message
     
    Author’s reply » Well, so far the $500 line holds. I don't have unrealistic expectations; I wrote last June:
    "AAPL is probably range bound around 350-550 USD before new product lines arrive."
    They hopefully introduce new product lines by late 2014 or in 2015 - that could also add growth again.
    Meanwhile, with the market at all-time highs I think AAPL is one of the few reasonably priced (tech) stocks out there. I'm mostly out of stocks since late 2013, AAPL is an exception.
    28 Jan, 11:06 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (4107) | Send Message
     
    Author’s reply » While payments continue to be an area of interest for AAPL...

     

    "Apple Continues Pursuing Mobile Payment Solution, Seeking to Hire Industry Executives"

     

    http://bit.ly/QF3bfS

     

    the entire sector continues to run on thin margins. Let's take for example Square:

     

    "THE MARGINS ON SQUARE'S CORE BUSINESS ARE RAZOR THIN

     

    Though those thin margins are an issue, the major problem for Square seems to be that it’s struggling to grow the side of its business that could one day be quite profitable. Square has been trying to break into the higher-margin business of consumer services. It launched its Square Wallet App, which lets people pay with their phones, and it rolled out Square Cash, which makes it easy for people to transfer money to their friends or family. So far, however, neither of those have found mass adoption"

     

    http://bit.ly/1iLPtTc
    23 Apr, 12:57 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (4107) | Send Message
     
    Author’s reply » Update to iBeacon at the WSJ:

     

    ""This has the potential to be transformative," said John Jackson, analyst at research firm IDC. "It could be the technology that underpins a future where anything you'd want or need to know is delivered to you in the most intelligent of ways."

     

    Most early iBeacon deployments are focused on retail, because the technology offers the promise of linking online purchases with in-store visits, a long-sought goal by retailers. Kenneth Cole Productions Inc. uses beacons from Boston-based Swirl Networks Inc. to send coupons to shoppers based on criteria such as how often they have visited a store recently; it then tracks campaign results.

     

    Swirl Chief Executive Hilmi Ozguc estimates that more than half of the top 100 U.S. retailers will start testing beacons in stores this year. ABI Research said it expects beacons to be installed at more than 30,000 indoor locations world-wide by year-end.

     

    Beacons are the latest, and most precise, location-based technology for smartphones. Global Positioning System signals enable features such as Google GOOGL +0.19% Maps, but don't work well indoors. Some companies use Wi-Fi signals indoors to track locations, but that can drain a phone's battery.

     

    " 'Where are you?' is not a question that a phone should ever ask," said Benedict Evans, a partner at venture-capital firm Andreessen Horowitz. "GPS gets you some of the way there. But iBeacon gets you absolute positioning."

     

    Beacons are relatively cheap, between $5 and $20 apiece. Swirl's Mr. Ozguc said he expects prices to fall to less than $2 next year, allowing organizations to deploy lots of beacons inexpensively.

     

    Eventually, beacons will be "everywhere," said Steve Cheney, senior vice president for Estimote Inc., a startup based in Krakow, Poland, that creates hardware, services and software for iBeacon."

     

    http://on.wsj.com/1nVffq8
    1 Jun, 07:44 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (4107) | Send Message
     
    Author’s reply » This topic is getting some traction again after the new IBM-AAPL partnership was announced.

     

    I see several opportunities:

     

    IBM already does many POS systems for large retailers, potential implementation is probably still 1–2 years off until there's enough TouchID devices out there.

     

    There are massive opportunities in payments - as well as authentication/ID/access control thanks to TouchID coupled with IBM's backend.
    17 Jul, 12:26 AM Reply Like
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