Samsung vs. Google – Here comes trouble

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Mobile payments could cause the gorillas to start fighting again.

• Google’s acquisition of technology from Softcard threatens to shatter the fragile peace that has existed between Samsung and Google since January 2014.
• For more details please see Samsung & Google – Gorilla War – 27th May 2014
• Following the failure of its own Google Wallet that was launched in 2011, Google has decided to acquire the technology and patents of Softcard in another effort to get a foothold in this important space.
• At the same time Samsung has acquired LoopPay (see here) which I think will be already be integrated into the Samsung Galaxy s6 when it launches on Sunday.
• This is because Samsung has been working with LoopPay for quite some time and I think that the acquisition is a sign that this is the technology that Samsung has decided it wants to run with for payments.
• This will lead to Samsung and Google once again competing against one another for the attention of the user, but I do not think that Samsung is going to fall for the same trick twice. (see here).
• Softcard is (or was) a collaboration between AT&T, T-Mobile and Verizon that offered users a NFC based mobile payments system.
• Unfortunately due to a clumsy set up process, poor user experience and limited credit card support, Softcard has gained virtually no traction.
• Vast sums of money have been poured into it as the cash burn looks like it is around $15m per month.
• However, it looks like Google has simply acquired the technology and the patents, leaving most of the people and the infrastructure behind for the telecom operators to deal with.
• Using Softcard will provide Google with much greater operator support but it will not fix the inherent usability problems that exist within both Google Wallet and Softcard.
• Google must now put the two technologies together and come up with a seamless, easy and fun to use solution that users will love.
• This will take quite some time (I am expecting some announcements at i/o on May 28^th and 29^th), giving Samsung a lead in terms of having something workable in the market.
• Samsung has lost of lot of market share over the last 9 months but it is still the largest Android vendor by quite some margin.
• In order to ensure that Google’s payment system has the best chance, I can see Google altering its Mobile Application Distribution Agreements (MADA) such that its payment system is required to be the default option with the app. placed front and centre on the device.
• Samsung is Google’s biggest distributor of its ecosystem and I am pretty sure that this time it will refuse to put Google’s payment system in a more prominent position than its own.
• This is because payments is one of the few areas left where Samsung can differentiate itself having ceded the entire ecosystem to Google in 2014.
• The winner of this latest conflict will be decided by the user, but Google has an advantage by being able to tie its payments system into its very popular ecosystem.
• This is likely to cause further conflict within the Android camp, handing the advantage to Apple and giving Microsoft an even greater opportunity to bring its ecosystem to life.
• Microsoft remains my top choice for the ecosystem in 2015E as Yahoo! is still failing to make any real use of the assets it has.